New York Attorney General Eliot Spitzer's probe of insurance practices forced state regulators to step up to the plate, said Howard Mills, the man who took up regulation of companies with New York insurance operations after Mr. Spitzer's high-profile investigation into abuses had already gathered steam.

And he believes any future investigation of the industry is better coming from his office than from the Attorney General.

"The Attorney General had jumped into the breach and was in fact the de facto regulator," said Mr. Mills, appointed New York's Superintendent of Insurance in December 2004. "I effectively had to reclaim the role of regulator" from Mr. Spitzer, he said.

Mr. Spitzer kicked off his investigation early in 2004. By October he had lodged a civil suit against Marsh & McLellan Inc., charging the world's biggest insurance broker of illegal bid rigging practices, and implicating some of the insurers doing business with Marsh.

Mr. Spitzer was warranted in jumping in because there were "bad things going on; we can't deny that," said Mr. Mills, speaking at the World Insurance Forum, a high-powered gathering of insurance investors and executives that wrapped up at the Fairmont Southampton yesterday. Among the delegates was Ajit Jain, head of reinsurance operations for Warren Buffett's Berkshire Hathaway Inc.

Mr. Mills and Mr. Spitzer jointly charged American International Group Inc., the world's largest insurer, of misleading accounting and earnings manipulation in a civil suit last May. Some of the charges were tied to a contract that AIG bought from General Re, a Berkshire Hathaway unit. Only AIG and former management, not Gen Re, have been charged in the matter.

"We needed to be in a better position to pick up some of these things," said Mr. Mills, saying he initially didn't have the resources to be the one driving the investigation as it continued.

He said his department has now secured a bigger budget to support more staff to dig through insurance filings before they are too far out of date. "The department simply didn't have the resources that the Attorney General had." It has now hired attorneys with experience in complex financial transactions to work directly with examiners. He said this puts his group in a position to investigate wrongdoing, and if criminal to work with Mr. Spitzer, or his successor. Mr. Spitzer is currently campaigning to be New York's next Governor.

"We need to make it so any attorney general would not have the opportunity" to lead an investigation, he said. Mr. Mills said he believed that was better for both insurers and consumers because the process would be less politicised.

Each US state has its own insurance regulator, some of which are elected or appointed, as is the case with Mr. Mills, a former legislator, elected to the New York State Assembly in 1998 and twice re-elected.

"I would submit that the industry would rather have a regulator look into issues, and hammering them (as need be), than an attorney general where politics enter into the mix."

Mr. Mills made his comments to an audience that included representatives from several companies that became caught up in the investigation, which eventually broadened to include insurance regulators and attorney generals from across the US issuing subpoenas to companies across the industry.

While the investigation initially focused on abusive practices between brokers and insurers, it expanded by early 2005 to a focus on finite risk, a non-traditional form of insurance that regulators have been probing for its potential to mask losses.

ACE Limited, a Bermuda insurance company with significant US operations, for example, received subpoenas from more than 40 regulatory bodies related to its use of finite. It paid out $30 million related to an internal investigation, and an additional $44 million in legal costs, according to a filing with the US Securities and Exchange Commission last year. In July, ACE restated results from 2000 through the first quarter of 2005 to correct the accounting of eight finite risk transactions, resulting in a $45 million rise in income.

Another Bermuda reinsurer, RenaissanceRe Holdings Ltd., in February 2005 restated three years of earnings to correct its accounting of a multi-year finite risk contract purchased from an affiliate. The restatement had no material effect.

Other Bermuda companies that received subpoenas in the investigation included Arch Capital Holdings Ltd., Endurance Specialty Holdings Ltd., Axis Capital, the Imagine Group, and Everest Reinsurance Ltd.