Insurance commissioners oppose US federal regulation

By Jui Chakravorty Das

NEW YORK, March 30 (Reuters) - As U.S. Treasury Secretary Henry Paulson gets ready to unveil plans on overhauling the regulation of markets on Monday, one group is already lining up in the opposition camp: state insurance commissioners.

One of the items on the treasury department's blueprint for a massive shake-up of U.S. financial market regulations calls for the creation of a federal insurance regulator.

States currently have the authority to oversee insurers, and although efforts have been made to standardise forms and other requirements, many differences persist between states.

"I think we've demonstrated over the years that state-based regulation is the most effective way to protect our consumers," Sandy Praeger, president of the National Association of Insurance Commissioners, said in a telephone interview.

"Efficiency at the cost of consumer protection is I don't think where we want to go."

Praeger, who said she was speaking on behalf of all state insurance commissioners, said it was important to have people at the state level who could ensure that products were appropriate and could explain them to customers.

"You want consumers to understand what they are buying ... You want someone to make sure the rules are easy to understand and appropriately represent the product being sold," she said.

Under the treasury department's proposal, a new federal insurance regulator would have oversight of insurance firms that chose an "optional federal charter".