The growth in class-action cases, according to David Snyder, assistant general counsel with the American Insurance Association, Washington, is undercutting the predictability of the insurance business.

Moreover, according to Mr. Snyder, it is important for state regulators to protect state regulation from the effects of class-action litigation.

Insurers bear some responsibility for the growth in class-action suits, Larry Mirel, insurance commissioner for the District of Columbia, told insurers.

"You settle [class-action suits] for millions of dollars and feed this frenzy," he said.

During the discussion that took place at the NAIC/Industry liaison committee, Ohio Director of Insurance Lee Covington noted that "class-action suits can be a vehicle to right legitimate wrongs."

Mr. Covington said that in meetings with company chief executive officers, the Ohio department has posed the question of what company concerns kept them up at night and was told that class-action litigation was a major worry.

Philip Stano, a partner with the law firm of Jorden Burt in Washington, said plaintiffs in a current class-action suit in New Mexico are claiming that 90 percent of the policy forms filed with the department are defective.

He recommended that boilerplate protections against such actions be included in any model legislation developed by the NAIC.

Consumer advocates said class-action suits can play a valid role in protecting consumers.

Class actions serve a public policy purpose and "state officials should not be throwing up firewalls" between parties that are suing and potential redress, said Kevin Hennosy, publisher of SpreadtheRisk.org in Kansas City, Mo.

Class actions can expose things that are not exposed through traditional market conduct resources, said Jeff Williams, a representative of the Legal Aid of Western Missouri in Kansas City, Mo.

(Jim Connolly is a senior editor with NU's Life & Health/Financial Services edition).