The US government is being urged to reconsider the rules under which insurance companies are governed.

Faced with international competition on a global playing field, including offshore centres like Bermuda, US insurance leaders call regulatory reform a major imperative for 1999.

Robert Hartwig, vice president and economist for the Insurance Information Institute said "One of Congress' top priorities should be the passage of a financial services modernisation act that would allow any combination of financial services operations housed under one roof.'' Liberty Mutual Group president and CEO Edmund Kelly said: "The highest priority would be significant deregulation.'' William R. Berkley, chairman and CEO of W.R. Berkley Corp., a property/casualty insurance group, was even more direct: "Eliminate rate and form filings.'' These are regulatory filings insurers must make on a state-by-state basis, explains an article published in the January property/casualty edition of Best's Review.

Mr. Berkley and other insurance leaders argue that insurance and financial services is crossing state and international borders, making anachronisms of regulatory barriers erected decades ago.

On other issues addressed in the Best's Review cover package, "Storm Clouds & Silver Linings,'' there was not as much agreement.

Asked whether the Year 2000 computer problem is being "overplayed, underplayed or reasonably played,'' answers varied. Mr. Berkley said he believes the issue is being overplayed.

"I don't think there are going to be huge insurance problems,'' he said, "although I'm sure there will be some, especially with municipalities and nonprofits.'' Edward Rust, president of State Farm Group, said: "It may be a little bit of hype, but I think most responsible people have recognised the importance of the issue and have taken steps to address it.'' Robert Vagley, president of the American Insurance Association, said the problem is not being overplayed, and Peter Gentile, president and chief executive officer of Gerling Global Financial Products, said: "I think it's underplayed.'' Mr. Gentile pointed out that "the financial crisis in Russia essentially disrupted the entire financial community. If one of those companies has a Y2K problem that's not mitigated -- if a large bank needs to close or loses financial stability because they haven't taken care of Y2K -- it will potentially rock the foundation of our economy.'' Asked what they thought would be the industry's "defining event'' in 1999, answers ranged from the launch of the euro to disappointing financial results for companies that have been writing business at "inadequate prices'' to preparation for Y2K.

Mr. Hartwig described the 1998 year as "difficult'' for the US property casualty industry, as surging quarter by quarter catastrophe losses were in stark contrast to a relatively quiet 1997.

He expects 1998 losses to top $9 billion (1997: $2.6 billion), making last year the fourth or fifth most expensive catastrophe in recent recorded history.

The $2.9 billion estimated losses from Hurricane Georges was the fourth costliest event in US industry history. Hurricane Bonnie increased it by $360 million, as the first half of the year accounted for $4.6 billion, when El Nino-related severe storms sparked tornadoes, high winds and hail.

But the industry also suffered with slowing growth in net written premiums and declining investment income, offset by sharply higher capital gains.

Mr. Hartwig said: "Premium growth is being restrained by rate decreases, intense price competition, overall low inflation and a slowdown in economic activity.

"Soft market conditions will persist in 1999 and will contribute to a continued erosion in commercial lines profitability, though a profit squeeze in personal lines will likely become more pronounced.''