Federal involvement in US insurance regulation is necessary in some areas, according to a Treasury report.

A paper on modernising and improving regulation – compiled by the department’s Federal Insurance Office (FIO) – has now been submitted to Congress.

It concludes the current system of state regulation satisfies the “most fundamental regulatory objective” of ensuring insurers’ ability to pay claims.

But “any system with 56 independent jurisdictions is inherently limited in its ability to regulate uniformly and efficiently. To address the inefficiencies and lack of uniformity in the state regulatory system, federal involvement will be necessary.”

The state-only solution “will not resolve the problems of inefficiency, redundancy or lack of uniformity, or adequately address issues of national interest”, the paper says.

The FIO will now monitor and co-ordinate policy to pursue its recommendations.