WASHINGTON--Congress will likely impose a level federalinsurance regulation soon unless states act promptly to institutemeaningful reform, the head of a property-casualty insurance tradegroup told state regulators at a meeting here yesterday.

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

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

An NAIC official confirmed that the meeting was held butdeclined further comment. Industry officials said the roundtablewas arranged by the NAIC.

Those participating included the heads of PCI, the NationalAssociation of Mutual Insurance Companies, the IndependentInsurance Agents and Brokers of America, and the Council ofInsurance Agents and Brokers.

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

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

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

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

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

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

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

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

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

Charles Chamness, president and CEO of NAMIC, also confirmedthat he appeared at the roundtable and urged the states to adoptthe Illinois model that allows insurers to set rates without priorregulatory approval.

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

But the most pointed comment came from Mr. Sampson, whorepresents a trade group that has historically supported stateregulation. Mr. Sampson said this week that the organizationsupports improvements in regulation no matter where they arelocated.

He said he told those attending the roundtable, "It isincreasingly likely that Congress will intervene in insuranceregulation unless it is persuaded that rapid, visible, meaningfulregulatory modernization at the state level is occurring."

And, Mr. Sampson said, "I also shared with them that it is PCI'sview states are not making sufficient progress to reform thecurrent regulatory system. I indicated that PCI wanted to workclosely with them to help achieve that regulatory reform andmodernization."

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

He added, "I shared with them that PCI recognizes the depth ofexperience of the states in regulating the industry is notsomething that we underestimate, and that that experience would notquickly be replicated at the federal level."

Mr. Chamness also said that in his comments he brought upFlorida, which has been critical of insurance companies for notlowering homeowners' rates enough to satisfy state officials,including state regulators.

Florida also suspended the ability of Allstate to write newpersonal lines business until it turned over hundreds of thousandsof pages of documents related to its rate structure and signed anaffidavit promising to turn over all documents as they arerequested in the future.

"I told them Florida insurance regulation has effectivelydestroyed the private market, and complimented neighboring coastalstates for their restraint, which will ultimately give a benefit toconsumers in those states by keeping the private market vibrant andhealthy."

Mr. Chamness noted "some positive signs" in modernizing stateregulation, citing recent rate reform in Kansas. "But states haveto do more to commit themselves to change," he said. "We alsoencouraged the regulators to communicate our concerns to thegovernors and legislators who ultimately make the decisionregarding insurance regulation.