It adds, “Outside the area of financial regulation, the states have shown little ability to make comprehensive changes to improve the process, and the changes that have been made are largely due to federal pressure.”

The letter was signed by Ken Crerar, president of the Council.

Two areas that need urgent change, according to the letter, are implementation of the new law modernizing and reforming regulation of the surplus-lines industry, and international-regulatory issues.

Regarding implementation of the Nonadmitted and Reinsurance Reform Act, Crerar says that “the implementation of the NRRA by the states has lacked the coordination and uniformity that Congress intended, resulting in confusion and costly compliance burdens rather than the simple process NRRA contemplated.”

For example, the letter says, “A majority of states have not joined any multi-state agreement or compact, and are pursuing their own taxation policies.”

“As disappointing as it is that the states missed this opportunity, we remain hopeful that through the efforts of FIO and others, pressure can be brought to bear on the states and the goals of Congress can be realized,” the letter says.

The letter also discusses recent increased regulatory scrutiny in a number of jurisdictions and the lack of international coordination of insurance regulation, which, the Council says, have made it increasingly difficult for insurers and brokers to offer and place master multinational policies.

The letter concludes that it “will take leadership from the federal government to hold the states' feet to the fire—pressuring them to make the needed changes to modernize and improve the current system.

“And it may take more than pressure—there may be an ongoing role for the federal government in the form of comprehensive insurance regulation, state mandates, or standard setting.”

The letter says the FIO's role as the insurance-regulatory expert in the federal government “and your obligation to monitor the industry and its regulation put FIO in a perfect position to work for improvements to the system.”