Mr. Hood is open to discussion on a settlement, and while the industry is talking tough, I don't expect insurers to depend on the tender mercies of a Mississippi jury.

o Chubb Strikes Deal With AGs!

Score another victory for state attorneys general in New York, Connecticut and Illinois. While the money involved was pocket change–$17 million–the big news was Chubb's sweeping operational change, starting with an end to contingency fees.

Chubb also agreed to stop making side deals with producers–including loans in which interest and even principal would be forgiven if enough accounts were steered to the carrier–and terminated a reinsurance entity co-owned with producers. Those days are over.

Chubb vowed to create a new supplemental compensation program to “reward…agents and brokers for superior performance in a manner consistent with evolving marketplace standards and reforms…” Chubb is not alone in this effort, and it should be one of the top stories of 2007 to see what types of bonuses pass muster.

o There's A New Sheriff In Town!

Insurers and brokers in New York had to be pleasantly surprised and perhaps more than a little relieved to learn their nemesis, Eliot Spitzer, had flexed his new muscles as governor by tapping Eric R. Dinallo to be the state's insurance superintendent.

Yes, it's true that Mr. Dinallo worked closely with the former attorney general as the chief prosecutor investigating allegations of financial industry misconduct. But just before his latest gig, he served as general counsel for Willis, responsible for the mega-broker's legal and regulatory affairs around the world.

While that doesn't mean Mr. Dinallo will necessarily go easy on insurers and producers, it has to help that he has firsthand experience in how the industry operates–particularly after many of the major players settled charges of bid-rigging and other misconduct.

What interests me most is Mr. Dinallo's take on contingency fees going forward. Many of the top brokers–including Willis–have sworn off the controversial income stream, and his former boss, CEO Joe Plumeri, has publicly called for such deals to be abolished. Will Mr. Dinallo follow Joe's lead and urge Gov. Spitzer to seek a legislative ban in Albany?

Also watch out for Connecticut Attorney General Richard Blumenthal, who said he expects “contingent compensation bans will be contagious in the industry–eventually ending the pay-to-play culture altogether…”