The Bush administration plans to look beyond banks and investment companies when it looks at ways to improve the competitiveness of the U.S. capital markets.

The U.S. Treasury Department will be including insurance in an upcoming review of the regulatory system for U.S. financial institutions, Treasury Secretary Henry Paulson and Robert Steel, Treasury’s undersecretary for domestic finance, said earlier this week.

The review “should be broader as opposed to narrower,” Steel said at a press conference.

Steel noted that the lines between the insurance, lending and securities industries are becoming increasingly blurry.

“So, the right regulations should basically think about the activity or the function, not the entity,” Steel said.

The interplay between state and federal oversight will be “open for discussions,” Steel said.

The American Council of Life Insurers, Washington, put out a statement praising the Treasury Department’s plans to include insurance in the regulatory system review and asking the department to consider giving insurers the option of choosing to operate under the jurisdiction of a federal insurance regulator.

“The insurance industry is currently regulated exclusively by the states,” ACLI President Frank Keating said in the statement. “But to meet the challenges of the 21st century, an optional federal charter would provide needed comprehensive reforms.”