Property-casualty industry comments in reaction to Ms. Bair's comments were along the lines of either support for federal regulation or voicing satisfaction with the current system of state regulation.

The American Council of Life Insurers (ACLI) would only say “it is studying” Ms. Bair's remarks.

Ms. Bair declined further comment, as did the Treasury Department, which in early April proposed a new system of insurance regulation. This would be based on the principles included in legislation creating an optional federal charter, introduced in both Houses of Congress.

The Treasury blueprint for modernization of financial regulation proposed creation of an Office of Insurance Information–with Treasury as an interim step–that would provide Congress and the executive branch with information needed to fashion policy and regulation for the currently totally state-regulated insurance sector. This would allow time and provide the expertise needed to shape a permanent optional federal charter.

It is also important, Treasury said at the time, that the federal government have authority to negotiate with foreign governments on insurance trade issues.

Such legislation made it to the House floor the last week in September, but was shelved after complaints from California interests, including new Rep. Jackie Speier, D-Calif., that it would possibly pre-empt Proposition 103, which tightly regulates personal lines in that state.

The so-called “optional federal charter” would give insurers a choice between a national or state overseer to monitor their ability to pay claims.

Reacting to the comments by Ms. Bair, Blain Rethmeier, a spokesman for the American Insurance Association, said, “As longtime supporters of an Optional Federal Charter, Americans deserve a financial regulatory structure that protects consumers and provides banks, insurance companies, and other financial institutions with a high degree of confidence in their business transactions.”

But in a statement, Cliston Brown, an official with the Property Casualty Insurers Association of America said, “Our reaction is that the insurance industry is strong, and we support reforming the state-based insurance regulatory system based on sound principles of good regulation and preserving the prerogatives of the states.

Nancy Grover, a spokesman for the National Association of Mutual Insurance Companies, said “NAMIC does not think shifting the regulation of insurance from the states to the federal government is either needed or warranted.”

She added that, “The system of state based guaranty funds is strong and well placed to deal with insurer insolvency.”

Ms. Grover noted that, “Unlike the significantly federally regulated banking industry which has suffered many failures, the property/casualty insurance sector remains solvent and resilient even in these difficult economic conditions.”