To the Editor:

The American Council of Life Insurance would like to clarify its position on its review of life insurance regulation referred to in your Dec. 18 story "Study: Federal Regulator for Insurance to Cut Cost."

The information developed by the ACLI on the cost of insurance regulation was used in connection with a discussion of regulation by our board of directors in September. The information was not intended to lead to any specific conclusions, particularly since it made no attempt to quantify how much life insurers spend on regulatory compliance.

Subsequently, the ACLI board initiated a broad review of the current regulatory system governing the life insurance business. This review, which is now under way, is intended to identify shortcomings in the present system and consider options for improving it. The overall goal of this effort is to assure that life insurance regulation is as effective and efficient as possible and will meet the needs of companies and their customers in the years ahead. The ACLI board has no set timetable for completion of this review and no predetermined agenda for change.

Importantly, this review encompasses both state and federal aspects of insurance regulation. Contrary to your report, it is not an analysis of state versus federal regulation of our business, nor can it be accurately characterized as a step toward federal regulation.

This is not a unique exercise for the ACLI or, as your article describes, "a new front" in the debate over financial services restructuring. Over the years we have conducted similar reviews, and there will undoubtedly be others in the future. Given the rapidly changing environment in which life insurers compete, the current study is particularly timely.

The ACLI's present policy position is fully in support of state regulation. That will remain our position unless a change is made by our board of directors.

Gary E. Hughes

Vice president and chief counselAmerican Council of Life InsuranceWashington

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