May 07, 2026
Once an insurer exceeds $500 million in gross written premiums, compliance with the Annual Financial Reporting Model Regulation (NAIC Model No. 205), or “MAR” as its more commonly referred to, is not optional—and treating it as a finance-only exercise can be costly.1
MAR requirements span underwriting, claims, Information Technology (“IT”), and other core functions—and without cross-functional alignment, gaps can quickly multiply. Insurers that are close to the compliance threshold may not be completely familiar with the requirements or might be tempted to delay action. However, without prompt attention to MAR compliance, organizations risk inefficient remediation along with the potential for monetary fines and/or possible license suspension from state regulators that would significantly disrupt and impact the broader business.
Early action with a structured roadmap, clear testing strategies and formal remediation plans not only mitigates risk but also strengthens governance, improves operational resilience, and enhances your reputation with regulators and stakeholders.
MAR was established by the National Association of Insurance Commissioners to align insurance industry regulations with the reporting requirements of the Sarbanes-Oxley Act of 2002 (“SOX”). MAR mandates effective internal controls over statutory financial reporting and annual management certifications.
Whereas SOX has long-established frameworks, clear testing standards and audit expectations, MAR provides little regulatory commentary or examples. This can leave insurers uncertain about what constitutes effective controls and how to test, document and report them.
MAR readiness and overall compliance extend beyond finance and accounting. It requires active involvement from every business unit that supports statutory reporting processes. For organizations not accustomed to enterprise-wide compliance and coordination initiatives, this can be difficult.
These differences translate into a unique and often underestimated set of challenges for insurers.
The first hurdle for many insurers is translating MAR’s financial reporting mandate into actionable, cross-functional processes. These challenges can create early bottlenecks for readiness initiatives:
The implementation of a successful MAR program largely depends on the size, complexity, and maturity of the insurer. Organizations new to readiness or complex compliance efforts should consider assigning a project leader to guide cross-functional collaboration, accelerate progress and ensure proper scoping and resource allocation. Aligning with industry best practices, such as conducting a thoughtful scoping exercise alongside systemic walkthroughs of transactions, helps prevent over-testing and identifies gaps more efficiently.
Treating MAR solely as an accounting exercise can underestimate its operational scope and create many downstream challenges. Here are a few key pitfalls to avoid:
For organizations approaching or just passing premium thresholds, early action is the key to success. Implementations typically take up to 18 months, depending on resources, technology, and competing priorities. Here are a few initial actions to consider on the path to MAR compliance:
In the words of Benjamin Franklin, “If you fail to plan, you are planning to fail.” MAR readiness is centered around planning, scope, and execution. The more an organization understands about potential gaps, missing controls, and the inability to evidence performance, the better off they will be as the initiative advances.
MAR compliance extends beyond finance – it is an enterprise-wide initiative requiring cross-functional alignment, early planning, and a clear roadmap. By addressing control gaps, documenting testing strategies, and implementing formal remediation plans, insurers can not only meet regulatory expectations but also strengthen governance, improve operational resilience, and turn compliance into a strategic advantage.
Footnotes:
1: NAIC Model Laws, Accounting, MO-205, “Annual Financial Reporting Model Regulation,” (Q3 2015).
May 07, 2026
William J. Mellon
Senior Managing Director
Jon Burns
Senior Director
© 2026 FTI Consulting, Inc., including its subsidiaries and affiliates, is a consulting firm and is not a certified public accounting firm or a law firm. All Rights Reserved.
