It was a short but informative visit last week paid to NU Editorial HQ here in Hoboken by Florida Insurance Commissioner Kevin McCarty, who laid out the reasons why his state is going its own way on reinsurance regulation, given its massive catastrophe exposure and the snail's pace of change at the national level.

(For full coverage of the Jan. 9 visit, click here.)

Mr. McCarty told NU that Florida would likely have a new reinsurance collateral law on the books by April, permitting foreign carriers in good standing to do business in the Sunshine State without having to post the equivalent of 100 percent of its potential liabilities–the standard trapped in the Byzantine model law alteration process at the National Association of Insurance Commissioners.

New York is taking the same road, prompting some to suggest (myself included) that the two states are going rogue (which, in this case, is a compliment, not a criticism).

Still, Mr. McCarty's frustration was plain as he addressed that point in our conference room. Weve been abundantly patient, he told us, stating that his department was prepared to go along with a revised rule from the NAIC that would have set up a sliding scale of collateral for foreign and domestic firms alike, depending on how rating agencies viewed them.

But then the proposal got stuck in the seemingly endless NAIC review process. We were disappointed the NAIC [went back to reconsider] something we had studied for seven years, noted Mr. McCarty. Who could blame him? How long can the market afford to wait for state regulators as a whole to agree on anything? It's like herding cats!

Florida, however, is not about to go out on a limb alone. Mr. McCarty said his people are closely coordinating with the New York department to make sure both giant states are not independently reinventing the wheel. At the end of the day, if not similar, the differences between the two regulations will be minimal, he assured us.

The hope, of course, is that by making it easier to enter Florida (by not automatically having to post 100 percent collateral), capacity will rise–particularly for catastrophe exposures. Indeed, the commissioner's authority to revise the collateral rule came under the same legislation that allowed the Florida Hurricane Catastrophe Fund to offer reinsurance based on below-market pricing. That's all part of the “good cop” role in Florida's one-two punch.

However, there is a “bad cop” on duty as well. The grand plan is to lower property insurance rates for Floridians, but thus far, that objective has not been reached–at least not to the satisfaction of state lawmakers. That's prompted the scheduling of many hearings, extensive document demands and preparations for a massive class-action suit on the state's part.

Mr. McCarty said he would also like to see Uncle Sam offer some relief–if not by forming a national catastrophe insurance facility, then at least by allowing private carriers to take a tax deduction for disaster-reserves.

“The U.S. Tax Code is the problem,” he said. “It makes no sense now for insurers to set aside a catastrophe reserve when they're going to get a 33 percent haircut.”

However, he is not realistic help is on the way from Washington, even with the presidential candidates from both parties tripping over one another to pledge their support for a national cat plan to win support in the critical Florida primary just a couple of weeks away.

“It was hard to make the case [for a cat reserve tax deduction] when we had federal budget surpluses,” he said. “Now that we have deficits, it's even harder,” adding that the idea is “still seen as a bailout for insurers,” raising the odds against passage even higher.

Meanwhile, he said, “there is a hurricane out there that is the daddy of all storms. We're doing our best to be prepared for it.”