While other panelists, including Michael McGraith, director of the Illinois department of insurance, agreed with Mr. Dodell's assessment that state regulation of commercial lines needs improvement, Mr. McGraith repeatedly took issue with the idea of federal regulation portions of the insurance process.

Television Journalist Forrest Sawyer kicked off the debate asking, "Why not just keep the state system, reform it and drive on?"

"I don't think the issue is so much who is doing the regulation, but how it's being done," said Mr. Dodell. He noted that the professional liability lines environment that PLUS members participate in requires them "to move fast to protect [their] capital and also to get products to our customers."

He added that an efficient system is needed but the current structure makes it "very difficult for us to get products out to the marketplace quickly on an admitted platform."

In some lines, state regulation "makes perfect sense because states have an obvious interest" in protecting consumers and "decades, if not more" experience, he said, referring to personal lines. In others, however, it doesn't.

"Does Idaho have a position on cyber-liability form and rate filings?" Mr. Dodell asked, noting that it's hard to understand why regulatory hurdles to this and other errors and omissions products exist.

Mr. McGraith countered that insurance is unique from the securities and banking industries where dual regulation exists.

In securities, for example, "the consumer assumes the risk," knowing it can go up or down. By contrast, "in insurance, you're transferring the risk," he said.

"For the most important parts of your life, you're seeking protection--your health, your life, your family, your home, your cars," Mr. McGraith continued. "That uniqueness needs to be recognized." He added that there are local differences that need to be appreciated.

He conceded that there are some things that state regulators could do better.

"Some forms take too long for certain states to approve. We agree with that," he said, adding that work is being done in the areas of speed-to-market and producer licensing.

Still, he said, Illinois gets 15,000 inquiries from consumers each year related to auto accident issues. "If we involve the federal government in insurance regulation, where do these people go?"

"When we get into car accidents, do we want to have to deal with a federal agency run by another Arabian trainer?" he asked, referring to Michael Brown, the former head of the Federal Emergency Management Administration and his handling of Katrina. "We want someone we can call immediately to get some response. That's what state regulation is for," he asserted. It's not just about assuring financial solvency, but is "direct interaction with insurance companies for the benefit of consumers."

While Mr. Dodell referred to some elements of state rate and form regulation as cumbersome, Johnny Rowell, head of specialty lines with Beazley Group in London, characterized the process of starting up an admitted commercial lines insurer in the United States as "torturous."

He explained that in the United Kingdom regulatory environment, a company can be set up in about 60 days, compared to the two-year process he experienced here when the London-based firm purchased a U.S. platform to better access small and mid-sized business.

"We spent two years trying to find a clean shell [and] it cost $10 million," he said, adding that his lawyers advised him that changing the name of the purchased company would cost another million.

"Now, nearly 18 months later, unfortunately in some states, our policies are still being issued under the name Mutual of Omaha," the company's old name.

Mr. Rowell also noted that it took five times the number of people to operate in the in the professional lines admitted market in the United States compared to writing the same business out of London.

"You correctly address the issues of auto and homeowners, but most of us here are involved with commercial customers," said Gerald Sullivan, president of the Sullivan Group, and a surplus lines producer in Los Angeles, another panelist, addressing the Illinois regulator about the difficulties involved in placing a multi-state risk as a surplus lines producer.

"The way things are at the moment--the laws are so contrary that I have to break some" in placing every multi-state risk, he said. "That would suggest that on the commercial side of things there are problems in adapting, changing, moving" as required to keep up with the changing economics of customers' businesses.

"There's no question that commercial risk should be dealt with differently than personal lines," Mr. McGraith said.

Asked by Mr. Sawyer if the idea of having "federalism" confined to certain areas of the business might have some appeal, Mr. McGraith said, "Not at all. As an American citizen I am offended by the idea that we need to create another massive federal bureaucracy to essentially deregulate an industry that affects every single person's life in one way or another."