According to the senator, SMART's provision for federal deregulation would decrease state insurer filing fees resulting in budget layoffs of "substantial numbers of experienced insurance department staff who currently monitor markets, avert market dislocations, minimize the number of insurer insolvencies and ensure that claims are ultimately paid."

Mr. Larkin found that a requirement that the states adopt some generic model legislation would mean insurers could write business in states that local government does not want them to operate in.

His analysis concludes that such model laws would curtail attorney generals, insurance departments and other regulators from enforcing consumer protection laws.

His paper finds that SMART would ultimately limit state attorney generals' ability to enforce Blue Sky laws against various illegal practices involved in sale of some insurance products and securities.

Mr. Larkin also addresses a SMART provision to exempt large policies purchased by 'sophisticated' buyers, noting that the recent customer abuses revealed by New York Attorney General Eliot Spitzer's investigation of commercial brokerages shows that shows that purchasers of such policies may need protection.

The senator's analysis also included a statement that there were insurance industry lobbying efforts underway "being financed by powerful political forces who are advocating that insurance should become in essence a deregulated industry."

Even though he is critical in his paper, Mr. Larkin was careful to state that "its introduction has sparked a valuable discussion on how the business of insurance should be regulated in the future."