He also said that moves are being contemplated to win more investigatory power and other authority for insurance regulators.

State insurance regulators, he said, have actively worked on the matter of broker compensation since November 2002, when 13 New York departmental requests for information were sent out. A second round of more than 100 requests followed.

The New York department had been working with the New York Attorney General's office during that time, he said. However, action by the department was deferred because of a "pecking order" of criminal, civil and then regulatory action.

Regulatory action cannot interfere with any investigation that may lead to the filing of criminal indictments, he explained.

Once a civil suit was filed, regulatory action could be taken and is being taken, as evidenced by an upcoming Nov. 23 department hearing, when Marsh is due to answer allegations made in the Spitzer suit, he said.

When asked if market conduct examinations will be conducted, Mr. Serio said the department is "leaving all regulatory options open."

Mr. Serio noted he has not yet spoken to representatives of Congress on the broker issue, but is "clearly mindful" that it will impact the State Modernization and Regulatory Transparency Act, the congressional proposal for a reform of the insurance industry's regulation.

When asked how he would respond to a Congressman who posed the question of whether the investigation into broker fees' was an argument for federal regulation, Mr. Serio replied that state regulators and the Attorney General's Office "were the ones who rooted this out. This whole thing is not a referendum on the effectiveness of state regulation. Federal regulation will not solve the problem."

What is needed, Mr. Serio said, is a better corporate governance structure and greater power for state insurance regulators so that they can examine interplay between intercorporate operations without being limited to looking only at licensed insurance entities.

New York will seek an expansion of authority and "the NAIC has started a package" to look at this option, he added. This added authority would "update" the insurance law to reflect the current market, Mr. Serio said.

He noted that better corporate governance, particularly in the property-casualty industry, is needed. In the life industry, Mr. Serio said the Insurance Marketplace Standards Association, Washington, has made strides in the last several years but that to be truly effective it would need 100 percent participation among life insurers.

Asked how the industry could be left to police itself, Mr. Serio said that self-policing would not be a substitute for regulatory oversight but, rather a first step. It would be similar to the way that the National Association of Securities Dealers and the Securities and Exchange Commission works, he explained.

Mr. Serio wondered where the brokers, carriers and consumers were six months ago "when we first started to ask if there was a problem." He asked why these people did not voluntarily come forward if they were aware of a problem.