PCI works to shape regulatory reforms

By Rodd Zolkos

To protect and advance the industry's interests, the Property Casualty Insurers Assn. of America has had one foot in the debate over financial services regulatory reform, and the other in guarding the industry's position in any future debates.

The outlook is considerably brighter as the PCI gathers in Orlando this week for its 2009 annual meeting than it appeared at last October's gathering in Scottsdale, Ariz., according to David A. Sampson, the association's president and chief executive officer.

“Broadly speaking, I think we're very encouraged about where we are in October of 2009 as compared to where we thought we might be looking forward in October of 2008,” he said.

“The financial regulatory reform has slowed down the farther into the year we have gotten, and I think that's a positive thing,” Mr. Sampson said.

Among the factors slowing the rush to regulatory reform has been the recognition among the Obama administration and congressional leaders of the issue's complexity and the possible dangers of making drastic regulatory changes in the midst of the economic recovery, Mr. Sampson said.

“The second dynamic which has slowed it down has been the health care reform debate, which has just sucked all the oxygen,” he said. “Inside the Beltway” turf issues also have slowed the progress.

The PCI has been guarding against the industry being harmed by unintended consequences of any regulatory changes. To that end, the association has positioned itself as an honest broker of information.

A Web site created for congressional staff hosts the association's background research on financial regulation reform. “Our approach is to provide good, rigorous data-driven analysis that can withstand scrutiny, because it does us no good to just be industry flacks where we're going in and spouting the party line,” Mr. Sampson said. “In the midst of a crisis, that's not going to get you anywhere.”

While the PCI's focus obviously is the property/casualty industry, the organization also has monitored the health care reform debate for potential direct impacts in areas such as workers compensation or personal injury and for possible indirect—but potentially damaging—impacts emerging from the debate's rhetoric.

“One of the things that concerns us the most, writ large, are the attacks on private insurance as it really arises from this health care debate,” Mr. Sampson said. PCI's concern is that, in later debates over insurance regulation or natural catastrophe legislation, “private insurance will just be so demonized,” Mr. Sampson said. “So we just don't feel that we can sit back and allow that to go unchallenged.”

The past year's efforts have occurred against a significant backdrop: The property/casualty industry's essential soundness in the face of the financial crisis. Mr. Sampson cites several factors for that performance.

“One is underwriting risk is our core competency as an industry sector, and we never got away from that as a sector. No. 2, we always retained that risk,” he said.

“No. 3, we weren't highly leveraged. We did it with our own money,” Mr. Sampson said. “And No. 4 is the investment portfolio was very, very conservative.”

“As an industry, we still exist the way we did Sept. 1 of '08,” the PCI president and CEO said. “And you can't say that about the investment banking world.”