A 135-strong consortium of corporations and trade groups are petitioning the US Congress to enact a federal charter option to allow insurers the right to choose between state and federal regulation.

A joint letter, with sign off from numerous firms and associations including the American Bankers Association and the American Insurance Association, was sent to Richard Shelby, chairman of the Senate Banking Committee, and ranking member Paul Sarbanes, on June 13 petitioning for a century-old system of insurance regulation be overturned.

The insurers? petition to Congress follows modernisation of regulation over the banking and securities industry in 1999 with the Gramm-Leach-Bliley Act, legislation that bankers say is already due for updating. Requests have been made for banks to have limited participation in the insurance industry.

Those signing off on the request said enacting a federal charter, which would be optional, could give insurers the regulatory flexibility that banks have long enjoyed.

Participating in the plea to Capitol Hill is the US arm of XL Capital, XL America, as well as Symetra Financial Corporation, a joint venture of Berkshire Hathaway and Bermuda-based White Mountains Group.

Currently the US system of insurance regulation is a state-by-state one making it necessary for insurance sellers and agents to comply with up to 56 systems of regulation while needing a licence for each state in which doing business. ?Consumers, and the insurers and insurance agents that serve them, need a modern insurance regulatory system that provides greater product choice and portability, takes into consideration that demands of both the national and regional insurance marketplaces, and creates a national insurance regulator in Washington to address the growing list of national and international issues facing our industry,? the letter said.

A number of Bermuda-based insurance executives have said previously the US state model is onerous, costly and should be re-worked into a federal model.

The plan put forward would preserve state premium taxes while insurers could choose to be regulated either by the state or federally.

A wide regulatory probe of the insurance sector underway since last year has left some insurers grappling with similar subpoena requirements from multiple states as numerous regulators pursue parallel investigations of insurance practices. For example, several insurers have faced compliance with the like probes of New York Attorney General Eliot Spitzer and Connecticut Attorney General Richard Blumenthal.

On top of state-led investigations, federal investigations have also been mounted including from David Kelley, the US Attorney for the Southern District of New York.

Those backing the federal charter option said decades of work had attempted to reform the state model into one that was uniform in its laws and product standards.

?After literally decades of effort and despite good intentions, state regulators have been unable to provide an efficient, uniform regulatory structure,? the letter said.