While there was some movement following the flurry of activity in the aftermath of the passage of the federal Gramm-Leach-Bliley financial disclosure act in 2000, the issue went on the back burner after the 9/11 terrorist attacks that roiled the marketplace.

Mr. Parsons told National Underwriter after the session that the issue arose almost by chance as some regulators agreed that with the life sector side of rate and form regulation coming to fruition with the progress of an interstate compact, the time was ripe to address the property-casualty aspect.

But if industry representatives have their way, the regulators will take more time and abandon the current draft model to consider one that embraces free market principles more forcefully.

The 2000 model uses what is called a “file and use” system that in the spectrum of rate regulation regimens ranks just after the two most government-centered approaches of prior approval or the “fix and establish” method now set in Massachusetts.

Neil Alldredge, senior state advocacy director of the National Association of Mutual Insurance Companies, said the “file and use” approach would not represent much of an improvement over the current system.

“This bears out in those states that have 'file and use' but in reality it becomes almost prior approval since carriers would be reluctant to use the rates before the regulators approved them for fear of having to go back,” he said.

Mr. Alldredge said those states that have adopted rate regulation reform in the past few years have not looked to the NAIC for guidance, but rather the National Conference of Insurance Legislators, who have adopted a model law that calls for free market setting of personal lines rates.

“I think you are better off not doing anything than adopting something akin to what is on the table today,” Mr. Alldredge said.

He also noted that uniformity is not that much of an issue for personal lines insurers compared to the life insurance sector as rate freedom.

NCOIL has adopted what is called “flex rating” for those states not willing to embrace a total market approach that allows carriers a certain percentage of leeway to raise or lower rates without prior approval.

Like most regulation reform debate these days, the specter of federal regulation loomed large in yesterday's discussions.

The proposal currently being eyed in the U.S. House of Representatives, known as the State Modernization and Regulatory Transparency [SMART] Act, would impose federal standards on state regulation, and when it comes to personal lines deregulation would require a virtually free market regimen after a transition period of flex rating.

Wes Bissett, senior vice president of the Independent Insurance Agents and Brokers of America, said that whatever pressure there is in Congress to take over insurance regulation comes from industry complaints that the current rate regulation system stifles competition too much. “What Congress has heard are that the laws are too antiquated,” he said.

He also said insurance regulation reform is among the top of priorities of the House Financial Services Committee this year.

Mr. Parsons said he was not all that impressed by the federal takeover threat argument. “If Congress wants to regulate insurance they are going to do it, regardless of what we do,” he said.

The deputy commissioner said the NAIC sentiment remained for keeping some sort of regulatory lid on rates, which was not evident in the largely pro-industry contingent at the session yesterday.

Birny Birnbaum, of the Austin, Texas-based Center for Economic Justice, represented the only nonindustry voice at the session. He urged panelists to put their focus beyond mere rate-setting to also include risk classification and other underwriting criteria. “In this day and age that is where the action is,” he said.

John Pedrick, Ohio insurance department regulator and working group member, was not quite so willing to dismiss the federal threat as his Alabama colleague.

“What we have to do is try and figure out the least amount of regulation we can put in this bill and still accomplish what we mean to accomplish,” he said.

Mr. Parsons said a conference call would be set for sometime in the next month that would help measure the regulator sentiment for the degree of rate regulation that should remain in any NAIC model.