Marsh said customers are continuing to see the benefits of asoft market with flat to reduced renewal rates over the past month,but the rate of reduction appears to be tapering off.

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In a panel discussion titled "New Reality of Risk," broadcastover the Web, George Biancardi, head of financial institutionpractice for Marsh and McLennan Companies, said an analysis ofrenewals during the period Oct. 2 to Nov. 1 found that 61 percentof Marsh's accounts experienced either no increase or a slightreduction.

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The average reduction for its clients was 1.2 percent, comparedto 5.4 percent reduction in prior months. For the same period lastyear, clients saw a 13 percent reduction in rates. In 2004, hecontinued, rate reductions averaged 15 percent.

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A third of accounts increased their limits, while 7 percentincreased their deductibles.

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Mr. Biancardi went on to say that the terrorism take-up rate was"quite high" at 65 percent.

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On financial programs insurance, he said, "We are seeing somefuture signs of hardening, but currently, it still is a relativelysoft market."

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He said directors & officers is renewing flat to as high as15 percent reductions; errors and omissions and bond is flat to 10percent.

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"Rates are being determined more by loss experience for theindividual risk" and the ability to differentiate "one risk fromits peers." He added that type of financial institution, whether itis a bank or mutual fund, also plays a part in determining therate.

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Casualty also is "in a changing phase," but the full impact ofthis past season's hurricanes have not been felt.

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General liability, accident liability and workers' compensationalong with umbrella and excess are flat to 5 percent reduction.

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Pricing of these coverages, along with property insurance wouldbe affected by passage of the Terrorism Risk Insurance Act, Mr.Biancardi said.

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Ben Tucker, a member of Marsh's terrorism risk specialtypractice, said passage of TRIA with the higher limits would meansome clients may have to turn to the stand-alone market to purchasecoverage for the gap in the program (TRIA had not yet been passedat the time of the broadcast). He noted that this would be the caseno matter what version of the bill was approved by Congress.

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Mr. Tucker called the Senate version (which did pass) ashort-term resolution that would allow the industry to "hopefully"continue to work on developing its own pooling solutions.

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Mr. Tucker underscored that for Marsh's financial institutionclients, terrorism insurance is very important with more than 80percent in 2005 purchasing either TRIA or stand-alone-coverage--thehighest of any sector. He added that the stand-alone market has "atheoretical maximum capacity" of $1.4 billion.

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The principal primary carriers for this coverage are AmericanInternational Group and Lloyd's, and the main excess markets areAxis Specialty, Montpelier and Berkshire Hathaway.

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Currently, however, there is not enough capacity in thestand-alone to cover demand, and it only serves today to coverexcess demand, he noted.

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"Stand-alone coverage is not identical to TRIA coverage," Mr.Tucker said, pointing out the limited markets and property-specificnature of the policies. Policies can be tailored to layer coveragebetween TRIA and stand-alone to cover a client's risk needs.

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Arthur Koritzinsky, a member of Marsh Alternative Risk SolutionsGroup, noted that there are significant opportunities for captiveinsurers to secure their terrorism risk under TRIA. He explainedthat a number of captives have expanded their programs to covernuclear, biological and chemical terrorism risk not covered byTRIA.

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He said there will probably be even more growth in captives tocover the terrorism risk exposure under TRIA over the next twoyears. Some captives, he said, may purchase more reinsurance totake care of co-insurance and larger deductibles.

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