It followed a closed session meeting of the NAIC's capital and surplus working group on Dec. 29, 2008 to discuss a capital and surplus relief proposal advanced by the American Council of Life Insurers, Washington.

The proposal, which was first brought to NAIC leadership in mid-November 2008, has received scathing criticism because of the lack of transparency and lack of information available to regulators and the public concerning the potential impact of accounting and actuarial changes being advocated.

The ACLI said the changes are necessary to bring capital and surplus relief to life insurers. It estimated that implementation of the nine-point proposal could save the industry between $9.6 billion and $16.4 billion.

In the wake of the letter, the NAIC announced during an informational conference call Friday that a public hearing will be held on the issue Jan. 27 in Washington.

The consumers' letter was sent to all of the states represented by members of the NAIC's capital and surplus working group--namely the District of Columbia, Connecticut, Delaware, Maine, Iowa, Kansas, New Hampshire, New Jersey, New York, Virginia, West Virginia and Wisconsin.

Copies also went to state and district representatives for the 12 members.

As of today, replies to the letter have come in from the New Hampshire Attorney General's Office and Maine Insurance Superintendent Mila Kofman, according to the CEJ's Mr. Birnbaum.

Bud Fitch, the New Hampshire deputy, responded that under the state's open meeting law, the N.H. Superior Court has sole jurisdiction to address allegations of violations and pursue remedies. He added that the statute does not assign the AG's office a role in investigating or prosecuting alleged violations. New Hampshire is the home state of Insurance Commissioner Roger Sevigny, the NAIC's new president.

Ms. Kofman, the Maine insurance regulator, wrote that she shared the consumers' "objections to the working group's decision to close this conference call to the public, and I strongly urged the working group to have an open call allowing stakeholders and members of the public to hear concerns raised and learn how each state would vote on the specifics."

"The objections I have raised influenced the decision to hold a public hearing before taking any final action."

Ms. Kofman wrote that while regulators "should avoid regulatory actions that will show our carriers in a less than healthy financial light when in fact they are very healthy companies, and that we should be trying to find a balance and help carriers without hurting consumers, I have emphasized that the challenge is how to strike that balance and make sure we are not hurting consumers."

She added, "Now, more than ever, we need realistic, accurate financial evaluations. We should be extremely skeptical about making any change now that we would not be just as willing to make in better financial times. And we should make sure that the changes benefit policyholders (not Wall Street)."

Ms. Kofman added, "When it comes to solvency, regulators should consider changes if there is solid and convincing evidence to demonstrate that some current accounting conventions and capital requirements are duplicative or treat unrealistic worst-case scenarios as likely. The case has not been made to justify such fundamental changes, affecting a multibillion-dollar industry and millions of consumers."

In an interview Mr. Birnbaum said that "on this particular issue, it is clear that not only was more public vetting needed but also more information needed to be given to members."

"As a general rule, too many things are discussed out of the public view."

Mr. Birnbaum asked whether the NAIC is "going to be a publicly accountable entity and continue as a national regulator of insurance or act as a trade association? If they are going to be a trade association, they will be ceding their national right to regulate to the Feds."

NAIC President Sevigny, Mr. Birnbaum said, has "a real opportunity to change the nature of the way the NAIC operates and to fend off the call for federal regulation."

In response to a request for comment from Commissioner Sevigny, an NAIC spokesperson responding to the issue referred to the NAIC's open meetings policy posted online at http://www.naic.org/documents/meetings_naic_policy_mtg_801.pdf.).

The consumer representatives' complaint is the latest flap to erupt over NAIC meetings. Last year members of the National Conference of Insurance Legislators criticized the NAIC for closing sessions, and two lawmakers said security guards had tried to keep them out of one meeting. NAIC and NCOIL have since come to terms.