WASHINGTON - California and New York regulators had evidence for years that Executive Life Insurance Co. was insolvent, but failed to respond to the danger signals, a General Accounting Office official told House investigators yesterday.

Richard Fogel, assistant comptroller general at the GAO, said legislation is needed to "compel" regulators to intervene when they see hazardous conditions and to take steps to bolster the solvency of troubled firms. Mr. Fogel spoke at a hearing conducted by the House Energy and Commerce Committee's subcommittee on oversight and investigations.

States have historically handled regulation of insurance firms. Only broad federal laws such as those forbidding mail and wire fraud apply.

But recent failures of several major insurers - including Executive Life, which wrote guaranteed investment contracts for more than $1 billion of municipal securities - have triggered bills that would give federal regulators new leverage.

The panel's chairman, Rep. John Dingell, D-Mich., introduced a bill on Aug. 1, 199 1, that would make it a federal crime for insurance officials to mismanage funds. The bill was added to omnibus crime legislation that has been bottled up in Congress.

He also introduced broad legislation April that would establish federal standards to guard the solvency of insurance companies, including tightening disclosure standards for firms. Under the bill, insurance companies could stick with state requirements or choose to meet federal standards, which might be simpler than trying to comply with 50 different state laws. No action has been taken on the bill.

"We have all found quite clearly that the present system contains too many loopholes, and that an effective national system is needed," Rep. Dingell said yesterday.

John Garamendi, California's insurance commissioner, commended Rep. Dingell for introducing his comprehensive bill on insurance solvencies and said his office is currently reviewing the proposal. But he added that California's regulatory mechanism is sound.

"All of the systems were working," he said. "What was missing was the will to enforce the regulations."

Salvatore Curiale, superintendent of insurance in New York, said he supports some "modest" action by Congress, including enactment of the insurance fraud legislation proposed by Rep. Dingell.

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