Speaking at the annual joint luncheon of the APIW (Association of Professional Insurance Women) and the New York Chapter of Chartered Property Casualty Underwriters, Mr. Duffy suggested a three-pronged approach to improving underwriting standards.

First, underwriters must get the facts about each risk being considered. "A past filled with pertinent and accurate data is absolutely needed in order to make risky decisions," Mr. Duffy said.

He observed that throughout the 1990s, reinsurance clients did not provide and reinsurers did not request "good risk-assessment data."

"We have let ourselves down and our customers down by not doing an accurate risk assessment," Mr. Duffy declared.

But in 2002, "everyone involved in the insurance and reinsurance world must work at creating good, pertinent risk-assessment data --losses, exposures, where the company is, where it is going," he advised.

Otherwise, "we'll be making bad decisions," Mr. Duffy warned.

Second, insurers, reinsurers, brokers, agents and clients must understand the coverage grant, or "what we're insuring," he stated. If these parties fail to take the time to sit down with each other to iron out coverage definitions, "claims people will be settling claims in 2022" emanating from what the parties intended in terms of coverage, he said.

Mr. Duffy admitted that "we're not going to eliminate some of the controversies surrounding what was intended in the insurance or reinsurance contract, but we certainly can mitigate them."

Third, he recommended that underwriters forego making "big bets."

While noting that some reinsurance coverage for terrorist attacks is still available, Mr. Duffy quickly added that this remains a looming problem for which the federal government should provide a solution.

He indicated that the industry, including the Washington, D.C.-based RAA, will continue efforts to convince federal lawmakers to create a mechanism to help shore up the reinsurance industry in the event of another terrorist attack.

Mr. Duffy believes another such attack is likely.

"Just because the Taliban has been defeated and the al-Qaeda network is in disarray does not mean that there isn't other terrorist potential around the world," he observed.

Mr. Duffy admitted that convincing Congress to pass backstop legislation will be harder this year than it was in 2001 and that there is no guarantee that this year will prove any more successful.

He then indicated that the necessary reform may have to start at the state, rather than federal, level. He revealed that the RAA is studying options in this regard.