WASHINGTON--Congress will likely impose a level federal insurance regulation soon unless states act promptly to institute meaningful reform, the head of a property-casualty insurance trade group told state regulators at a meeting here yesterday.

The comments by David Sampson, president and chief executive officer of the Property Casualty Insurers Association of America (PCI), took place yesterday at a meeting attended by 28 state insurance regulators and 14 representatives of other state regulatory agencies.

Mr. Sampson was among four heads of insurance trade invited to speak at a so-called "roundtable." The May 21 meeting was chaired by Sandy Praeger, Kansas insurance commissioner and president of the National Association of Insurance Commissioners.

An NAIC official confirmed that the meeting was held but declined further comment. Industry officials said the roundtable was arranged by the NAIC.

Those participating included the heads of PCI, the National Association of Mutual Insurance Companies, the Independent Insurance Agents and Brokers of America, and the Council of Insurance Agents and Brokers.

But no invitation to participate was made to the American Insurance Association and the American Council of Life Insurers, according to officials of those trade groups. They are leading the effort to pass federal legislation creating an optional federal charter for insurers.

Among those who participated were some key lawmakers: Sen. Richard Durbin, D-Ill, majority whip of the Senate; Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee; and Rep. Earl Pomeroy, D-N.D., a former state insurance commissioner.

The National Underwriter was unable to contact these officials by press time. Their presence was confirmed by representatives of the trade groups that did participate.

PCI, NAMIC and the IIABA are steadfast supporters of continued state regulation of insurance.

The CIAB was asked to testify because it supports uniform state licensing and is also seeking backing from state regulators of legislation passed by the House last year that would simplify regulation of surplus lines and reinsurance.

That bill could be the subject of a hearing in the Senate Banking Committee as early as next month.

Joel Wood, senior vice president for government affairs at the CIAB, noted that the Council has been a "longtime" supporter of an OFC, and declined to go into detail about what he said at the meeting, "claiming it was a private opportunity to have an open dialogue with regulators."

But, Mr. Wood said, "I can say that it was a frank, constructive and gratifying dialogue." He added, "There was more focus on what we agree on, such as surplus lines reform and uniform agent/broker licensure, than what we disagree on."

An IIABA official confirmed that Robert Rusbuldt, IIABA president and CEO, spoke at the roundtable. "We were invited to speak to the state regulators," the spokesman said. "The roundtable dealt with the big picture concerning insurance regulatory reform and our general perspective on that topic," the spokesman said.

Charles Chamness, president and CEO of NAMIC, also confirmed that he appeared at the roundtable and urged the states to adopt the Illinois model that allows insurers to set rates without prior regulatory approval.

His other major point, Mr. Chamness said, was a call for less of what he and Mr. Sampson called "friction"--different standards and reporting requirements between states. "If they do those two things, we will go a long way to addressing the types of issues the pro-OFC forces are raising on Capitol Hill," Mr. Chamness said.

But the most pointed comment came from Mr. Sampson, who represents a trade group that has historically supported state regulation. Mr. Sampson said this week that the organization supports improvements in regulation no matter where they are located.

He said he told those attending the roundtable, "It is increasingly likely that Congress will intervene in insurance regulation unless it is persuaded that rapid, visible, meaningful regulatory modernization at the state level is occurring."

And, Mr. Sampson said, "I also shared with them that it is PCI's view states are not making sufficient progress to reform the current regulatory system. I indicated that PCI wanted to work closely with them to help achieve that regulatory reform and modernization."

The heart of that message, he said, is that PCI and its members "support responsible reform to the existing insurance regulatory system based on sound principles of regulation that preserves the prerogatives of the states."

He added, "I shared with them that PCI recognizes the depth of experience of the states in regulating the industry is not something that we underestimate, and that that experience would not quickly be replicated at the federal level."

Mr. Chamness also said that in his comments he brought up Florida, which has been critical of insurance companies for not lowering homeowners' rates enough to satisfy state officials, including state regulators.

Florida also suspended the ability of Allstate to write new personal lines business until it turned over hundreds of thousands of pages of documents related to its rate structure and signed an affidavit promising to turn over all documents as they are requested in the future.

"I told them Florida insurance regulation has effectively destroyed the private market, and complimented neighboring coastal states for their restraint, which will ultimately give a benefit to consumers in those states by keeping the private market vibrant and healthy."

Mr. Chamness noted "some positive signs" in modernizing state regulation, citing recent rate reform in Kansas. "But states have to do more to commit themselves to change," he said. "We also encouraged the regulators to communicate our concerns to the governors and legislators who ultimately make the decision regarding insurance regulation.

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