SCOTTSDALE, Arizona — U.S. property/casualty insurers and state regulators are concerned about how the actions of federal and foreign regulators will effect the the industry.

The industry is facing “pressure from international regulators and standard-setting bodies,” National Association of Insurance Commissioners CEO Ben Nelson said late last month during the Property Casualty Insurers Association of America annual meeting in Scottsdale, Arizona.

Some regulators want to treat insurance as if it were a “high-risk, short-term” financial instrument, said Mr. Nelson, a former Democratic U.S. senator from Nebraska, as well as insurance commissioner of that state. International discussion of standard setting has intensified, he said.

PCI President David Sampson, in an interview before the annual meeting, also expressed those concerns, noting that the organization was particularly concerned about “the continuing global regulatory convergence that would seek to impose one-size-fits-all bank-centric capital and regulatory standards on the insurance industry.” He said that international regulatory organizations “are becoming more and more opaque and less open in terms of the process by which they make decisions.”

In his speech to PCI members gathered in Arizona, Mr. Nelson cited the same issue as he discussed the work of the International Association of Insurance Supervisors, a Basel, Switzerland-based group of global insurance regulators.

Mr. Nelson said he was “tremendously disappointed” with a recent IAIS vote against having outside observers in certain IAIS meetings. The change came as part of a package that included rescinding a requirement that stakeholders contribute financially to the organization to participate in its consultations.

But the package also excludes industry observers and others from its subcommittee and committee meetings, although some stakeholders could be invited to attend. The move had been opposed by U.S. organizations representing insurers but the U.S. Treasury's representative in the IAIS voted for the change during the group's meeting late last month.

The change regarding observers is of “great concern” to the PCI and the industry as a whole, said Robert Gordon, PCI's Washington-based senior vice president, policy development and research, during an interview after Mr. Nelson's comments. The move could “shut down transparency and eliminate or reduce their accountability,” said Mr. Gordon. He added that “it's ironic it comes right after the IAIS started to allow participation of consumer groups as observers, and the proposal allows them to allow certain guests who might share their views.”

IAIS has also moved forward in the area of international capital standards, announcing its first global insurance capital standard last month. The standard, known as Basic Capital Requirements for Global Systemically Important Insurers, would apply only to nine international insurers — including American International Group Inc., MetLife Inc. and Prudential Financial Inc. — deemed to be globally systemically important in 2013 by the Basel-based Financial Stability Board.

Mr. Nelson said that the NAIC “will continue to fight” for standards that are appropriate for the U.S. insurance system. He added that the bottom line was that U.S. insurance regulators will not accept “bank-centric” regulatory standards.

Mr. Nelson, however, did not confine his concerns to international regulators — he raised questions about federal involvement in insurance regulation as well.

Of particular concern to Mr. Nelson was the role of the Federal Reserve Board in regulating certain insurers. AIG, MetLife and Prudential have been deemed “systemically important financial institutions” by the federal Financial Services Oversight Council and thus subject to heightened oversight by the Fed. Although AIG and Prudential have accepted Fed oversight, MetLife continues to fight the designation.

Mr. Nelson said how Fed oversight of insurers would work remains unclear. He also expressed concern about the lack of an “exit ramp” for insurers subject to Fed regulation that no longer required such oversight. According to Mr. Nelson, the Financial Services Oversight Council would be “better served” by focusing on what caused the financial crisis of 2008 rather than dealing in insurance regulation.

“All major studies show traditional insurance is not systemically risky,” Mr. Gordon said. Nevertheless, the Fed is required to impose “bank-centric standards” on the insurers it oversees, he said.

“Everybody agrees that's not the appropriate standard,” he said, saying that imposing such standards was not the intent of Congress. Mr. Gordon called it a “critical problem that needs to be fixed quickly.”