While it is rare for the property-casualty insurance industry to mount a united front on almost any controversy, conflict within the business was particularly harsh this year on a number of major public policy debates.Lets start with the split over a long-term response to catastrophe threats.

After back-to-back years of record hurricane losses, Allstate helped launch a high-profile campaign--ProtectingAmerica.org--with the goal of establishing a national safety net of some sort.

"There's a lot more agreement within the industry than people think," according to Tom Wilson, president and chief operating officer of Allstate Corp. He cited consensus on the need for improved building codes that are vigorously enforced, as well as an end to rate suppression so that the price of insurance accurately reflects the risk being taken.

However, while insurers appear united on the need for a federal terrorism reinsurance backstop because they agree such a risk is ultimately unpredictable and uninsurable, most give no such ground on hurricanes and earthquakes.

"We will fix our problem," declared Mr. Wilson, in no uncertain terms, noting how Allstate is pulling back in cat-exposed areas such as Long Island, N.Y. "But that won't solve the industry's problem or the country's problem."

The battle had one high-profile casualty--Ernie Csiszar, president of the Property Casualty Insurers Association of America, who abruptly resigned after PCI joined ProtectingAmerica.org, then pulled out shortly thereafter. While Mr. Csiszar might have been jettisoned over organizational rather than philosophical differences, the startling turn of events demonstrates how charged this debate could be.

On another front, regulatory battles continued to split the industry, with some heavyweight groups pushing hard for an optional federal charter, while others remain firmly in opposition. The battle is raging within both the insurance company and brokerage communities.

On the company side, while individual carriers and groups such as the American Insurance Association argue that an OFC would free insurers from costly and unproductive business barriers, others such as the National Association of Mutual Insurance Companies are steadfast backers of continued state oversight.

Well be the first to admit the current system does not work, but it is salvageable, said Robert Wadsworth, president and CEO of Preferred Mutual, a NAMIC leader.

Meanwhile, the producer community is divided as well, with the Council of Insurance Agents and Brokers at odds with the Independent Insurance Agents and Brokers of America over the need for an OFC--although the Big I would be willing to live with a series of federal benchmarks for state insurance commissioners to follow.

While this particular industry split is nothing new, the arguments over federal regulatory alternatives heated up this past year, as Congress moved forward on bills to standardize oversight of surplus lines and reinsurance. With Democratstraditionally more favorable towards federal regulation--in control of Congress next year, the odds of groundbreaking legislation being passed might have improved.

A war of words also broke out last month between U.S. insurers and their counterparts in Bermuda, with some challenging the tax advantages of the insurance island paradise, while questioning the staying power of much of the markets recently added capital via private equity firms.

Last, but not least, independent agents and national brokers were at each others throats this past year over the payment of contingency fees, with agents struggling to keep their sales incentive system in place. (See top story #4).

How do you think these disputes will be resolved?

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