Two US senators are keen to shake up the national insurance industry, introducing a bill to create a new federal regulatory system.

Currently insurance is administered on a state level with each government having its own laws and standards.

Senators John Sununu (Republican, New Hampshire) and Tim Johnson (Democrat, South Dakota) hope to add a federal system and allow companies to choose which regime they sign up to.

Senator Sununu says the existing system is stifling competition, innovation and growth in the insurance market. “[It] spreads across more than 50 jurisdictions and has proven burdensome and expensive for all concerned,” he said.

His solution would mirror the “highly successful” dual banking system that has operated across the US for 150 years. Insurers could choose to be regulated by their existing state charter or a new federal agency in the US Treasury Department.

Big insurers will support the bill, but more than 1000 smaller companies are not convinced. The proposed legislation has been referred to the Senate Banking Committee, which is expected to hold hearings before June.