Three years and much wrangling in the making, the nation's insurance regulators gave final approval this week to rules that for the first time match property and casualty insurers' level of funding to the kind of risks they assume.

The National Association of Insurance Commissioners approved the risk-based capital standards for P/C insurers during its winter meeting in Honolulu Sunday.The ramifications are immediate: P/C insurers must use the risk-based capital formula on their 1994 annual statements to state insurance departments due by March 1995.

"The adoption of this risk-based capital proposal is a historic act of consumer protection," said Steven T. Foster, NAIC president and Virginia's insurance commissioner. "Under this proposal, state insurance regulators will have a powerful new tool with which to protect insurance consumers from the

financial problems of insurers."

Several of the biggest P/C companies and industry trade associations had criticized the working group almost from the beginning for not doing enough testing before approving the requirements, developed by a working group led by Vincent Laurenzano, assistant deputy superintendent of the New York Insurance Department.

Insurance companies will be subject, based on asset, credit and underwriting risks, to the following guidelines:

* Asset risk will be calculated based on the quality of an insurer's bond

investments multiplied by a risk factor set by the NAIC.

For example, a bond rated NAIC 3 (the equivalent of a "BB" rating by Standard & Poor's) has a risk factor of 0.02, twice the risk factor of a less risky bond rated NAIC 2 (or "BBB" from S&P), the NAIC explained in a fact sheet.

* Insurers will be charged 10 percent for reinsurance recoverables from non-affiliated reinsurers and affiliated non-U.S. reinsurers, minus the reinsurance penalty already taken by companies on their annual statements to regulators.

The standard also gives companies that find themselves below a set solvency point three years to correct the situation before regulators step in. The original version of the standard gave the companies one year. Another change halved the penalty for investments in non-U.S. insurance subsidiaries; a 50 percent charge against investments was substituted for a 100 percent charge. For example, an American insurer investing in a Canadian company with a value of $100,000 will only have to set aside $50,000 in reserves to cover this risk.

The NAIC adopted a similar standard for life and health insurers at last year's winter meeting and is now developing separate risk-based capital requirements for such health organizations as health maintenance organizations, Blue Cross/Blue Shield plans and health service organizations, Mr. Foster said.

In other action, the NAIC accredited 10 state insurance departments Monday. The addition of Delaware, Georgia, Louisiana, Massachusetts, Oklahoma, Oregon, South Dakota, Washington, West Virginia and Wyoming brings the total number to 32.

New standards require that state regulators have adequate statutory and administrative authority to regulate an insurer's corporate and financial affairs, the resources to carry out that authority, and set organizational and personnel practices for effective regulation.

The NAIC also approved a model act to protect consumers when insurance companies sell a block of policies to another insurer. The model bill, which must be approved by a state's legislature, provides guidelines for dealing with "assumption reinsurance" agreements.