Ponte Vedra Beach, Fla., April 21--A free market in insurance pricing, monitored by a streamlined, state-based regulatory system, is the best way to relieve property insurance problems in distressed markets and keep coverage available and affordable throughout the U.S., according to members of a CEO panel at the 2008 AAIS Main Event conference.

The Main Event is an executive conference devoted to product-related issues of strategic importance to property/casualty insurers. It is sponsored by the American Association of Insurance Services (AAIS), a national advisory organization that develops policy forms and rating information used by more than 600 P&C carriers throughout the U.S.

In his opening comments as a panelist, Robert Wadsworth, chairman and CEO of Preferred Mutual Ins. Co., New Berlin, N.Y., said that the P&C business has consistently responded well to natural catastrophes, and noted that an estimated 95% of claims from Hurricane Katrina were settled within a few months of that historic disaster.

Given that record, Wadsworth said, it is not necessary for the federal government to create special disaster pools, at least for perils currently insured under standard policies. "If you allow companies and reinsurers reasonable freedom to operate, you will see capital flow into this industry," he told attendees.

Robert Restrepo, chairman and CEO of State Auto Insurance, Columbus, Ohio, agreed, but urged the insurers in attendance not to simply retreat from distressed coastal areas. "Collectively and individually, we can't go running away from the coasts," he said. "If we are going to be responsible risk partners, we have to work with the state wind pools."

The prospect of a federal charter and regulator was put to the panelists, prompting some disagreement between Wadsworth and Restrepo. Wadsworth has served in the past as chairman of the National Association of Mutual Insurance Companies (NAMIC), which generally opposes a federal role in P&C insurance, and Restrepo has served as chairman of the American Insurance Association, which supports the idea.

"[P&C] insurance is a very state-specific business," said Wadsworth. "To relinquish control to the federal government would not serve companies or policyholders."

"Companies looking to expand want to have a choice [in charters]," Restrepo said.

Wadsworth and Restrepo were joined by Darin Kath, president and CEO of Jewelers Mutual Ins. Co., Neenah, Wis., who commented that the growing importance of Indian firms in the jewelry business was one example of how insurers needed to develop the ability to insure exposures globally.

They were also joined by George Dale, former insurance commissioner of Mississippi, who said that repeated occurrences of major disasters raised the question whether people should be allowed to live in areas prone to loss. Dale noted that federal funding for relief in the Gulf States far exceeded that of other famous disasters, saying that, "You have been generous to the Mississippi Gulf Coast, and I hope we will be grateful."