The National Association of Insurance Commissioners has responded quickly to suggestions that the turmoil at American International Group Inc. might be evidence of the need for a federal insurance regulatory agency.

The American Council of Life Insurers, Washington, and the American Insurance Association, Washington, argued Thursday that the problems at AIG, New York, show why lawmakers should give insurers the option of choosing between the traditional state-based regulatory system and a new, national insurance regulatory system.

Sandy Praeger, the Kansas insurance commissioner and president of the National Association of Insurance Commissioners, Kansas City, Mo., has put out a statement of her own rejecting the trade groups’ argument that the AIG problems demonstrates the need for an optional federal charter.

The ACLI and the AIA “have gotten it wrong and are letting their desire to have an optional federal charter get in the way of making a common sense recommendation to address the problem,” Praeger says in the statement, which was distributed by several state insurance departments as well as by the NAIC.

People think of AIG as being an insurance company, but it is really a conglomerate that controls 71 U.S. insurance entities and 176 other financial services companies, Praeger says.

The AIG finance unit that got into trouble was regulated by the federal Office of Thrift Supervision, not by any state insurance department, Praeger says.

“Even if there was an optional federal charter for insurers, and some or all of the 71 U.S. based AIG insurance entities had selected to be regulated by the federal insurance regulator, the problem at the AIG parent company level would not have been prevented,” Praeger says.

Keeping the AIG parent company from using insurance policyholder assets in efforts to secure financing took “a coordinated effort by the nation’s insurance regulators,” Praeger says.

Praeger says the key to preventing future crises of the kind that affected AIG this week is to make it easier for the public to find out about the kinds of financial transactions that AIG’s financial products unit was handling.

“One way is to create a transaction platform where market participants — as well as state and federal regulators — have access to view the disclosures and the transaction details so that the markets become transparent, rather than opaque,” Praeger says. “Transparent information about the transaction details will keep everyone honest, while allowing all parties to make a reasonable profit from the transactions placed through the platform.”

Federal banking regulators also should consider getting ideas from state insurance regulators about topics such as restrictions on derivative activities; limits on high concentrations in investment types; and appropriate minimum capital and surplus requirements, Praeger says.