–The rating agencies–which have been very active lately in changing the way they assess carriers–took a beating at the conference. Fitch Ratings was one of the hosts of the conference, but Keith Buckley, a group managing director at the firm, took the gripes from a variety of speakers with good humor, jokingly identifying himself while appearing on one panel as “one of the official punching bags of the conference.”

–Bill Berkley, chairman and CEO of W.R. Berkley Corp., one of the industry's rare contrarians, was the first to hammer the rating agencies in response to a question I'd posed. While conceding that the agencies mean well and are doing a “much improved job,” he said “it is astonishing how little insight they have into underwriting risk. If you don't fit in one of their boxes, they think they have the right to tell you how to run your business. But you can't run your business just to fit into the boxes they want you to check. The only reason they do it that way is that they lack the skilled people to take a broader view.”

–Dan Carmichael, president and CEO of Ohio Casualty Corp., added that “our biggest frustration [with rating agencies] is seeing more turnover than at McDonalds.” (Although he excluded Fitch from this criticism.) “As soon as we train [an analyst] about our business, they're gone. It's hard to get inexperienced analysts to see us as individuals and how we're different from the standard models.”

–Back to Mr. Kelly, who had plenty more to say. Calling this “the best of times, and the worst of times” for p-c insurers, he warned that insurers could be the victims of their own success.

“The lack of catastrophes this year will create its own set of problems, including accusations that we cried wolf when we raised rates and are now price-gouging.” He joked that “it's like saying someone who survives Russian Roulette faced no risk just because the gun didn't go off, when we all know there is still a bullet in the chamber and if you play the cat game long enough, it's going to go off.”

–Bermuda also took a number of hits at the meeting on two fronts. One was the fact that a lot of capital going there lately is from hedge funds and private equity investors rather than traditional insurance sources–with a good portion going into new vehicles such as sidecars. Another was griping that Bermuda has an unfair tax advantage over U.S.-domiciled carriers.”My goal is to get all those people in Bermuda to pay their fair share of taxes,” declared Bill Berkley. “I don't think that will be a hard sell in Washington,” he added.

Ted Kelly readily agreed, saying in his keynote address that “foreign companies have a considerable edge” when it comes to taxation. “They get a better deal over there [in Bermuda]. It's not a level playing field.”

As for the source of Bermuda capital, Mr. Berkley was equally dismissive. “People are using these financial facilities in lieu of reinsurance, but they're one-shot deals…After the first event, many of these new players might not come back.”

–Bermudians are like the old Ewing family on the TV show “Dallas,” in that they will fight one another to rule their markets, but whenever facing the outside world, they close ranks like a fist.

I moderated a panel of key Bermuda players, and they weren't shy about defending their way of doing business. To Mr. Berkley's criticism that much of the recent capital pouring into the island may be fleeting, they not only didn't deny it, they said, what's the big deal? The point is that the Bermuda insurance markets are being run with the cool efficiency of the capital markets. When an opportunity arises (higher property-catastrophe prices), investors rush in to capitalize. If prices fall, taking returns with them, they withdraw. That's rational, not radical.

I personally found it amusing that for years I've heard top dogs in the industry complain about how hard it is to raise capital given the low rates of return delivered by most insurers, but now that capital is pouring into the business, somehow it's not worthy! Sounds more like envy to me.

As for the tax issue–which I think has more merit than the capital complaints–the Bermudians dismissed the backlash as sour grapes, emphasizing that the reason money is pouring into Bermuda is not to dodge taxes, but to take advantage of quicker regulatory turnaround time and the mother lode of intellectual capital on the island.

–Of course, the state of the market drew considerable attention, given the softening prices in casualty lines. (Property pricing still seems to be holding up quite nicely, thank you, despite the lack of hurricanes this year.) But Mr. Berkley said he believes the pace of the softening is being overblown by unreliable surveys relying on brokers sore over losing business. “The price cutting is not so terrible,” he said. “It's not as bad as people think. A lot of people are crying wolf right now. And there's no significant slippage in terms and conditions.”

When another panelist raised the specter of the industry being poised on a “slippery slope” in terms of pricing, Mr. Berkley said that “a slippery slope implies a decline that is rapid and uncontrolled. We're not there yet.”

But Mr. Kelly, echoing warnings I have heard him voice often over the years at such conferences, was clearly concerned about the industry falling back into bad habits. “We're like an alcoholic who is 'cured' until they pass the next bar,” he said. “We've lost far more capital to underpricing and poor underwriting than on catastrophes.”

While noting that “price competition on the whole right now is fairly benign,” he wondered “will this rational behavior last, or will underwriters get sloppy again–even desperate?” Calling it a “tough fight” to maintain pricing discipline as marketshare slips away, he said that “at some point, an underwriter says, 'If I don't write something, I'm out of work.'” He said the “ideal compensation” to discourage such tendencies is to “pay brokers 75 percent for growth and 25 percent for profit, but the other way around for underwriters.”

–Wendy Baker, president of Lloyd's America, gave the luncheon address, warning that the industry, financially, is “out of intensive care, but for how long?” She noted that insurers–in line to report record results in this cat-free year–is already being demonized again as “villians” in the media. “We must explain why profitability is not a dirty word,” she said, emphasizing that “the long-term [financial] performance of this industry is not pretty.”

She also warned that the industry “will commit financial suicide if we follow the same cycle,” noting the classic warning signs–weak premium growth, falling rates in non-catastrophe lines and rising surplus, all likely to erode the bottom line before long.

–Finally, the severe split in the industry over the need for a national catastrophe fund was anything but disguised at the conference.

I felt a little bad for Tom Wilson, president and COO of Allstate Corp., who stayed positive during his talk pushing for a national solution despite the fact that many of his mega-carrier colleagues were adamant that Uncle Sam's help isn't needed in disaster coverage.

“There's a lot more agreement within the industry than people think,” he said, citing the need for state funds to stabilize cat-prone markets, improved building codes (vigorously enforced) and an end to rate suppression so that the price of insurance can accurately reflect the risk being taken.

But the main point of contention remains a national cat fund. On terrorism, insurers are united on the need for a federal backstop, but only because they agree such a risk is ultimately unpredictable and uninsurable. They give no such ground on hurricanes and earthquakes.

“We will fix our problem,” declared Mr. Wilson, in no uncertain terms, noting how Allstate is pulling back in cat-exposed areas such as Long Island, N.Y. “But that won't solve the industry's problem or the country's problem.”

Still, getting Congress to agree to such a facility without complete industry support would take a miracle, I believe.