In a fight to remain relevant, state insurance commissioners are reaching out to federal banking and securities regulators, trying to forge deals on divvying up the work should a financial conglomerate run into trouble.

“We need to be able to provide a coherent, cohesive response … to any financial services industry problems that crop up and involve insurance,” said George Nichols 3d, president of the National Association of Insurance Commissioners and commissioner for Kentucky.

“We need to be clear where all the channels’ regulatory authorities start and stop,” he said. “Our goal is to create the rules before there are problems with hybrid products or activities.”

State commissioners are concerned that Congress’ next step in modernizing the laws governing financial services will be a federal insurance charter. They are trying to use this opportunity to adopt common standards so that insurance supervision from state to state would be more uniform.

But beyond insurance regulation, Mr. Nichols said, his group is also talking to the Federal Deposit Insurance Corp. and the Securities and Exchange Commission. His association already has formal information-sharing relationships with the Office of Thrift Supervision and the Office of the Comptroller of the Currency.

With the FDIC, the insurance commissioners are discussing how to divide responsibility should a thrift owned by an insurance company get in trouble. “We need to understand what they do,” he said. “For example, if an insurance company has a thrift charter and the thrift goes bankrupt, formal agreements need to be there to determine who handles what.”

Reaching out to the Securities and Exchange Commission, however, has been more difficult.

“We’ve gotten a cool reception from them — I don’t understand it,” Mr. Nichols said. “Things like the Martin Frankel matter affect both our industries, and we should be working more closely together.”

The NAIC currently works mostly with the North American Securities Administrators Association, the organization of state securities commissioners, to coordinate regulation of securities activities. But with the continuing trend toward institutions that offer banking, brokerage, and insurance under one roof, Mr. Nichols said the SEC should pay more attention to insurance issues. “Maybe they feel there’s no burning issue. I disagree,” he said. “We’ve got Citigroup here in Kentucky, and they have banking, securities, and insurance. All the more reason we should all be involved.”

Though he is convinced the states can standardize their oversight, Mr. Nichols said a federal insurance supervisor is inevitable. “I believe there will eventually be one,” he said.

But the questions are when and how.

If Congress creates a federal agency to supervise insurance, it should be independent, outside the Treasury Department, much as the SEC operates, Mr. Nichols said. “There’s no reason we shouldn’t have our own structure, much like the banking and securities industries do,” he said.

Mr. Nichols also endorsed an idea that has been adopted abroad: the setting up of a financial services authority that puts banking, insurance, and securities regulation under one umbrella. Japan, Canada, the United Kingdom, and Australia have created such agencies, and South Africa is looking into it. “It creates a formal, coordinated approach,” he said.

Mr. Nichols, as chairman of the NAIC’s international committee, is also playing a key role in global trade talks aimed at liberalizing and harmonizing the worldwide regulatory structure for several industries, including financial services. The association’s international committee is also giving technical assistance to help China and Egypt establish regulatory frameworks — much as it did in Eastern Europe in the early 1990s.

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