Most of the FCRF expense will be limited to a small group of 32 companies with dollar costs likely to be less than $1 billion annually, according to the firm's analysis.

The FCRF would apply to the U.S. insurance industry as part of an effort to reimburse the U.S. Treasury for the cost of the Troubled Asset Relief Program.

To date, Moody's noted, only a very limited amount of information has been made available about the fee and its implementation, "so it is challenging to determine its impact on the insurance industry and specific companies."

The proposed fee, according to Moody's report, appears limited to the relatively small number of insurers with $50 billion or more in consolidated assets that own insured depository institutions or securities broker-dealers.

Moody's said the approximately 15-basis-point proposed fee would apply to an insurer's total consolidated assets less a deduction that includes insurance policy reserves plus some component of capital.

According to the rating firm's analysis written by Arthur Fliegelman, vice president-senior credit officer, insurance companies' typical deduction would be equal to 90 percent or more of the potential tax base.

Once the 15-basis-point fee is applied to the remaining taxable base, Moody's expects that the total fees generated from the insurance industry will be quite modest for the U.S. Treasury, he wrote.

The report added that given the very preliminary nature of the proposal, "refinements and changes in the application of this fee are almost certain before it would be adopted. In addition, insurers could modify their business practices in a variety of ways to minimize or offset this fee and the impact on their ongoing business."

Insurers, it was noted, could substitute various forms of insurance products/liabilities that would not be subject to the fee for certain liabilities that are subject to the fee.

As an example, Moody's said a spread lending program that currently operated using holding company debt subject to the fee could be replaced with funding-agreement-based liabilities that would not be subject to the fee since these liabilities are considered insurance liabilities.

In addition, the firm said it would expect that insurers would modify their pricing to account for this fee in entering into new transactions or issuing new liabilities, further minimizing its impact.

In drawing up its list of U.S. insurance groups with total assets in the range of $50 billion or higher as of Dec. 31, 2008, Moody's noted that companies are potentially subject to the fee, provided they also own an insured depository institution or securities broker-dealer, which Moody's had not confirmed.

The firm also said it was important that the percent of assets represented by items that are subject to the tax could vary substantially by company, with a few companies having significant non-insurance operations.

Impact on insurers in the U.K. from the Jan. 14 civil litigation report by Lord Justice Rupert Matthew Jackson has potentially far-reaching implications for England and Wales if it were adopted, according to Moody's analysis.

While it would not prompt upgrades, adoption would have a net positive credit implication, Moody's said.

One positive recommendation–a claimant's fees and after-the-event insurance premiums would no longer be recoverable from the defendant, even if the claim were successful, wrote Scott Robinson, Moody's senior vice president. Also, fixed costs would be established for certain types of cases.

A negative for insurers, he found, is a suggestion that general damages awards for personal injuries should increase by 10 percent. He said this would offset the fact that some additional costs would be borne by the claimant.

Recommendations in the report could reduce claims frequency and average costs in personal injury cases and spur top-line insurer growth from increased sales of legal expenses insurance, Moody's found.