State regulators have also moved to prevent a repeat of the activities of AIG Financial Products, which put $2.77 trillion of credit default swaps on AIG's books by 2008 and forced federal regulators to loan AIG $85 billion, plus loan guarantees, as this portfolio was wound down.

She says state regulators have expanded the disclosure requirements of any entity within the insurance holding-company system that could pose reputational or financial risk to the insurer and clarified that the insurance regulator has the right to access information of any entity of a holding company system when desired.

Voss says, "We have made a number of enhancements in corporate governance, including introducing high-level responsibilities of the board and senior management."

In her testimony, Voss also launches a pre-emptive strike against a mandatory Federal Insurance Office study on insurance regulation that will look at the potential for federal regulation of insurance by early next year.

"We continue to believe there is an inherent conflict in an office of the Treasury Department studying ways to further empower itself," Voss says.

"While the national state-based system of insurance regulation has successfully protected the interest of consumers for decades, state regulators recognize that, like any regulatory system, it is not perfect and we are open to hearing any suggestions FIO may have for improvements," she adds.

She notes, "To date, the NAIC has had a good relationship with FIO, and we look forward to continuing that relationship going forward and working with our friend and former colleague, Mike McRaith," currently director of the FIO.

In his testimony, John Huff—Missouri director of the Department of Insurance, Financial Institutions and Professional Registration, and insurance member of the Financial Stability Oversight Council (FSOC)—reiterates his concerns that the FSOC does not allow him to discuss some issues with other state insurance regulators.

But, in his testimony, Huff also proposes a compromise aimed at resolving the issue. He says potential collaboration between the FSOC and state regulators could take place through a smaller group of designated regulators who would represent the needs of different regions and markets in the country.

"I firmly believe that such consultation will be vitally important in the coming months as FSOC determines the criteria to be used to identify systemically important non-bank firms and evaluates firms for such designations."