State regulators are preparing to consider insurance industryrecommendations they were handed last week to water down proposednew internal control reporting requirements for non-publiccompanies.

The Interested Parties Group submitted its proposals to theNational Association of Insurance Commissioners panel looking atstiffening internal controls reporting on non-public companies.

The so-called Title IV subgroup will meet Nov. 7 at a city to bedetermined later to mull the proposals. Regulators have set thefirst half of next year as the target date for final approval.

The new measures are patterned after some provisions in the 2002Sarbanes-Oxley corporate disclosure law enacted in the aftermath ofthe Enron and WorldCom accounting scandals.

Regulators, led by Virginia Deputy Commissioner Doug Stolte,want to impose the Sarbanes-Oxley-type measures on nonpubliccompanies.

The industry has vigorously fought the proposal, asserting theyare meant primarily for investor and not policyholderprotection.

The so-called Sec. 404 internal control proposals have been themost controversial and are described by the industry asburdensome.

The National Association of Mutual Insurance Companies opposeseven the watered-down measures proposed by the other tradeassociations as too costly an effort for its members, even thoughit remains an improvement from the regulators' originalproposal.

"That relaxed version still adds costs to state solvencyregulation that aren't needed, based on the solvency record ofmutual insurers," said William Boyd, financial regulation managerfor NAMIC.

In other NAIC news:

The NAIC said it is seeking comment on a white paper it releasedthis week on collateral requirements for non-U.S. reinsurers.Initial comments are due Nov. 11. In addition, the Reinsurance TaskForce is expected to consider other comments at its Oct. 26 interimmeeting in Overland Park, Kansas.

The panel is expected to review the white paper at the wintermeeting in December.