John J. Degnan, vice chairman and chief operating officer of Warren, N.J.-based Chubb, said participants in the financial services sector have witnessed a series of unprecedented events that have rocked it to its core, wreaking financial havoc on much of the nation, including the nationalization of American International Group. The government took a 79.9 percent stake in AIG as collateral for an $85 billion loan.

Mr. Degnan said it is too early to assess the fallout from these shake-ups, but he seemed to admonish insurers who may seek to take advantage of AIG's situation. They “should not gloat over the victims,” he said.

“When one of our largest and most prestigious insurance companies needs to be bailed out by the government, we all suffer a loss of confidence by our customers,” he said. “They wonder who will be next.”

The industry needs to assure customers that insurers are strong and stable and will be there to pay claims when called on to do so, he said.

“If there is one lesson to be learned here for carriers, it is that our desire to earn a superior return for our shareholders must never overpower our responsibility to preserve our financial stability so the wherewithal to fulfill our financial responsibility to our policyholders will never be jeopardized,” he said.

In an interview with National Underwriter, Markham R. McKnight, president of BancorpSouth Insurance Services Inc. and the incoming chairman of the CIAB, said what is particularly alarming about the current crisis is the fast pace of change that is taking place.

“My answer in two-and-a-half hours from now could be different from two weeks ago,” he remarked, adding that the financial crisis has “absorbed all the oxygen” that could have been used to push through needed industry reforms such as gaining greater market efficiency.

However, for the coming year, one issue that will occupy the industry will be preventing onerous regulation from becoming a reality. More regulation is coming, he said, and as the country works through this financial crisis, one concern is that some will want insurers to use their loss reserves to cover losses from bad assets and erode the carriers' ability to pay claims.

“We need good regulations,” Mr. McKnight said.

“We want to interact in such a way that we protect consumers and surplus. But we do not want to be so overly regulated that it throws costs burden back on us.”

More important, he said, will be reinforcing confidence by reassuring clients of the soundness of the industry and providing an understanding of what is happening before it become news.

“We do not know where the tail is going to whip on this thing,” he pointed out.

Others brokers here said AIG's financial difficulties have prompted clients to reevaluate their position with the insurer.

Prior to the conference, Patrick J. Gallagher Jr., president, chairman and chief executive officer of Itasca, Ill.-based insurance broker Arthur J. Gallagher, told National Underwriter that his firm is monitoring changes at AIG and getting as much information as possible out to clients who are hungry to know what is happening.

AIG is “an important, prominent player in the market. Whichever way it goes with AIG, we will take care of our clients. There is plenty of market out there.”

Eric J. Andersen, CEO of Chicago-based Aon Corp.'s U.S. retail business, said a lot of clients are calling with questions about AIG. The broker has responded my making information available and offering Web-based conference discussions.

He said the primary question from clients is, “is AIG alone? That is the $64,000 question clients want answered.”

He added that company third-quarter results “will be confessional time.”

“It is not a price issue but quality of the insurer,” noted Mr. Andersen. “Price is secondary. [Clients] want to know they can get the coverage and limits they need.”

“Our desire to earn a superior return for our shareholders must never overpower our responsibility to preserve our financial stability.”

John Degnan, Vice Chair, Chubb