A California law that is designed to force European insurance companies to turn over lists of World War II policyholders is undermining federal attempts to settle claims by Holocaust survivors, a senior Clinton administration official said this week.

Deputy Treasury Secretary Stuart E. Eizenstat, who has coordinated the administration's policy on Holocaust claims, said the new state law may discourage companies from cooperating with an international commission established last year to resolve the settlements.

The law, signed in October by California Gov. Gray Davis (D), requires European insurance firms to publish a list of unpaid Holocaust-era insurance policies or risk losing their licenses to operate in California.

In a letter Tuesday, Eizenstat urged Davis and California Insurance Commissioner Charles Quackenbush to exempt the subsidiaries of five insurers--Germany's Allianz AG, France's AXA, Italy's Assicurazioni Generali and Switzerland's Winterthur and Zurich--that are cooperating with the International Commission on Holocaust Era Insurance Claims, headed by former secretary of state Lawrence Eagleburger.

Executives of several European firms were subpoenaed to attend hearings in Los Angeles and San Francisco this week to explain what steps they are taking to comply with the state law, which will go into effect on April 6, 2000.

California's action is the latest in a campaign by Holocaust survivors and their advocates to force European companies to disclose long-hidden information about bank accounts, insurance policies and other assets stolen or lost during the Nazi era.

Last year, Eizenstat and former senator Alfonse M. D'Amato (R-N.Y.) reached an agreement with Swiss banks that promised to pay more than $1.25 billion to settle Holocaust claims. But negotiating a deal with the insurance industry is more complicated because foreign insurers are regulated by all 50 states, while foreign banks are regulated primarily by the New York State Bank Supervisor and the Federal Reserve.

The international commission headed by Eagleburger promised "safe harbor" from state regulators to companies that cooperate with the commission and give auditors access to their archives.

"The companies that are [working with] the commission have all been acting in good faith," Eagleburger said today. "Under those circumstances, I don't think it was right for Quackenbush to subpoena them and bring them in for hearings."

Eizenstat also warned that California's hard-ball approach could "undermine the Eagleburger commission, which is the best hope of getting claims paid quickly."

If other states follow California's lead, he added, it will complicate his negotiations with Germany's government and private industry to provide compensation to Holocaust-era slave laborers. The Germans recently offered a $4.25 billion settlement.

"We are trying to say to the German government and German industry, 'We are prepared to give you legal peace in the United States if you contribute to this German initiative and settle the case and pay substantial amounts of money,' " Eizenstat said.

If California pursues its initiative, he said, foreign companies will ask: "Why should we cooperate in this broader initiative if German companies cooperating are still going to be subject to subpoenas and sanctions?"

Quackenbush responded that this week's hearings "don't do anything to undercut" the Eagleburger commission. On the contrary, he said, the hearings will kick-start efforts to uncover war-time insurance policies.