Mr. Birnbaum suggested regulators retain an independent consultant to examine why regulators are the last to come to grips with market problems, and revision of rate and form model laws "to reflect evidence that market forces alone fail to discover important market problems."

As founder of the CEJ and an NAIC-funded consumer advocate, Mr. Birnbaum has been active in the debate over market conduct reforms and has long contended the current system has failed to uncover the major scandals of the past two decades.

And, in Mr. Birnbaum's view, N.Y. Attorney General Eliot Spitzer's broker lawsuit and investigation into insurance brokerage bid-rigging fits right into that mold.

"We noted that Mr. Spitzer thanked [New York Insurance Superintendent Greg] Serio for his assistance, but who is the insurance regulator here?" Mr. Birnbaum wrote.

Ms. Koken, who is Pennsylvania insurance commissioner, said she had not yet received the letter and would have no time to comment on it today.

Earlier this week, Ms. Koken told National Underwriter that the NAIC has appointed 13 commissioners to investigate the issue and will be developing a model regulation for broker disclosure. She added that state regulators had been investigating brokers before Mr. Spitzer acted and that federal regulation would not have acted any faster.

Mr. Birnbaum said the bid-rigging broker fee scandal "should also be a wake-up call to regulators and legislators about the myth of competition in insurance markets."