The leadership of the Property Casualty Insurers Association of America has grown impatient with state regulatory reform, and is examining legislation that would give more input to federal authorities, PCI's outgoing chairman revealed last week.
Speaking here at PCI's annual conference, Gerald Whitburn said there has been a growing interest among PCI's membership about what is happening at the federal level in regards to insurance.
At the same time, he added, “we sense across our board an increased impatience with [National Association of Insurance Commissioners] reforms [of insurance regulation].”
PCI, he noted, continues to communicate with and “nudge” the NAIC to stir action, but he wondered: “Are the sands of state regulation falling away from the footings?”
Asked if PCI was endorsing any of the current bills in Congress for a change in regulation, Mr. Whitburn–who is also chairman and chief executive officer of Church Mutual Insurance Company in Merrill, Wis.–responded: “It's early, we're working on it.”
Speaking here just before Election Day, Mr. Whitburn told National Underwriter he expected to see Democrats win control of the U.S. House of Representative–which they did, and which he saw as an opportunity for the industry. “A smart trade association is going to be in a listening mode as new leadership settles in,” he said.
In Mr. Whitburn's view, a change in leadership “is an opportunity for a critical partnership at a critical time.” Because the current focus on Capitol Hill when it comes to insurance issues is relatively new, focus by trade associations “is critical. If we are going to have a broader federal involvement, we need to do it right.”
On another point concerning federal legislation, Mr. Whitburn–who was succeeded as chairman last week by Thomas J. Tierney, CEO of the Vermont Mutual Group–said insurers had pushed the Bush administration to pass another extension of the Terrorism Risk Insurance Act, warning that “we may have to push them back again” to insure continuation of TRIA, which expires at the end of 2007.
The property-casualty industry, he noted, has $450 billion in surplus to insure against terrorism, but “not trillions, and we don't know what the threat is–it's classified–or how to price it.”
Meanwhile, modeling efforts to forecast terrorism risks, in Mr. Whitburn's view, are “pretty sophomoric.”
The Bush administration has reacted positively to PCI's lobbying for a terrorism backstop measure that takes into account the interests of small and medium-sized carriers, according to June Holmes, the group's interim CEO.
Ms. Holmes said that in a recent meeting with Jim Wilkinson, chief of staff for Treasury Secretary Henry M. Paulson Jr., Mr. Wilkinson had “praised us for the 'small insurer' and 'small consumer' aspects of our message, and urged us to continue to hammer this home with policymakers and opinion leaders.”
She said that in lobbying on the issues involved with TRIA, PCI is working for “a long-term, market-based solution to the terrorism insurance problem.”
In speaking with Mr. Wilkinson, Ms. Holmes reported here, “We emphasized that the solution should not put the federal government in the position of picking winners and losers based on the size of a commercial insurance buyer's business, the type of weapon used in an attack, or the size of the company that provides its property and liability insurance.”
She referred to Mr. Wilkinson in her talk only as a “Treasury official,” but identified him later in an interview. Ms. Holmes told her audience he had indicated that while Treasury has been heavily lobbied on TRIA, and that “every building on Wall Street” is “beating the hinges off the doors,” PCI is the only group “talking about the needs of small and medium-sized companies.”
According to Ms. Holmes, Mr. Wilkinson also said the small-company issue will be important as Treasury and White House policy is determined, and she promised the membership that “we intend to be in the thick of the policy development process.”
Ms. Holmes told National Underwriter PCI is seeking a middle layer of protection that would be achieved by lowering some of the loss triggers for government support of insurers after an attack.
Mr. Whitburn told NU that the message PCI is pressing is that “we mustn't limit the parameters of the TRIA response to the giant insurers only. We have a variety of high quality, long-standing niche players who assume very significant roles in the market. Such things as the trigger placement should respond to those realities. A company that writes a half-billion in premium finds itself in the top 10-to-15 percent of premium writers in the industry.”
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