The most prominent of these proposals is a "discussion draft" released earlier this year by Reps. Michael Oxley, R-Ohio, and Richard Baker, R-La., chairman of the Financial Services Committee, and its key Capital Markets Subcommittee, respectively, he said.

"This proposal increases the federal role in insurance regulation while overriding many of the most important consumer protections that exist at the state level, such as the regulation of insurance rates," Mr. Hunter testified.

"This would leave millions of consumers vulnerable to price gouging, as well as abusive and discriminatory insurance classification practices," he said. He said such legislation "would also encourage a return to insurance redlining, as deregulation of prices would include the lifting of state controls on territorial line drawing."

States would also be helpless to stop the misuse of risk classification information (for pricing purposes), such as credit scores, territorial data and the details of consumers' prior insurance history," he said.

"The draft bill goes so far as to completely deregulate cartel-like organizations such as the Insurance Services Office and the National Council on Compensation Insurance, while leaving the federal antitrust exemption fully intact," Mr. Hunter said.

Mr. Hunter was a member of the second of two panels that testified on "Insurance Brokerage Practices, Including Potential Conflicts of Interest and the Adequacy of the Current Regulatory Framework" before a subcommittee of the Senate Governmental Affairs. The oversight hearing was convened by the Committee's Subcommittee on Financial Management, the Budget, and International Security.

Other lessons from the probe by New York Attorney General Eliot Spitzer, Mr. Hunter said, are that Congress should:

? Consider a federal minimum standards bill for states to enforce.

? Restore the Federal Trade Commission's authority to protect insurance consumers from fraud

? Repeal the insurance industry's antitrust exemption.

Mr. Hunter also said Congress should require transparency so consumers can compare insurance products.

But, even with good standards, a federal approach is fraught with risk, "given the lack of federal insurance regulatory expertise and the strong possibility that sooner or later any federal regulator would be subject to the same kind of regulatory capture that has occurred at the state level," he said.

"Thus, it is essential that any federal approach mandate strong, well-funded structures to represent the needs of consumers," Mr. Hunter said.