PCI's CEO Warns Of Divide & Conquer Washington Strategy

NU Online News Service, Oct. 23, 2:38 p.m. EDT

The chief executive officer of the nation's largest property and casualty trade group said he plans to warn his membership against a "divide and conquer" strategy in Washington.

David A. Sampson, CEO and president of the Property Casualty Insurers Association of America (PCI), made his comments in advance of the organization's annual meeting due to begin Sunday in Orlando, Fla.

His worry, he said, is that in dealing with federal lawmakers and the White House, "industries will be cutting their own best deals and throwing the other guy under the bus."

As examples, he mentioned health care reform that has pitted doctors, pharmaceuticals and insurers against each other, and energy legislation that has seen nuclear, renewable and other energy sectors "trying to cut their best deal regardless of what that means. We're going to guard against that in the property and casualty industry."

Mr. Sampson said PCI is well financed to pursue its political aims. The group's plan is for its political action committee to raise $1 million for the 2009-2010 election cycle, he said.

For this year, he said PCI's fundraising goal is $480,000, and "we've already got in $436,000.

So far in Washington this year, Mr. Sampson said the insurance industry has been successful in efforts to prevent additional regulation for insurers in proposed financial services regulatory reform legislation and consumer protection measures.

"I think we've been successful in making a compelling case that the property and casualty industry did not cause the financial meltdown."

He said PCI representatives have pointed out that over the past five years the industry had handled the avalanche of additional claims from events like Hurricane Katrina and Hurricane Rita in addition to processing its normal business "without having to ask for a bailout. We've been laying out that data to Congress....We have a compelling story to tell."

The PCI, said Mr. Sampson, has been very encouraged by "how open and responsive Congress and the [Obama] administration have been to our data."

"The first reason is underwriting is our core competence," he noted, adding that the industry has not engaged in securitization, is not highly leveraged, and has investment portfolios that are tightly regulated at the state level.

"All those factors allow us to perform as economic crises come and go," he said.

Other risks that Mr. Sampson said he will alert members of include a recovery which involves prolonged slow growth. Companies, he said are going to remain on the sidelines and not engage in rehiring "until they have more confidence that this economy is for real."

He also foresees that massive government deficits will lead to inflation, a factor of concern to P&C company CEOs because it will mean high repair costs for autos and homes in an environment where rate increases will be difficult to obtain, as was the case during the inflationary period of the 1970s.

Additionally Mr. Sampson said he has concerns that efforts will be made to undermine the private insurance markets as exemplified by moves to push a government-run public option for health insurance that could "crowd out" private insurers. That effort, he said, could spill over into the p&c sector.