Appearing before a commissioners' roundtable session, Sen.Nelson warned state regulators about a potential federal oversight that is being lobbied by various industry groups.

If regulators don't engage in a "more urgent, energetic plan for modernization and reform," they will end up playing catch-up with those lobbying for federal oversight, he said.

Mr. Nelson is familiar with the procedural details of state insurance regulations and the NAIC, having served as Nebraska insurance director as well as chief of staff and executive vice president of the NAIC prior to serving as his state's governor and being elected a senator in 2000.

"You know the shortcomings of the current regulatory system and what it would take to fix them. I'd suggest that you draft your own set of standards and set a timetable for true implementation. Otherwise, you will be faced with reacting to the Congressional process," Sen. Nelson warned.

He added, however, that "most members of Congress" may not see the need to undertake this debate if state regulators become more forceful advocates for reform.

"How you proceed in your individual states will help dictate how we in Congress move forward. I'd suggest you try to engage some of your governors in this debate and others in Congress who come from a true states-rights perspective," Sen. Nelson advised.

Speaking separately at a commissioners' discussion, Rep. Michael Oxley, R-Ohio, chairman of the House Committee on Financial Services, also offered his perspective on this debate to the NAIC members.

Like Sen. Nelson, Rep. Oxley emphasized the need for reform efforts toward uniformity in the regulatory environment. But at the same time, he said he would rather work within the existing state regulatory system for achieving improvements.

"We hope that, in working with all the interested parties, we will have the opportunity to enact meaningful short-term changes that will benefit consumers across the country," Rep. Oxley told state regulators.

"In the meantime, we will continue to explore other avenues for reform while working with the states to improve the system from within," he said.

Both Sen. Nelson and Rep. Oxley participated in the NAIC summer meeting after accepting an invitation from NAIC officers.

Commenting on legislators' messages to the NAIC members, Mike Pickens, Arkansas insurance commissioner and president of the NAIC, said, "We all agree that regulations can become more efficient, more effective and thus more beneficial to consumers."

Commissioner Pickens also said it was good to hear Rep. Oxley choose states as the "preferable agents for change" over "an undefined and untested federal mechanism."