WASHINGTON--The two House sponsors of legislation creating an optional federal charter are seeking to win over more lawmakers to their cause by citing a recent finding by Standard & Poor's that new European Union insurance regulation reforms will leave non-EU insurers "at a competitive disadvantage in Europe."

Reps. Melissa Bean, D-Ill., and Ed Royce, R-Calif., the original sponsors of the House bill, made their argument in a "Dear Colleague" letter seeking additional sponsors for H.R. 3200, the National Insurance Act. A companion Senate bill was introduced last year by Sens. Tim Johnson, D-S.D., and John Sununu, R-N.H.

The letter cites Standard & Poor's recent analysis of "Solvency II," an insurance regulatory reform directive of the European Union, which was published March 12.

The letter says that "... our counterparts in the European Union are making tremendous strides in updating their regulatory structure overseeing their insurance market," adding that the latest regulatory directive is headed toward completion and implementation in the near future.

"The directive offers a realistic ability to move Europe's insurance supervision onto a modern, risk-based platform much more efficient than the current regulatory system," the letter said.

It added that because of the new directive, there is the "potential" that U.S. companies will be operating at a competitive disadvantage in the European Union "because we have failed to establish a world-class regulatory equivalent here in the United States."

"Whether it is resolving regulatory discrepancies or negotiating major free trade deals, insurance regulators around the world must attempt to reach agreements with 54 separate state regulators representing the United States market," the letter added.

It explained that the latest development "highlights the continued frustration expressed by regulators around the world forced to deal with our fragmented regulatory structure."

In urging House members to become co-sponsors of H.R. 3200, the representatives' letter said, "While the National Association of Insurance Commissioners is well intentioned, it does not possess the regulatory powers and is not equipped to perform even an informal oversight role that today's global insurance industry requires and demands.

"If we do not act quickly, our insurance industry will be further handicapped in this ever-changing marketplace" the letter said.

The letter adds that Ms. Bean and Mr. Royce are sponsoring the bill because it would "establish a world-class regulator with the authority to represent the entire U.S. insurance marketplace."