Authored by John Romano and Rachel Schmoyer
The National Association of Insurance Commissioners' (NAIC) Annual Financial Reporting Model Regulation #205 Section 17 Management’s Report of Internal Control over Financial Reporting – Annual Attestation on Internal Control , commonly known as “MAR” mandates that every insurer having annual, direct-written and assumed premiums of $500 million or more shall prepare a report, for the prior calendar year’s year-end, attesting to the insurer’s, or the insurer group’s, internal controls over financial reporting (ICOFR).
We refer to an insurance company’s processes to fulfill the requirement indicated above as a “MAR program.”
With focus on the current state of the MAR program, alignment of goals, resources and accountability, and application of current trends and practices, Baker Tilly recently helped a client experience the following:
Insurance organizations face many challenges with how to implement and continue their MAR program efficiently and effectively. This is primarily due to lack of definition of what they want as a result of the time and effort from their team members and providers. Where do you currently fall on the spectrum compliance to value? Where would you like to be?
Unfortunately, what we see with some organizations is that the spectrum is imbalanced. The feedback we receive from management and internal audit is that the MAR program feels more like the following:
Develop a project plan approach that is agile and flexible to changes in the environment. Prepare for expected and unexpected changes to your overall goals and objectives for MAR program improvement.
Your approach to MAR program improvement should consider the following guiding principles for a successful outcome and efficient project:
For additional best practices and trends refer to our Model Audit Rule article here, and if you are a publicly traded company subject to Sarbanes-Oxley requirements refer to our article here.