Insurance regulators looking to redefine bond-rating process

Standard & Poor's, Moody's (MCO) and Fitch will likely loose their stranglehold on bond ratings now that the National Association of Insurance Commissions has added its voice to the growing call for an end to the ratings agencies' oligopoly over bond ratings.

The ratings agencies lost their favored position when they failed to expose the risks investors were taking with the purchases of complicated mortgage securities.

The NAIC has gotten involved because insurers are among the most important users of bond ratings. They collectively hold $3 trillion in rated bonds and most states require a certain level of rating from one of the bond rating agencies to determine the health of an insurer's portfolio.