A Bermuda insurance market leader has welcomed efforts to create a US federal insurance regulator — a step toward updating the current system whereby each state has its own rules for the industry.

Bradley Kading, president of the Association of Bermuda Insurers and Reinsurers (ABIR), which represents more than 20 of the Island's major companies, said legislation that would eliminate restrictions on market access would benefit consumers, as well as insurers.

Last week Representative Paul Kanjorski, chairman of the US Congress Subcommittee on Capital Markets and Insurance, said he would introduce legislation to create a federal insurance regulator for the first time in 135 years.

His plan is along similar lines to part of US Treasury Secretary Henry Paulson's plan to create a federal office to oversee international issues and advise the Treasury Department on insurance issues.

Any move toward federal regulation would be popular with Bermuda insurers who have to contend with the labour-intensive and time-consuming process of gaining approval from 50 different states, all of which have different rules.

Ace Ltd. chief executive officer Evan Greenberg expressed the views of many in the industry during a CEO panel at the Risk and Insurance Management Society's CEO panel a year ago when he described the state-by-state regulation system as "nuts" and added that there should be one set of rules for the whole country.

Mr. Kading welcomed Rep. Kanjorski's proposal for federal oversight of the industry.

"Bermuda's reinsurers would benefit from mutual recognition agreements with governments in Europe and the US," Mr. Kading said. "The Kanjorski bill may be a vehicle to help speed the way to reaching that goal.

"Bermuda reinsurers provide about 25 percent of the US' reinsurance capacity. Legislation that would streamline regulation would ultimately benefit consumers by eliminating restrictions on market access, eliminating contradictory and overlapping regulation and ultimately creating some efficiency that reduces costs."A lot needs to be done and there is little time to do anything in the current Congress."The legislation presents Bermuda carriers with both challenges and opportunities. We are working with the Bermuda Monetary Authority to meet those regulatory challenges." The idea behind Rep. Kanjorski's proposal has been around for some 20 years, but when Mr. Paulson included it in his financial regulation overhaul proposals last month, it was thrust back into the political limelight."The status quo for insurance no longer works," Rep. Kanjorski said. "We must move quickly but we must also be smart about it."Mr. Kading said Rep. Kanjorksi's bill was "an important development"."The US Treasury recently endorsed a two-step process: 1) first immediately pass legislation allowing the US to negotiate with foreign governments over regulatory rules for access to US markets for the global reinsurers which provide the US with important reinsurance capacity; and 2) create an optional federal charter, similar to what banks have, so that commercial insurers can operate country-wide with a single licence. "Rep. Kanjorski's bill, based on public statements, seems to be sympathetic with the first point made by the Treasury."