An insurance-industry proposal to reduce the role of the major ratings firms in sizing up risk in insurers' investment portfolios cleared two hurdles Wednesday.

Two separate panels of state insurance regulators voted in favor of the proposal, which calls for the National Association of Insurance Commissioners to hire a risk-advisory firm to help assess potential losses in insurers' big holdings of residential-mortgage bonds.

The proposal to create the high-profile assignment still has to clear the full NAIC, with a vote expected within several weeks.

The assessments will be used in the insurers' financial filings for calendar year 2009, while regulators continue to discuss a longer-term solution to what they say is an overreliance on the major ratings firms. The NAIC also said it would consider alternatives to the ratings for other categories of assets.

The panels' approvals came over the objections of two consumer groups that the move could weaken protections for policyholders whose contracts are backed by those investments.

In a joint statement, the Center for Economic Justice and the Consumer Federation of America dubbed the proposal "yet another bald attempt by life insurers to change the rules" to provide capital relief to insurers at a time when "continued high unemployment, mortgage defaults and mortgage foreclosures" make the securities particularly tricky to value. "Insurers should be increasing their capital base significantly if they hold these very risky securities," the groups said.

The American Council of Life Insurers, which submitted the proposal this summer, has estimated that the NAIC's existing ratings-based capital guidelines will require the industry to boost capital by $9 billion by year's end to back up residential-mortgage bonds that were downgraded earlier this year from investment grade to "junk" by the ratings firms. One of the trade group's biggest concerns is that the junk ratings don't distinguish the size of potential losses on the bonds.

The regulators maintain that, in seeking a new method for assessing the mortgage bonds, they aren't looking for inflated valuations to burnish insurers' books, but for a more reliable analytical process. The ratings firms have come under widespread criticism for conflicts of interest in originally giving many mortgage bonds triple-A ratings and for botching their analysis.

Chris Evangel , managing director of the NAIC's Securities Valuation Office, said officials there will begin work lining up a contract for the analysis, which will cover about 18,000 different residential-mortgage bonds held by insurers. Regulators recently have talked with risk-advisory outfits including BlackRock Inc., Pimco Advisory, part of bond-powerhouse Pacific Investment Management, Co., a unit of Allianz SE; Promontory Financial Group; and Andrew Davidson & Co.

Mr. Evangel said a dozen or so other firms also have been in touch with the NAIC about the possible assignment.

The price tag for the assignment hasn't been set, he said. Insurers will foot the bill.

Meanwhile, the NAIC is continuing to review a separate ACLI proposal that would allow insurers to expand their use of deferred-tax assets, a move also opposed by consumer groups.

The proposal, submitted by the ACLI last year, designates levels of these assets that can be used in calculating insurers' capital.