Insurance Community Says Dinallo's Resignation Will Leave a

The insurance community agrees: New York Insurance Superintendent Eric Dinallo will leave a void when he steps down on July 3.

Since being appointed to the post in January 2007, Dinallo has emerged as a battle-tested national figure. Industry, regulator and consumer representatives complimented Dinallo for his leadership in addressing the subprime credit crisis, the American International Group Inc. (NYSE: AIG) meltdown, the worst recession since the Great Depression and arguments over state versus federal insurance regulation.

New York Insurance Department spokesman Andy Mais declined to comment on speculation that Dinallo is considering a run for state Attorney General. Attempts to reach Dinallo for comment were not successful.

Wisconsin Insurance Commissioner Sean Dilweg said he would leave comment on a run up to Dinallo, but said he has great potential to be successful in whatever he does next. Dilweg added, "Eric has a lot of opportunities."

Dilweg worked closely with Dinallo on subprime credit issues and their traumatic effects on bond insurers in 2007 and 2008. Working through the National Association of Insurance Commissioners, they helped expedite licensing for Berkshire Hathaway Assurance Corp. to enter the market (BestWire, Jan. 22, 2008).

"Eric has that knack for taking very complicated financial issues and boiling them down to how they affect the everyday consumer," Dilweg said.

"He had a lot of crises and he dealt with them," said Birny Birnbaum, executive director of the Center for Economic Justice.

Dinallo will become the Henry Kaufman Visiting Professor of Finance at New York University's Stern School of Business. In 1990, he earned his law degree from NYU.

Birnbaum, who is also a NAIC-appointed consumer liaison, said Dinallo was a "very progressive regulator" who brought a lot of credibility into the state-versus-federal argument and debates over credit default swaps. Dinallo testified before Congress at least 11 times in less than two years, leading the call for regulation of credit default swaps (BestWire, March 26, 2009).

Dinallo previously worked as general counsel for Willis Group Holdings and managing director and global head of regulatory affairs for Morgan Stanley. He served under then-Attorney General Eliot Spitzer as chief of the securities bureau, where he led investigations into the financial services industry.

NAIC President and New Hampshire Insurance Commissioner Roger Sevigny said Dinallo is "a great ambassador for state-based regulation."

"While superintendent, Dinallo has played a lead role in addressing important financial issues such as the risks associated with credit default swaps, the role of state and federal government in the regulation of insurance as well as reform of the New York workers' compensation system and the reinstatement of insurance flex rating for auto insurance," Property Casualty Insurers Association of America?s Regional Manager and Counsel Paul Magaril said in a statement.

Bill Latza, a partner at Stroock & Stroock & Lavan, a New York law firm with a large insurance caseload, described Dinallo as a "remarkable person in remarkable times." But Latza said Dinallo's loss can be overstated.

"The New York Insurance Department is a world-class regulator. It was when he got there and it will be when he leaves," Latza said.