The US should look to Bermuda?s regulation of the insurance industry as an example of how to reform its own regime according to the head of the Property Casualty Insurers Association of America. Ernst (Ernie) Csiszar, who was poised last night to address local insurance industry leaders about ?Regulatory Developments in the United States?, attributes Bermuda?s success as an insurance market to the failure of the American regulatory system.

?There may be tax reasons, but fundamentally it is a regulatory issue,? he said adding that although it is not in the stars politically, the US needs to entirely restructure its regulatory regime. What our system calls out for is letting market forces work and what you?re doing here is letting market forces work. I have a great deal of respect for what (Bermuda) is doing.

?Nothing is ever perfect, but the whole notion of price controls goes back to the days of the new deal in American and market forces have overtaken that. Even in Eastern Europe they have discovered that price controls don?t work so a greater allowance for markets as prime regulator is what is needed and to the extent that Bermuda can set an example it is perfectly permissible for us to look at it as a model.?

Mr. Csiszar, who has been head of PCI since October 2004 oversees a staff of 240, a $40 million budget and represents more than 1,000 member companies that write almost 40 percent of the nation?s property and casualty insurance.

While the US has an ?obtrusive regulatory regime? burdened by a patchwork of regulation, price approvals, product approvals and market conduct, he appreciates Bermuda?s less bureaucratic system where it is possible to get ?license approval in reasonable period of time?.

While Mr. Csiszar views Bermuda?s regulatory regime in a positive light, others such as New York Attorney General Eliot Spitzer have recently questioned it during a broad investigation of the insurance sector.

Mr. Csiszar said that while he applauds Mr. Spitzer for uncovering criminal activity such as bid-rigging, his ends do not justify the means.

?The whole notion of trial by media of unsubstantiated allegations of offshore actives that in some shape of form are portrayed as criminal or un-American that is nonsense.

?I have described it as McCarthyism in the past and many ways it resembles that,? he said adding that even though Mr. Spinster may move into the political world there are plenty of other politically ambitious attorney generals eager to take up where he leaves off. He is hopeful however that trends may be reversing.

?The other day he lost the mutual fund case and the Arthur Anderson verdict was reversed though you can argue that was on technical grounds.

?Nonetheless there are signs that the pendulum is swinging back towards normality and I am very hopeful that much as we see in most federal cases that let?s get away from this trial by media, let?s get back to due process, let?s get back to innocence until proven guilty.?

Mr. Csiszar also planned to touch on terrorism legislation during his speech last night. IPC wants to see a public private-partnership as opposed to a purely Government driven program when it comes to terrorism.

?We have heard a lot about bonds, we have catastrophe bonds, why not a terrorist type bond. The argument has been there wouldn?t? be much liquidity to it. You could design a bond that would put back to government much like the US treasury that would give us liquidity.

?There are things that could be done by the private market to help but ultimately it is an uninsurable event so you keep going back to the fact that there has to be some backstop other than the industry and the backstop has to come from the government.?

Mr. Csiszar also planned to speak about the ?terribly designed? asbestos legislation which essentially puts the industry at risk to the sum of its reserves and offers no finality to the outcome., Mr. Csiszar said that it is a bill that needs to be fought.

?The way to handle that is either through an amendment that puts a cap on this trust fund or ultimately through stricter medical criteria.

?Right now 90 percent of our claimants in asbestos cases are of the view they have been exposed to asbestos but they show absolutely no sign whatsoever of any disease from asbestos so we are spending billions on what??