Industry Opposes SOX Rules For Mutuals

"The risk being transferred by the policyholder is not to protect against the loss of discretionary income, as is the case in many situations for public investors," Stolte says. "Rather, the policyholder's risk of loss consists of items that are essential to one's continued health and livelihood: Their home, personal property and protection of income."

Both sides have agreed on a standard for ensuring the independence of auditors by requiring some rotation, and now they are working on a proposal that will set rules for the independence of board members who sit on audit committees.

But Section 404 of the Sarbanes-Oxley Act, which requires new internal controls assessments and attestation, has been the greatest bane for industry in general, and the property-casualty and life trades are working to ensure that the new rules are not too burdensome for the non-public insurance companies, who currently are not subject to them.

The insurance industry also is facing new pressure from the U.S. Securities and Exchange Commission to shed more light on how reserves are established for long-term claims. In addition, the NAIC has expanded the actuarial opinion rules to require more commentary on and disclosure of how reserves are arrived at on the condition that the disclosures remain confidential.