It's tough to grow. There are virtually no new start-ups in terms of potential customers, so the 'pie' of business is not growing. The only way to grow is to take business away from others. Maintaining a company's renewal book of business in a prudent way and providing excellent service to agents and policyholders is crucial in this environment.

NU: What are the key issues you have to deal with as chair of NAMIC this year, and what do you hope to accomplish?

John Hill: A major initiative is to make sure Washington understands that p&c companies were not responsible for the [financial system's] collapse. It is important that we not get swept up into the reforms targeting other parts of the financial services industry.

We came out from the downturn without needing any bailout funds, so you can see that it is not necessary for us to be regulated by the federal government. Therefore, we have to closely work with legislators in Washington to ensure that there will be no negative impacts from financial reform on the industry and the policyholders we serve.

On the state side, we have to work to improve state regulation at this level.

As we are a membership-driven organization, we have to increase involvement of our members. We have to encourage our members to meet locally with their representatives in Congress, and in Washington through our Congressional Contact Program. This engagement at the grassroots level can have a tremendous impact, giving Congress a better understanding of our business.

NU: What are some of the unique challenges facing mutual insurance companies today, and what are some of the unique advantages of being a mutual?

John Hill: I'd say the biggest challenge is also the biggest advantage. By their structure, mutual insurance companies don't have ready access to capital. This can be a disadvantage, but in a stormy environment, a conservative capital structure positions you nicely.

Mutual insurance companies are owned by their policyholders, so this enables them to think long term and not have to respond to quarterly shareholder pressures. This means that companies in difficult markets aren't facing the same premium growth pressures in an environment where it may not be appropriate to have substantial growth.

The company's interest is aligned with the policyholder's interest of maintaining a strong balance sheet to ensure the company will be there to meet the needs of the policyholder in the long run.

NU: One of the criticisms of the industry is that it rarely speaks with one voice. At times, multiple producer and insurance company groups have opposing agendas. How can the industry make its case more effectively in this diverse environment?

John Hill: There are various issues we all agree on–for instance, the use of credit scoring, the need for tort reform, flood insurance reform and improving the state regulatory system. In addition, most companies agree that we don't see the need for a systemic risk regulatory body to cover the p&c industry.

Of course, there are also disagreements. Having more than 4,000 p&c companies in the U.S., we can't agree on everything. Some companies favor a federal regulator.

We at NAMIC say the state system works, but it has to be improved. Federal regulation is difficult to implement as states are unique in terms of underwriting risks and environments. Solvency regulation by the states has worked out, as evidenced by the fact that no federal bailout money was necessary for p&c insurers in the recent financial collapse.

Another aspect that speaks for state regulation is consumer protection. People locally are better equipped to provide the benefits needed than could be done by federal regulation.

NU: The insurance industry is often on the defensive–both with lawmakers and the mainstream media. How can insurers change that? What can the industry do to improve its reputation and credibility with the general public as well as with legislators and regulators?

John Hill: Two things are frustrating to me. First, our industry is unfavorably talked about in the media. That's unfortunate. We can handle 1,000 claims perfectly, but if one fails, it is the only one that is talked about.

We have to address more actively the positive things we do and accomplish. Most people don't understand our business–what we actually do and how important the insurance industry is. We are a linchpin.

Also communicating the industry's involvement in charity organizations and community work is necessary and has been neglected. The St. Baldrick's Foundation, for example, is an organization started by three members of the insurance industry to fight childhood cancer by funding research. NAMIC CEO Charles Chamness is very active with the organization, but few people know about our role in this important work.

Secondly, there is the whole idea of getting a larger number of younger people involved in our business and showing them our industry is an attractive one. Currently, they are more likely to pursue a career in banking or investment banking instead of in the insurance industry because of the misperception of those industries as being more dynamic.

NU: What can insurers do to recruit the best and the brightest–not only out of college, but from other financial service sectors? How can the industry diversify its ranks to better reflect the society at large, both in terms of race and gender–particularly in its leadership?

John Hill: As already mentioned, we have to attract more young people to our industry. We have to actively get the word out. Making students aware of careers in our business should start at the high school level, to introduce them to our business and the possibilities in our industry before they start going to college.

Being successful in that, we will also have a broader pool of new people coming into our industry. This will consequently lead to more diversity, in both gender and race, in our industry and eventually have an impact on a more diversified leadership in the years to come. I am convinced this change will come, but the industry has to do its part as well.