Regulators put off final approval of a provision to imposeSarbanes-Oxley reporting requirements on mutual companies at a keycommittee hearing yesterday.

Members of the National Association of Insurance CommissionersFinancial Condition Committee set tentative plans to vote on themeasure May 18, if the proposed changes could be drafted bythen.

The planned amendments to the Model Audit Rule would set newreporting requirements on internal controls, as well as new ruleson the number of independent directors a mutual company must haveon its board.

Most of the insurance industry, with the exception of theNational Association of Mutual Insurance Companies, has supportedthe watered-down model reached after two years of compromiseefforts with the regulators.

William Boyd, NAMIC's financial regulation manager, said it wasunusual that such detailed work would go on at the major committeelevel like what happened yesterday in Atlanta. “That the committeeis engaged in such detailed work shows that the rush is on,” hesaid.

Among the changes the committee is considering as a result ofyesterday's deliberations are liberalization of the independentdirector requirement for an insurer's audit committee, along with aone-year postponement of the effective date to 2011.

Another change would index the proposed threshold of $500million in annual premium for companies to be exempt from theinternal controls reporting requirements to allow for risingprices, but no index was decided on.

Steve Broadie, financial regulation manager of the PropertyCasualty Insurers Association of America, urged regulators not toapprove the draft until an implementation guide is alsoapproved.

But Virginia's deputy insurance commissioner, Doug Stolte, hasrepeatedly said he would not follow that course and has promised noback-door regulation through the guide.

Mr. Boyd said that with the May 18 date for committee approvalnow only tentative, it was possible the full NAIC body could notvote on the measure until fall.