The U.S. Federal Reserve is considering a proposal from life insurers that could delay the implementation of a costly nationwide capital framework for the $1 trillion industry, according to records of a recent meeting between the two sides seen by Reuters and people familiar with the matter.

More than a dozen senior insurance executives met Fed Governor Dan Tarullo on Feb. 6 to pitch a two-step process for launching nationwide insurance rules, according to records of the meeting by Dirk Kempthorne, who heads the American Council of Life Insurers, an industry group.

The group presented the plan under which the Fed would use the current system of state-based regulation for a period of time before writing a national framework that would likely require firms to boost capital buffers, according to the meeting records and people briefed on the matter.

Tarullo, the Fed’s top Wall Street regulator, did not indicate whether he was open to adopting the insurers’ proposal, the people said. But he did ask the companies to form a team to work with his staff in developing final details for such a scenario, the meeting records show.

The Fed has not committed to executing any plans submitted by the industry, a person briefed on the matter said.

A delay could give some relief to insurers from a new capital regime that analysts and investors fear would ramp up costs and stifle profits.

While precise estimates are lacking because the rules are still unknown, Bank of America has estimated that Prudential and MetLife could see their capital levels drop by 50 percent in a worst-case scenario under the new rules.

A two-step process could also buy more time for the Fed, which has been slow in building insurance expertise and only last year hired a former Connecticut state regulator to head the effort.

Insurance firms have lobbied Congress about how their industry will be regulated after the crisis, and politicians have often raised the issue with regulators on Capitol Hill.

Asked for a comment, the Fed said Tarullo has encouraged various industry representatives and state commissioners to offer suggestions on how it should set capital requirements for the industry.

“The Federal Reserve welcomes these views as it prepares to formulate consolidated capital requirements applicable to holding companies with insurance activities,” a spokesman said.

One of the people briefed on the matter said the Fed has noted in subsequent staff-level meetings that the 2010 Dodd-Frank Wall Street reform law does not prohibit it from adopting a two-step process.

“Tarullo was intrigued by these ideas and their potential as standards that could apply to both life and property/casualty companies,” Kempthorne said in a March 10 email sent to members of the American Council of Life Insurers.

Other attendees in the meeting, including Roger Ferguson, the CEO of TIAA-CREF, MetLife President of the Americas Bill Wheeler, and Mark Grier, a member of Prudential’s board of directors, declined to comment or did not immediately return a request for comment.

The ACLI confirmed it had met with Tarullo to discuss capital standards.

The Dodd-Frank law mandated the Fed to write nationwide capital standards for the first time to help avoid another insurer failure such as the near collapse that prompted the $182 billion bailout of AIG at the height of the financial crisis in 2008.

That is a marked shift for the industry, which has so far been overseen by state commissioners whose main goal is to protect policyholders rather than the wider financial system.

The industry has long expressed skepticism that the Fed does not have enough expertise or resources to regulate the sector. The central bank only has several dozen insurance experts spread throughout its organization versus more than 400 banking experts in its Washington headquarters alone.

Tarullo told the insurance executives at the meeting that the Fed is looking to bring on more insurance experts, Kempthorne wrote in the email, but that he would not establish a separate insurance division.

Since the financial crisis, the Fed was put in charge of overseeing insurance holding companies that own thrifts, a type of bank that focuses on building up deposits and doling out mortgage loans, as well as insurance holding companies whose demise could jeopardize the wider financial system.

Insurers fear they could be treated too much like the heavily regulated Wall Street banks, given the Fed’s history as a bank watchdog.