Meanwhile, in announcing Mr. Csiszar's resignation, PCI Chairman Gerald Whitburn said: "Ernie has done a fine job of establishing PCI as a major player in our industry at a critical time. He's brought great energy on a wide variety of issues, and leaves PCI well-positioned to advance its important public policy agenda consistent with its mission. We are grateful for the contribution he's made to the association's success."

Mr. Whitburn--president and CEO of Church Mutual Insurance Company--said a national search for a new CEO will begin immediately. In the meantime, the group's Board of Governors has appointed June Holmes, PCI's chief operating officer, to serve as interim CEO.

Mr. Csiszar--who was appointed CEO just two years ago--"indicated that he plans to pursue a variety of personal and professional interests," according to a statement issued by PCI, which claims more than 1,000 member companies, writing over $194 billion in annual property-casualty premium--40.1 percent of the nation's total.

"I've been a lawyer, a college professor, an investment banker, an insurance company CEO, a regulator and a trade association executive," said Mr. Csiszar, who was South Carolina's chief regulator as well as president of the National Association of Insurance Commissioners when he was tapped to head PCI. "I plan to continue to work within the financial and insurance industries. I leave PCI in the capable hands of a strong board and a talented staff."

The resignation comes at a time of escalating tension within the industry over what role the federal government should play--if any--in providing a backup mechanism for catastrophe insurance.

Ever since the federal fund was first proposed last fall by ProtectingAmerica.org in a series of advertisements by Allstate in national publications, the industry has remained divided over its merits.

The American Insurance Association immediately came out swinging against the plan, while PCI and the National Association of Mutual Insurance Companies took a more reserved approach initially, reflecting in varying degrees the support for the concept by two of their main members--Allstate and State Farm, respectively.

Allstate and ProtectingAmerica.org currently support HR 4366, sponsored by Rep. Ginny Brown-Waite, R-Fla., that would establish a national commission on catastrophe preparation and authorize the sale of reinsurance contracts backed by the federal government to eligible state catastrophe funds.

Mr. Griffin said PCI could possibly support such a fund, but set out 16 preconditions that must exist--the most significant one centering on the prohibition against any cross-line subsidization, which he feels is evident in other proposals.

The organization could back federal liquidity support for state catastrophe funds, since some mega-catastrophe exposures might be beyond the capability of both the private market and state catastrophe funds, he added.

"However, such assistance should be tied to a requirement that state funds seeking help demonstrate that their states have implemented the vital market freedoms needed to attract private capital to their markets," he said.

Mr. McDonough said HR 4366 specifically prohibits such cross-line subsidies. "We would hope that they look at the bill more carefully," he said.

PCI itself must tread a fine line as two large members have taken opposite views in the debate. In addition to Allstate, Liberty Mutual is one of the largest PCI members, but the Boston-based company has been outspoken in its opposition to a federal fund.

Mr. Griffin declined to elaborate on the decision to join and then resign from the group, other than to stress a commonality between the two approaches on most issues other than the federal role.

Meanwhile, the federal fund was just one issue on which industry officials and regulators failed to reach a consensus last week at the fall meeting of the National Association of Insurance Commissioners, where work continued on a national mega-catastrophe plan.

Last June, the full NAIC recommended that a proposed federal commission study the question of what role the federal government should play in backing catastrophe risk.

The NAIC's Catastrophe Insurance Working Group is set to meet by conference call on Sept. 18 to adopt changes approved at a three-hour fall meeting session last week. The changes reflect the concerns of stakeholders over the plan, designed to respond to the record insured losses the industry suffered last year from three Gulf Coast storms--including the worst on record, Hurricane Katrina.

A call for a comprehensive program to provide incentives for homeowners to improve their properties to better withstand disaster remained unchanged.

However, efforts to make flood risk protection almost universal have aroused some industry fears about more bureaucracy.

Essentially, regulators are trying to develop some quasi-enforcement mechanism to help ensure homeowners have disaster coverage. The Federal Emergency Management Agency currently estimates that about half of all property owners in flood-prone areas lack such coverage.

Florida Insurance Commissioner Kevin McCarty at first proposed an all-perils policy to replace the current public-private scheme of insuring flood versus wind risk.

After a strong veto from the industry, Mr. McCarty and other regulators are attempting to come up with a "mandatory offer" disaster coverage requirement for homeowners insurers, but are having difficulty providing clear and enforceable language.

At the group's meeting on Sept. 11, a Florida insurance department representative, Ray Spudek, said the intent now is to require flood coverage only on properties backed by a federally sponsored mortgage, with other policyholders having the choice of participating in the National Flood Insurance Program.

But the American Insurance Association's assistant general counsel, Dave Snyder, for one, said he found the meaning of the current language unclear as to the responsibilities of both the agent and carrier in terms of coverage offers.

The plan--which calls for a checklist producers must use when offering homeowners insurance--is intended to prevent the misunderstanding evident in the recently concluded Leonard vs. Nationwide case, and avoid applicants misconstruing which perils are covered in homeowners insurance and which are not.

However, that proposal has been put off for study by a group of producers and regulators, who have been asked to come up with a list that does the job without presenting too much of an administrative burden or potential liability exposure to producers.