The inland-marine marketplacemirrors many other insurance segments as carriers continue to dealwith a soft rate environment. The market is "fierce" and "continuesto be competitive," says Joseph Tracy, president of TravelersInland Marine. "There's more competition, with a couple of [new]entries" looking to cash in on a historically profitable line ofbusiness.

But those entering the field—as well as establishedplayers—aren't likely to have an easy go of it, at least for theforeseeable future.

Jerry Theodorou, vice president of insurance research andpublications for Conning, says reports of economic recovery are"not too encouraging" in the short term. Construction remainssluggish. Loss costs are rising.

"The exposure base for organic growth is not there. These aretough conditions," he says, and will remain so for at least therest of the year.

The most recent report from MarketScout showed thatinland-marine rates were down by 3 percent. Tracy had a slightlymore optimistic take on the current economic conditions: "Maybe[prices] have flattened out," he says.

CONSTRUCTION, TRANSPORTATION

Inland marine is described as a"bellwether line of business" by Pat Stoik, senior vice presidentand global marine manager for the Chubb Group of InsuranceCompanies. Two of its key coverage areas, construction andtransportation, are "impacted first by an economic crisis"—and theyare the "first to show signs of recovery."

Right now, Stoik has glimpsed a few small indications ofimproving conditions: Some building projects have been taken out ofmothballs, and inventories are being rebuilt.

"I haven't uncrossed my fingers yet, but there has been someuptick in business," Stoik says.

But along with these hints of good news, somenew challenges are emerging, especially on the regulatory front.New federal standards are shifting the landscape—making it evenharder to set rates.

 One example is the new power given to the Food andDrug Administration, which now can condemn shipments of cargo for"presumed contamination." Another is the Compliance, Safety andAccountability (CSA) program.

The CSA was put in place toimprove the safety of the trucking industry and monitor drivers. Inthe view of Sam Rizzitelli, transportation portfolio director forTravelers Inland Marine, the law is well-intended—but with goodintentions comes a cost.

To comply with CSA, trucking companies had to invest inexpensive on-board equipment to capture the required data, but mostinsurance forms are not yet designed to cover the loss of thisequipment—or the data.

"The valuation of this risk is different," Rizzitelli says."When you lose this [on-board equipment], you lose compliance. Thenyou need to hire someone to retrieve it."

Though it is "yet to be seen how it helps us," CSA couldpotentially be beneficial for insurers, Stoik says. "If theobjective is safety, then fewer accidents equal less cargo damage,"he explains. "That's a benefit."

The law could also assist risk managers. W. Michael "Mike"McDonald, vice president of enterprise risk management for QualityDistributions, says that CSA, for which his company has beenpreparing for two years, will "indirectly" help by making drivers'records more readily available.

"The driver takes his record with him wherever he goes," saysMcDonald, who also sits on NU's Risk Managers AdvisoryBoard. "Trucking companies can order it up."

Trucking companies are also seeking to adhere to new standardsin securing cargo, McDonald adds.

ROBBERY RISK

Quality Distribution has also invested in a satellite-trackingsystem to combat yet another risk: McDonald says there has been anupsurge in trucking-related theft, an observation supported by theindustry. For McDonald, the concern is the cargo, since QualityDistribution's tanker trucks haul hazardous materials.

"What I worry about is someone stealing a rig who doesn't knowwhat kind of dangerous cargo he has," McDonald says.

But many thieves know exactly what they want off a truck—and thelevel of sophistication of their plans to get it, unload it and"fence" it is astounding.

Maurizio Scrofani, president of CargoNet, says its database,used by insurers, authorities and victims, is loaded with sharedinformation about cargo thefts.

The relatively new national information-sharing system isgaining traction, says Scrofani. "We're adding features all thetime to make it easier to use," he says. "We're beginning toconnect the dots, and we are gaining a lot of energy from acredibility standpoint."

Among the intelligence that can be minded from the database:Base metals, such as copper and aluminum, are top targets today, hesays.

After a hard freeze in the southern U.S. thieves began hungeringafter food, even stealing a truck of tomatoes.

Thieves are now sometimes getting their own trucking businesslicense, Stoik says. This fraudulent business steals two or threeshipments, sells it and closes up shop—only to open up another"business" somewhere else because the license is inexpensive.

"It comes down to the fact they are incredibly opportunistic,"Stoik says. Insurers have adjusted and are now incorporating lengthof service into the underwriting of a trucking company, headds.

Combating theft is a "constant battle we fight," says Stoik."Thieves don't sit idle."