While industry association members who have worked with the outgoing New York insurance superintendent point to his handling of the AIG meltdown, the World Trade Center coverage dispute and his willingness to confront controversial issues as his major accomplishments, Eric Dinallo shifts much of the credit to the agency he will be departing next month.

Indeed, in an interview with National Underwriter, Mr. Dinallo said his biggest accomplishment over the last two years was recognizing the quality of the department he inherited and making few, if any changes. He said it was the agency and the people in place that allowed him to step right into large-scale, thorny issues such as AIG’s woes and the World Trade Center dispute.

Industry members said it was Mr. Dinallo’s approach as a regulator that allowed him to step up on the big issues.

Lane Rubin, chair of the Independent Insurance Agents and Brokers of New York, said Mr. Dinallo educated himself and became well versed in the industry’s problems before he tackled them. Mr. Rubin also said the superintendent was open-minded and listened to multiple viewpoints.

As an example, he noted that the department sought agent feedback on a producer compensation regulation, and while all of the points agents made were not in the final draft, Mr. Rubin said the department was at least willing to listen to the “other side of the story.”

Both Mr. Rubin and Matthew Guilbault, director of government and industry affairs for the Professional Insurance Agents of New York, said they did not always agree with Mr. Dinallo’s final determinations, with Mr. Guilbault citing the producer compensation issue as an example. But they agreed they respected the process he went through to reach decisions.

“He hasn’t had an easy tenure, but that being said, I think he was the right man for job,” according to Mr. Guilbault.

“While we have not always seen eye to eye on every issue, Superintendent Dinallo worked hard to protect consumers in New York and create a marketplace that focused on choice and competition,” said Paul Magaril, regional manager and counsel at the Property Casualty Insurers Association of America.

Ellen Melchionni, president of the New York Insurance Association, characterized Mr. Dinallo as a “big-picture thinker” who came up with interesting concepts and who was not a bureaucrat. “He really will be missed,” she said, adding that she thought he was one of the best superintendents New York has ever had.

One could say that, while the insurance department and its superintendent showed a willingness to tackle big issues, the big issues often sought out the department and Mr. Dinallo. His tenure was bookended by two significant industry events.

He took over the department in the midst of the producer compensation fallout following bid-rigging and contingency fee abuse on the part of major brokers and insurers exposed by his former boss as state attorney general and the governor who named him superintendent, Eliot Spitzer. Now, he leaves with the current financial crisis–led by AIG’s near collapse–still in full swing.

Speaking to what was on his plate when he started his job, Mr. Dinallo said, “I think the biggest early challenge was settling the World Trade Center dispute. And I think it was essential for the credibility of the new phase for the p-c markets and the catastrophe markets.”

Noting that the dispute over coverage had been going on for several years before he became involved, he said, “I think that was an early, very important challenge.”

Mr. Guilbault mentioned the World Trade Center dispute in discussing what he believes was one of Mr. Dinallo’s biggest successes–pressing for contract certainty. In highly complex commercial insurance issues involving the World Trade Center, he noted, there were coverages in place but no copy of the actual policy.

He said Mr. Dinallo issued a circular letter stating that all terms of a policy should be agreed to and the insured provided with a copy, normally within 30 days of the policy’s inception. The October 2008 letter added that insurers, agents and brokers should, within 12 months, develop and implement practices to assure policy documentation is delivered within 30 days.

Mr. Guilbault said contract certainty is a great benefit to consumers and agents, adding that insurers benefit as well since it removes a lot of legal questions for them after a loss.

Both Mr. Rubin and Ms. Melchionni cited Mr. Dinallo’s handling of the AIG situation as his greatest accomplishment. Aside from his involvement in working with AIG itself, they pointed to his appearances on TV and in print defending state regulation and explaining important components of the financial crisis.

Mr. Rubin said Mr. Dinallo made the point that state regulation kept the insurance industry solvent through the crisis, adding that by stepping up and speaking in public and before Congress, there was no hysteria regarding the insurance industry as a whole despite AIG’s financial woes trading credit default swaps in its Financial Products unit.

Ms. Melchionni noted that Mr. Dinallo took time to describe publicly what credit default swaps were and how they affected the economy, and she said he was also able to explain why AIG is actually “Exhibit A” in what is good about state regulation.

Gary Henning, assistant vice president covering the Northeast for the American Insurance Association, said he could not think of one defining accomplishment, but rather hailed Mr. Dinallo for changing the general approach of his department. He said it seems to be more oriented toward free markets and competition than in the past.

Mr. Guilbault also said Mr. Dinallo leaves behind “a new vision for the department–one that we haven’t seen from other superintendents.” He described the new vision as a willingness to tackle issues and expand the breadth and scope of office.

Mr. Guilbault wondered if the next superintendent would continue this transformation or scale back the department to a more traditional role.

Most association representatives who spoke with NU cited the concept of principles-based regulation as a transformative idea championed by Mr. Dinallo. The superintendent did not abandon the concept even in the face of a fiscal crisis when many are seeking more rules, challenging the view that it is too “light touch” to work in today’s environment. “I think it would have helped, not hurt us in the financial crisis,” he said.

He noted that with rules-based regulation, there are always loopholes to exploit, and individuals and companies can do things legally that end up blowing up the economy. While a principles-based approach may have a reputation as being hands-off and easy, Mr. Dinallo argued that “it depends on who’s wielding it.”

While industry members had a lot of praise for Mr. Dinallo, they also pointed out areas where they disagreed with the department during his tenure.

Mr. Henning and Ms. Melchionni said they did not endorse Mr. Dinallo’s approach regarding mandatory catastrophe reserves for property-casualty companies. Both complained that New York would be alone in mandating such reserves. Ms. Melchionni said the idea is problematic when companies are facing tough market conditions, new obligations and assessments.

For his part, Mr. Henning said Mr. Dinallo wants to see federal action on mandatory catastrophe reserves, but he added, “We are not so sure that doing single-state catastrophe reserving makes sense from an insurance standpoint.”

Mr. Guilbault cited producer compensation as an area where he disagreed with Mr. Dinallo, even though he spoke positively of the manner in which the superintendent approached the issue. Mandatory disclosure, he argued, is unnecessary.

Mr. Rubin said he believes producer compensation disclosure should be voluntary and provided when a consumer asks for the information. He said he was encouraged by recent conversations IIABNY had with Gov. David Paterson on the issue. Most important, though, Mr. Rubin said there needs to be finality to the producer compensation disclosure issue.

Mr. Dinallo recognized as much, mentioning producer compensation as the “biggest open issue” and something that is essential for consumers. He urged producers to be open-minded on the issue.

“They should be proud of what they earn,” not embarrassed by it, he said. Insurance has survived the current financial crisis so well, Mr. Dinallo said, that producers should be able to look consumers in the eye on the compensation issue.

Regarding other outstanding issues, Mr. Dinallo said he is disappointed the department was unable to resolve the medical malpractice crisis facing doctors and insurers in the state–a sentiment echoed by Mr. Henning–and he also said he wishes there was more time to look into re-establishing the New York Insurance Exchange. The exchange, he said, is a “huge opportunity as we find ways to make New York a leader in financial services and capital markets.”

As to his future plans and whether he might run for public office in the near future, Mr. Dinallo did not reveal much. He said he is a “big fan of public service,” but for the moment, he is focused on teaching “Markets, Ethics and the Law” at NYU and getting his course materials together. He said he is also focused on leaving the department in the best possible position.

To that end, industry professionals did not speculate much on who might be the next superintendent. If the governor chooses to promote from within the department, both Ms. Melchionni and Mr. Rubin cited First Deputy Superintendent Kermit Brooks as a possible candidate.