Plans to establish a federal system of insurance regulation in the US continue to divide the insurance industry despite widespread approval from other quarters.

The Government proposal to establish a national insurance office was revealed in a financial regulatory reform white paper last week. The office would be part of the US Treasury and would gather information, develop expertise, negotiate international agreements and co-ordinate policy.

The proposal has attracted the support of the major insurance lobby groups, possibly because the paper stopped short of recommending a federal charter for insurers, which is a source of considerable contention within the industry.

The proposal to establish a national insurance office follows calls to reform the cumbersome US insurance regulatory system, where more than 50 state regulators control the industry.

The Independent Insurance Agents & Brokers of America, known as the Big I, took the proposal as a sign the US Government believes radical reform of the industry is unnecessary.

“We will continue to press the point that the state regulatory system has done and will continue to do a solid job of protecting consumers and ensuring that they receive the insurance coverage they need,” CEO Bob Rusbuldt said.

The National Association of Mutual Insurance Companies, which also opposes federal regulation, has taken a similar stand.

The American Insurance Association, the Council of Insurance Agents & Brokers and the Risk and Insurance Management Society welcomed the proposal but for a totally different reason. They regard the plan as a “first step” in the path to federal regulation, which they believe is necessary.