But, even as he voiced opposition, Mr. Eiland questioned the bill's chances for success. He said he doubted that in an election year Congress would want to go home to their constituents and say they are “supporting federal intrusion on states' rights.”

Alessandro Iuppa, NAIC president and Maine insurance superintendent, said many insurance products are state specific and a lot of state law would have to be preempted in order to attempt to create a system that would be analogous to the banking system.

Mr. Iuppa noted that the creation of such a system is “hypothetical,” but said that if such a system were to be developed, it would pose questions as to how families would be covered by insurance where one spouse is covered by a federally-chartered insurer and the other by a state-chartered insurer.

He said the bill also leaves open the issue of how well consumer questions and complaints would be handled, which he said the states do a better job with.

Susan Nolan, NCOIL executive director, asked, “How is the bill helping consumers?” She said the bill “isolates state legislators and commissioners from their constituencies.”

Ms. Nolan questioned whether there has been any cost analysis on the issue of federal chartering. “I understand a lot of business has an interest in this, but asked what it is all about–streamlining business or taking care of the consumer?”

According to Ms. Nolan, if state premium taxes are lost, it could have a huge impact: $13 billion in premium taxes were collected in 2003, she said, citing NAIC statistics.

Mr. Iuppa questioned whether companies in a federal system would still be eligible for credit for contributing to state guaranty funds as is currently the case under the state system. Would states have any input on solvency? he asked.

Mr. Eiland, on the question of premium tax revenue, noted states that “already have significant budget problems will have those problems exacerbated with the loss of premium taxes.”