Notwithstanding the bad press generated by the AIG bailout,property-casualty carriers must convince Congress they are betterat risk management than their banking counterparts to avoid federalregulation.

In a recent presentation sponsored by the National Underwriter,Robert P. Hartwig, president of the Insurance InformationInstitute, outlined the key points insurers need to present theircases:

o Insurers are more disciplined than banks in underwriting,especially in managing their overall exposures

o Insurers have low leverage–especially compared with banks

o Insurers have relatively conservative investment portfoliosthat are far less volatile and more liquid than banks

o Insurers maintain a strong relationship between underwritingand risk-bearing, unlike banks which package and securitize theirrisks.

And although Hartwig conceded that some form of federalinsurance oversight appeared inevitable, he cited “a lot ofunresolved issues” for the industry and Congress to work throughbefore that happened, including:

o Differences, if any, between the regulation of life insurersversus their property-casualty counterparts

o The fate of state guaranty funds, with the Federal DepositInsurance Corp. exploring the idea of establishing a nationalinsurer insolvency backstop

o Whether regulatory authority might be split on a functionalbasis, with Washington handling solvency, while the states continueto oversee forms and pricing–a possibility Hartwig characterized as“an extraordinary conflict”

o How to reconcile differences in state workers' compensationlaws, including the fate of state funds.