Q. The U.S. remains one of the few industrialized nations without a federal comprehensive catastrophe plan. Here in Florida, the state's Hurricane Catastrophe Fund entered 2009 unsure whether it would be able to obtain financing in the municipal bond market if needed. What is your take on our current condition following an almost storm-free season?

A. We are thankful that 2009 brought a quiet hurricane season without significant property damage in the U.S., but there is still much work to be done in bringing long-term stability back to coastal insurance markets. The end of the hurricane season reminds us that balanced insurance public policy at both the federal and state level is critical for coastal residents and our economy. This is no time to be complacent. Experts agree that America still faces the prospect of more frequent and severe natural disasters in the coming decade, and, certainly, this increasing exposure to natural disasters is exacerbated by the dramatic increase in population growth and the resulting growth in property at risk in the most disaster-prone areas in Florida and other states.

Q. As the statute of limitations plays out for hurricane-related claims from the 2004-2005 storm seasons, insurance companies are fighting resurrected claims, many of which were paid and closed. This has brought the practices of some public adjusters under intense scrutiny. From your perspective, is Florida overly burdened with what are often deceptively encouraged, unethical new claims? What can effectively bring more protection for both consumers and companies?

A. Public adjusters need to be regulated in order to protect the public from fraud and incompetence. While many public adjusters make many contributions to the claims process, the unethical conduct of a few takes advantage of consumers and hampers the ability of insurers to settle claims in an organized, timely fashion.

Q. Mitigation is one of the universally agreed-upon ways to offset the costs of storms' effects. However, mitigation fraud is regarded by many as a significant problem in Florida. The amount of the mitigation credits are also under scrutiny. How do you see insurers working through this balancing act?

A. This certainly is, as you describe it, a balancing act. We have always taken the position that strengthening homes is the No. 1 solution to lowering losses after a storm. The mitigation measures must perform during any event and reduce damage to be effective for consumers and insurers. We also believe that consumers save money not just through discounts, but also out-of-pocket due to lower losses under percentage-of-value wind deductibles. Further, we stress that discounts should be based on sound actuarial science, not done arbitrarily, and that the system must have credibility to function. Fraud is the enemy of credibility.

Q. Can you update us on the federal bills related to the Chinese drywall situation?

A. There are seven federal bills that address that issue, but only one appears to directly affect insurers. That bill is H.R. 4094, introduced Nov. 7 by Rep. Charlie Melancon (D-La.). It would prohibit insurers from canceling or non-renewing homeowners' coverage based on the presence of drywall containing elevated levels of sulfur or strontium, or imported from China between 2004 and 2007. The bill would also prohibit changes to homeowners' coverage and/or rates based on the presence of the drywall, and it creates a private right of action against an insurer so doing. At present, the bill has no co-sponsors.

Other federal bills include:

• H.R. 1728, introduced March 26 by Rep. Brad Miller (D-N.C.), passed the House and has been referred to the Senate. It calls for a study on the effect of Chinese drywall on foreclosures.
• H.R. 1977, introduced by Rep. Robert Wexler (D-Fla.), would create a commission to study Chinese drywall and impose an interim ban. S. 739, introduced by Sen. Bill Nelson (D-Fla.), is a companion bill to Wexler's proposal.
• H.R. 3473, introduced by Rep. Parker Griffith (D-Ala.), passed the House and has been referred to the Senate. It would allow loans to impacted homeowners.
• H. Amdt. 492 to H.R. 3854, introduced by Rep. Glenn Nye (D-Va.), passed the House and has been referred to the Senate. It would allow loans to homeowners for replacement.
• S. Res. 91, introduced by Sen. Bill Nelson (D-Fla.), would create a commission to study the issue, recall defective Chinese drywall, prohibit its importation, and provide tax incentives for repairs.

Q. Worries persist that we are about to experience a rough time in commercial real estate, mirroring the foreclosure nightmare in the residential housing market. If that happens, how will it impact business insurance? Is there any way to avoid or lighten the hit?

A. We can expect an increase in property claims, both from moral hazard (i.e., arson for profit) and morale hazard (i.e., reduced maintenance, safety inspections), as businesses face increased financial pressures. A drop in commercial property values will magnify these issues. A similar increase in liability claims can be expected as reduced maintenance and shortcuts are alleged in more premises' claims and product liability claims. Reduced maintenance, training, and money pressure will be issues in some commercial auto claims as well. Lightening the load for insurers will require vigilance in underwriting, loss control, and claim processes.

Q. Your thoughts on Florida's auto insurance market?

A. We supported repealing no-fault, which occurred for 30 days until it was re-enacted. We believe the residual market population should be kept low, and the market liquid and competitive. And we are always concerned about fraud. We support funding for more dedicated PIP fraud prosecutors.

Q. In closing, give us your thoughts on 2010 and beyond. What should our industry be focusing on as we ride out the current economy?

A. One thing about the insurance business is that it teaches you to think with a long-term view. Loss exposures, especially on the liability side, last for years. Underwriters tend to think that way going in, then make incremental adjustments based on the short-term environment.

There are some silver linings in an economy like the current one. The focus brought on by the current economic climate will help insurers confirm the financial stability of the businesses they insure. It will also confirm that insured values are appropriate and that business income coverages are at appropriate levels. Finally, this is an opportunity for insurers to work with insured businesses on routine activities that can prevent premises, product, and auto liability claims. For insurers and insured businesses alike, a slow economy can provide an opportunity to prepare entry of new markets and products so that they are ready to go as the economy returns to expansion.