The National Association of Mutual Insurance Companies (NAMIC) told members of the National Conference of Insurance Legislators (NCOIL) at their recent summer meeting in Chicago that states have the financial regulatory tools necessary to make an extension of federal Sarbanes-Oxley corporate governance standards unnecessary.
“Legislators should feel very comfortable with the state of financial regulation as it already exists. State regulators have tools that are more comprehensive than those found in Sarbanes-Oxley requirements,” said Neil Alldredge, NAMIC state affairs director, during a meeting of the NCOIL Financial Services Committee.
Insurance companies are already subject to a host of financial regulations geared toward ensuring solvency, which “should be the primary focus of insurance policymakers, not the requirements found in the Sarbanes-Oxley legislation,” according to Alldredge.
“Sarbanes-Oxley is intended to protect investors not policyholders. Policymakers need to understand this distinction and why it is important,” Alldredge continued. “NAMIC members support sound corporate governance practices and believe that those practices can be found in the current financial regulatory scheme but a blanket application of Sarbanes-Oxley requirements in the name of consumer protection does not make sense in this context. Consumers are already protected and would ultimately bear the
cost of new, redundant regulation,” Alldredge said.
He said that NAMIC will work with NCOIL member legislators to help determine the effectiveness of present state financial solvency regulation as well as identify potential weaknesses related to consumer protection.
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