An official in the New York Insurance Department says insurance regulators from across the country are expected to discuss dropping Moody's Investors Service from a list of acceptable rating organizations at a meeting later this week.

Hampton Finer, deputy superintendent of insurance for New York, told Reuters in an interview late Saturday that concerns about Moody's arose after the credit-rating firm turned down an invitation to attend a regulatory hearing on Thursday, where it was to be questioned about its ratings process, particularly in light of the financial crisis.

If we don't feel like we can get answers to our questions, the question is if we should put them on our ARO (acceptable rating organizations) list, said Finer.

Finer added that Moody's had been cooperative in answering most, but not all, questions in a regulatory questionnaire earlier in the year.

We are a little stunned, that Moody's refused to attend the hearing, he said. This is not going to be like a congressional hearing. No one is out to embarrass them.

A spokesman for Moody's did not immediately respond to a request for comment.

With nearly $3 trillion of rated bonds, the insurance industry is the largest sector of the U.S. financial services industry to rely on capital ratings, according to the National Association of Insurance Commissioners (NAIC).

The three leading ratings firms -- Moody's, Fitch and Standard & Poor's -- have been criticized for fueling the financial crisis by assigning and maintaining high ratings on mortgage-backed securities, even as concerns about the health of the U.S. home market grew.

The NAIC, which represents state insurance regulators, wants to lessen its reliance on the ratings firms, according to a March report. The group has also held discussions over whether to launch its own system for assigning ratings.

REGULATORY POW-WOW

Insurance regulators from across the United States will gather this week in National Harbor, Maryland, at an NAIC-sponsored meeting to discuss a range of issues, including concerns over the current ratings system.

Other firms approved by the NAIC to rate insurer-held securities -- Fitch, S&P and DBRS Limited -- have agreed to answer questions at the hearing on September 24, according to information on the NAIC's website.

Moody's informed the NAIC last week that it would not attend the hearing, said Finer. A spokesman for the NAIC could not immediately be reached.

The hearing was called as part of a review being led by an NAIC working group convened early in the year to assess changes needed to improve the ratings process. Finer said the purpose of the hearing was to gain information, not to be a forum for blame.

The NAIC working group is led by New York Insurance Superintendent James Wrynn and Illinois Insurance Director, Michael McRaith.

A call to McRaith's office was not immediately returned.

The U.S. Securities and Exchange Commission, which last week adopted new rules that will require credit agencies to disclose more of their ratings history, will also take part in the NAIC hearing.

Moody's is a unit of Moody's Corp's, McGraw-Hill Cos owns Standard & Poor's, and Fimalac SA is the parent of Fitch Ratings.

Warren Buffett's Berkshire Hathaway holds a large stake in Moody's but recently cut ownership of the stock to 16.6 percent from 20.4 percent in mid-July, according to a filing with the SEC in early September.

(Editing by Steve Orlofsky)