"This is something that has concerned me for quite a while and recently the chairman agreed we should hold hearings next year," she said, referring to Rep. Mike Oxley, R.-Ohio, who chairs the parent House Financial Services Committee.

At a separate hearing, Michigan State Rep. Joe Hune, R-Hamburg Township, raised the possibility of developing an NCOIL alternative to the National Association of Insurance Commissioners effort to impose Sarbanes-Oxley reporting requirements on mutual insurance companies.

Virginia Deputy Insurance Commissioner Doug Stolte, the main force behind the NAIC effort to add the reporting requirements, told the meeting he would be amenable to alternatives. But National Association of Mutual Insurance Companies official Neil Alldredge said any alternative should focus on solvency reforms rather than rules based on shareholder protection.

Ms. Kelly had more than Sarbanes-Oxley issues on her mind.

As vice chairman of the House Financial Services Committee, the Westchester lawmaker will play a key role in developing insurance legislation that could end up imposing national regulatory standards on the states through the State Modernization and Regulatory Transparency act.

NCOIL has taken a firm stand against SMART legislation. But Ms. Kelly tried to sidestep the issue by noting no final bill has been introduced in the House so it would be premature to comment.

"One thing that consumers do not benefit from is a patchwork regulatory system across the country that merely increases the cost of insurance," she said.

She also criticized the recent report from the Treasury Dept. that essentially stated the private market could handle the need for terror risk coverage in the coming years. "That is just not matched by the marketplace today," she said.

While asserting the need for a permanent solution, Ms. Kelly said that every effort should be made to assure terror risk insurance will be available next year after the initial Terrorism Risk Insurance Act expires.