Even if they're shopping tough exposures like Florida coastal property or medical malpractice, risk managers are finding insurers far more eager to please--if not always with lower prices, then at least with improved terms and conditions in this softening commercial market, leading buyers say.

"We're in the best spot we've been in probably in the last 10 years, and especially since the year 2000," according to Scott Beckman, vice president of risk management and insurance for Advocate Health Care Network in Oak Brook, Ill.

Mr. Beckman faces two looming renewals for the organization's health care system. One is excess liability, which includes all medical malpractice coverage for physicians and hospitals and several hundred ancillary networks.

The second is property coverage for eight hospitals, including two pediatric centers. Casualty nonproperty renewals are Jan. 1, and property renewals are scheduled for February.

"We insure over $4 billion of assets in the Chicago area--one of our largest hospitals is worth more than $800 million," noted Mr. Beckman, who is a board member of the Chicago chapter of the Risk and Insurance Management Society, as well as a member of the RIMS national program committee. He explained that with 26,000 employees, the Network is one of the top-five nongovernment employers in the Chicago area.

"The capacity is out there," he said. "Companies have a lot of ability to underwrite business--their ability to underwrite is huge. The surplus in the industry is more than $500 billion right now, and I think a lot of companies want to write new business."

After conversations with their broker, he said, "we do expect to see lower pricing," adding that as well as working with brokers, "we also market ourselves to the reinsurance and excess liability markets."

To do this, CD-ROMs are compiled with relevant data and materials. "I've met with London, with a couple of different syndicates. I've met with five different markets and Bermuda. I've met with the domestic markets," he said. "We have direct conversations with the underwriters as to what our expectations and theirs are."

All of the underwriters, he said, "informally acknowledge that it's a soft market and that they would expect there would be some lowered pricing."

Even with the soft market, however, lowered pricing isn't a guarantee. "If they don't lower pricing and want to maintain premium volume, it's a matter of what kind of benefits can you give me in my current insurance program. Instead of writing all the different exclusions, what can you do to make my program stronger in each individual layer?"

Because the company's losses have been better than expected, "and we have very good loss control and risk management patient safety, we're going to hit them up and try to actually push down the attachment points," Mr. Beckman said.

In 2001, for example, "our attachment point for hospitals on professional liability went up from $1 million to $15 million an occurrence overnight," he noted.

On the property side, he said he is looking for increased sublimits. Because the main catastrophic threat is tornados in the Chicago area and losses in the hospital industry are low, "we're going to try to go into the renewal and increase all the sublimits and enhance the coverages we have, making sure we can optimize any coverages available for terrorist-related events."

Elizabeth Guimaraes, director of risk management for Nova Southeastern University Inc. in Broward County, Fla., and president of the Broward County Chapter of RIMS, said she is hoping the market will offer some breaks on property coverage this year.

"Knock on wood, we haven't had anything as far as storms are concerned. We are hopeful that the softening of the property market will stay in place until we renew," she said.

Her hope, she added, is to be able to buy additional levels of insurance in order to continue to grow the pool in which her university is covered. The biggest concern "obviously is on our property," she said, "especially when it comes to windstorm."

Ms. Guimaraes explained that her university is part of an insurance pool with 10 other colleges--all within the state, with many in South Florida, either on or near the coast. The property value of the pool's combined colleges, she said, is about $2 billion.

Because of their potentially vulnerable location, "there are things that underwriters don't like to see," she said. "When you have $2 billion in the state of Florida, the underwriters want to look at the models and really take a look at [the property]."

This means that the colleges, with their broker, have been working closely to assure the accuracy of information going into the catastrophe models used for pricing.

Information the underwriters are looking for, Ms. Guimaraes noted, includes basic construction, the age of a building, the age of its roof and how the roof is attached. They also want to know if the building's windows and doors are shuttered, and if the windows are impact- and wind-resistant.

All the information, she said, "paints a better picture than simply saying we have $2 billion of property values in the state of Florida, and that's it. We're hoping that with the quieter [catastrophe] year, in conjunction with what we've been doing and the information we've been collecting over the last year, it will play into our favor as far as renewals."

At Nova, she said, many of the buildings are fairly new, thus built under a more stringent code, with wind-resistant doors and windows.

After Hurricane Wilma, she added, the school purchased more generators for the campus and rents additional generators every hurricane season.

"The intent is that if a storm goes through and we have lost power, we can immediately provide the services, such as the on-site clinic, which is open to the public," she explained. "They sit on campus and if we don't need them, it's money well spent."

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Savvy Buyers Basking In Glow Of Soft Market

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