''Congress should consider the creation of a federal insurance charter and a federal insurance regulator,'' said T. Timothy Ryan Jr., CEO of the Securities Industry and Financial Markets Association, according to Financial Week.

Also kicking around was the latest insult to the state-based system -- ''the last vestige of the 19th century.'' That phrase has popped up in a few places not just in the hearing.

And in the spirit of the election season, the pro-fed people have the momentum – the public wants something done. Carriers and their trade groups are slugging hard for a national system and it is difficult to argue against it. Some insurance agent associations and, of course, the state regulators are swinging back but they are getting less connection on those punches. Right here on our site, you'll find the latest ACLI call for a federal system.


It is a member-only story, so I'll relay part of the story here: ''As the federal government, the Treasury Department, Congress and others wrestle with reforming the regulatory system, 'where is the $5 trillion dollar life insurance industry? We are not at that table permanently,' (ACLI CEO Frank) Keating said. 'The optional federal charter, the Office of Insurance Information, would seek to put us at that table permanently, on an optional basis.'

And that makes sense, but the part of all this that is disconcerting is unveiled in the story's next sentence: ''Most life insurers would remain state-regulated, he (Keating) said.'' This is what concerns many in the service end of the industry.

Producers would be left with two systems of regulation – federal and state -- that may or may not work well together. Producers would also likely have fewer carrier choices because smaller, regional companies would be at a disadvantage once large carriers were freer to move into their state.

Many legislators and pundits look at AIG as evidence of the need for tighter insurance regulation. The Treasury Department is one of the biggest proponents of federal regulation, making it one of the key parts of reform that Chairman Henry Paulson proposed earlier this year.

But the parts of AIG that got in trouble were not the well-respected insurance entities but the financial services entities. The states say they did their jobs with the insurance subsidiaries, but the federal regulators and ratings agencies did not do theirs with the investing entities.

So, will all this mean regulatory changes for insurance? Maybe, but not right now. Keep in mind that even though these hearings are going on, Congress is not likely to do anything before the election, after which the urgency would dial down. And if anything did happen it would probably focus on banking and securities. But you never know, someone could throw the Insurance Information Act or even the Optional Federal Charter into the sausage as it's made.