Legislation introduced by Republican Edward Royce in the US House of Representatives last week would allow some insurers to be regulated by the Federal Government rather than by their individual states. But the industry is far from sold on the proposal.

Mr Royce said the National Insurance Act should create a “more efficient financial services sector” by allowing some companies to chose whether they are governed by state or federal laws.

But US brokers have opposed the move. The Independent Insurance Agents & Brokers of America (the Big I) says it realises regulatory reform is needed, but it doesn’t want to lose the knowledge that the state governments have collected over the years.

“We agree with virtually all insurance industry stakeholders, including consumers, regulators and companies, that the existing regulatory system needs greater uniformity and efficiency,” Chairman Thomas Minkler said.

“We are long overdue for change. The existing system is slow, inefficient, unnecessarily complicated and expensive. That said, a one-size-fits-all scheme that creates a new federal bureaucracy is not the answer.”

Mr Minkler says insurance issues are localised in nature, and “bureaucrats in Washington will not address these issues with more expertise and efficiency than local officials”.