The financial collapse of AIG, Inc., one of the world's largest groups of insurance companies, has had and will continue to have significant impacts on the financial services industry, including the regulation of insurance. AIG's difficulties highlight the extent to which insurance has become intertwined with other aspects of the financial services industry, including the markets for securities, futures and complex financial instruments. The high stakes at risk due to AIG's financial collapse have reinvigorated the debate over whether the federal government should play a role in regulating the business of insurance.

"The current system of regulation in the United States, in which each state is individually responsible for regulating insurance, essentially has been unchanged for the past 139 years." The federal McCarran-Ferguson Act provides that state laws regulating insurance pre-empt federal laws that may impact insurance, leaving the states holding the field of insurance regulation. "The result is a patchwork of laws and regulations individually enacted and enforced by the states."

The United States Treasury Department recommends establishing an optional federal charter that would provide a system of federal chartering, licensing, regulation and supervision of insurers, reinsurers and insurance producers. Under the Treasury Department's plan, an Office of National Insurance would be created to promulgate and oversee the OFC system. An Office of Insurance Oversight would promote international insurance regulatory policy for the United States and serve as an insurance advisor to the Secretary of the Treasury. "In short, the Treasury Department is in favor of a comprehensive scheme of federal regulation that would replace much, if not all, of the existing state-based regulatory regime."

Currently there are several bills pending before Congress that would effect some level of federal regulation of insurance. The proposed National Insurance Act would put in place an optional federal charter system substantially similar to the one subsequently recommended by the Treasury Department. Other bills propose the creation of an Office of Insurance Information that would collect, analyze and disseminate information and issue reports regarding insurance, as well as establish federal policy on international insurance matters. "It seems likely that some form of federal insurance regulation eventually will be in place to address the real and perceived inefficiencies in the state-based regulatory system and the need for true national regulation of insurance in the modern financial world."