NAII Hail NAIC Codification Implementation Date

The National Association of Insurance Commissioners Executive Committee's adoption of a codification implementation date of January 1, 2001 clears the way for a common date for the new accounting system in all states and gives the industry sufficient time to change to the new system, according to the National Association of Independent Insurers (NAII).

The action, which was approved by commissioners at the NAIC's summer meeting in Boston, describes the terms of implementation for the codification project, which was approved by the full NAIC at its spring meeting. The Ad Hoc Task Force recommended that the implementation date be deferred from January 1, 1999. The project, which involves a complete rewriting of the accounting manuals used in preparing statutory financial statements, represents years of work by the NAIC and the insurance industry.

The other key element of the Ad Hoc Task Force's tentative recommendation that was adopted at the meeting is making codification an accreditation standard, basing compliance on the Procedure for the Adoption of Additional Model Laws, Regulation or Standards for Accreditation. If approved by the accreditation subcommittee and then the full plenary session following the public hearing process, this will establish an accreditation standard for codification to be in place by January 1, 2002.

"The accreditation requirement is something we will have to look at further," says Joseph Pomilia, NAII director of financial reporting and taxation. "We may have problems with how codification will be applied as an accreditation standard."

However, the NAII was pleased with the new implementation date. "The 2001 implementation date is a far more realistic time frame for insurers, regulators and statistical organizations to comply with the new standards," Pomilia adds.