Some domestic industry representatives voiced worries that the balance has already been tilted in favor of some sort of change with consideration of whether any such change is wise.

David Snyder, assistant general counsel for the American Insurance Association, raised concerns that the burden of proof has shifted to the domestic industry as to why the status quo should remain in place.

Mr. Snyder said the charge belied the spirit of the white paper approved last December spelling out the issues that he termed a “balanced description of the positives and negatives of making any change to the collateral reinsurance requirements.”

“Unfortunately, the [executive committee] charge was not to consider the validity of making a change, but rather to direct the task force to come up with changes,” he said. “We view that as fundamentally contradictory to the white paper and contradictory to statements made by leadership that it was not assuming that any changes would be made.”

Mr. Snyder said the charge developed “behind closed doors will ultimately take the NAIC in a particular direction we believe will ultimately harm insurance consumers and insurance companies in this country.”

For the past several years, domestic primary and secondary insurers have succeeded in keeping collateral rules in place despite arguments by the non-U.S.-domiciled reinsurers that current 100 percent collateral requirements for liabilities represent an unfair competitive advantage and a violation of the spirit of free trade.

Domestic carriers argue such requirements are needed to help ensure payments will be made by companies that operate under differing accounting and regulatory regimens from the U.S.

The issue has reemerged after lying dormant for three years while efforts were made by the two groups to find some sort of common ground for a solution.

A number of approaches such as pooling and reliance on rating agencies have sprung up in the past couple of years to offer regulators an alternative to the original NAIC-administered “white list” of alien reinsurers approved to operate under reduced collateral requirements.

Those alternatives are among the possibilities that could be weighed by the Task Force.

NAIC President and Maine Commissioner Al Iuppa has called 2006 the “year of decision” and hinted that his position was evolving from his previous opposition to any change in the status quo to a more open-minded approach.

Among the factors favoring change, he said, were extended discussion the commissioners have had recently with their counterparts from the United Kingdom, Germany and Switzerland as well as a recent European Union directive providing for more standardized reinsurance regulation.

North Dakota Commissioner Jim Poolman, a member of the Ad Hoc group that developed alternatives to the collateral system, said there will not be any change unless one can be provided that will offer the same amount of solvency and consumer protection that the current system does.

“Some commissioners are sympathetic to the idea of 'why are we treating them differently,' but most have not really focused on the issue,” he said. “So as always, the devil will be in the details.”

Bill Marcoux, London-based attorney who represents the International Underwriters Association, agreed that the “yeast is rising,” and said the charge to the Task Force indicated a tilt in favor of change.

“What has changed is that there is more of an agreement that the time is right for this to happen,” he said. “People have had a chance to study the issue and have seen that the show-stopping issues are probably not all that show-stopping. And I think it is an evolution of the relationship of the U.S. regulators and the European regulators, and that is a function of time.”

As for any ultimate solution, “everything seems too wide open as to what it may be.”

Past domestic concerns have centered on enforceability of U.S. judgments in foreign courts and differing accounting standards that would make regulatory oversight challenging for U.S. regulators.

Last week a study by the Insurance Legislators Foundation, which examined the enforceability of U.S. judgments and arbitration awards against unauthorized, non-U.S. domiciled reinsurers found that, as a general rule, U.S. judgments and awards are enforced overseas.