President and CEO

American Insurance Assn.

Washington

Q: What key 2010 federal-level legislative efforts are likely to be?

We are certainly expecting to continue to work on a financial services reform bill. I think the key for the insurance industry is to educate the lawmakers on the nature of the business in terms of the risk profile of property/casualty insurers. Our primary focus will be on the systemic risk and resolution authority. Other priorities include Consumer Financial Protection Agency, the office of national insurance and corporate governance issues.

We’ve got to continue to work on the (National Flood Insurance Program). As the McCarran-Ferguson issue continues to be out there in the context of health care reform, that will remain a priority for us—immediately in the context in the of health care but longer term, the general preservation of the limited antitrust exemption.

Our overall goal is to look for ways to improve the environment for property/casualty companies.

Q: What state efforts are you watching?

Our general sense was that last year activity at the state level wasn’t what we anticipated largely in response to the economic crisis. In 2010, it’s going to be a very consumer-oriented, very populist-oriented environment. It has a tendency to make state legislatures active.

We’ll look for the aggressive plaintiffs bar coming in to repeal the pro-business reforms of the last decade. Bad faith is clearly a priority for them. Workers compensation, particularly in California, with the changing of the guard out there after this year’s elections, will set the stage for serious challenges in workers compensation.

I think we’ll see very aggressive and active legislative sessions in the states.

Q: What were the most important federal legislative achievements in 2009?

From our perspective, we’ve always supported financial regulatory reform that was responsive to the crisis, that would address gaps in regulation. We feel like we were able to accomplish some recognition of the unique nature of the risk profile of property/casualty companies. That’s evidenced by the inclusion of a risk matrix in the resolution language in the House bill, the inclusion of a federal insurance office and the fact that insurance was rightly recognized to not be included in the CFPA. We were able, from an achievement standpoint, to say, “We’re not your risk problem; we’re not your bailout problem.”

Q: What about at the state level?

It was a good year in terms of defeating those efforts to restrict the use of credit (scoring). We were really successful on tort reform and bad faith efforts in those states that moved on those efforts in the wrong way. In North Carolina, we got favorable changes to the Beach Plan (property residual market) there. We had to restructure the Texas Windstorm Insurance Assn. and work on the reauthorization of the insurance department.

Q: What will the outcome of the midterm elections be?

If the trends are right now in the polls, Republicans stand to gain a significant number of seats and I think become more competitive in the Senate. I think the bottom line translates to tighter margins in both bodies and the possibility of flip in control. I think we’re going to see more serious legislating because you’re not going to have the minority party shut out.