Although the ongoing soft market hasn't been a big hit withcarriers, who are doing their best to stay competitive whilemaintaining underwriting discipline, corporate insurance buyers aregiving glowing reports.

|

Michael Liebowitz, director of insurance and risk management forNew York University, said, “It is so competitive and so flexible.It should be like this all the time.”

|

While last year “you could drive down the price,” he said, thisyear buyers are not only able to drive down the price “from adollars-and-cents perspective,” but they are also seeing expansionsin coverage.

|

“We're seeing carriers thinkingoutside the box, providing coverages that are really necessary, inunique ways,” said Mr. Liebowitz, who is a past president of theNew York-based Risk and Insurance Management Society. “It has beena great market,” he said.

|

Even with difficult lines and international placements, he said,pricing has been flat. “My property is down. My workers' comp isdown. Liability is down. D&O is down. It's all down.”

|

And despite the fact that he must place New York City risks,which he said “people are still afraid of, I still have carrierswho want to play. It's a good market. I like to see the capitalcoming into the market because it helps.”

|

What he also is seeing, he said, are better terms andconditions, better servicing plans, and willingness on the part ofcarriers “to meet and figure out how we can do things that aremutually [beneficial] to both of us. This is the first time I canactually say that. There isn't a carrier I can think of that I'mangry with.”

|

Another good thing that's come out of this market, he said, isthat “carriers seem to feel now that trying to keep a client isprobably in their best interest. Relationships are going a verylong way today.”

|

Mr. Liebowitz explained that he has had long relationships withhis insurers, “and they are now more than happy to listen to whatthey have done wrong and they attempt to make changes wheneverpossible.”

|

While in the past the focus of carriers was on terms andconditions and pricing, now, he said, “we're able to bring some ofthe service issues the buyer has been complaining about for yearsto the table.”

|

Not only is the buyer able to get a better renewal, he said,“but the carrier is saying thanks for bringing that to ourattention.” Before, he pointed out, some issues might not have beenacknowledged.

|

|

Now, Mr. Liebowitz said, “we're seeing flexibility on handlingof claims and getting claims allocated to the right entity. That'sbecoming very helpful.” Carriers are also more willing to provideinformation “and what I'm seeing now is a partnership. For thefirst time, I can say the insurer is attempting to be a partnerwith us.”

|

He added, “I think people have learned a lot from the financialissues the world is going through. It's a global problem and wehave to work together. It's not the insurers versus the insureds;it's us as a team working to minimize [and] mitigate the losses.It's a win-win.”

|

But while so much is going right,he noted a lingering problem–policy issuance and contractcertainty.

|

The length of time for policy issuance is still around threemonths with some carriers, he said. “This is not an endemicproblem, but it's still problematic,” especially with Bermudacarriers.

|

His advice to risk managers facing renewals: “Keep thoserelationships going, but always keep an eye toward thecompetition.”

|

He added that he goes to the market looking for competitivepricing every couple of years. However, “I always will come back tothe incumbent when it's a relationship that's not broken and I'veseen the incumbents come back to us and stick by us, especiallywhere there have been policy limit losses.”

|

Those incumbents, he said, have come back and said, “'You hadyour big loss; we're staying with you. We're not going to bail.'That goes a long way.”

|

Mr. Liebowitz added, “I would say what I say every year: Getyour information in early, provide as much detail as possible, andprovide as much transparency as possible.”

|

William J. Montanez, director of risk management, ACE HardwareCorp. in Chicago, said he is seeing similar positiveconditions.

|

“Most of our renewals are midyear, so we've seen [pricing]staying flat with some good size reductions.”

|

He said that ACE Hardware carries large retentions, which meansthat a lot of the decrease reflects the company's favorable lossexperience.

|

Mr. Montanez also has cultivated a good relationship with hiscarrier, he said, adding that the company doesn't “have too muchrisky business. Our drivers are our workers' compensation andliability, including product liability.”

|

Because the company has actively pursued loss control measuresand corporate safety, he said it has seen significant reductionsover the past three or four years– “and we're still makingheadway.”

|

“We have about 5,000 employees and 4,000 of them work at ourdistribution centers,” he said. “A majority are working inwarehouses, so we have a lot of soft tissue claims, cuts andbruises.”

|

|

The company also has a shipping and trucking operation, whichdelivers products to 4,500 stores domestically. “So we have 14distribution centers that are strategically located throughout thecountry that service those 4,500 retailers, pretty much on a weeklybasis, [and] “loss control is extremely important–front andcenter.

|

“Our efforts have paid off pretty handsomely in the last two tothree years,” he said.

|

Overall, Mr. Montanez estimated that considering administrativecosts, his coverage costs have gone down an average of 5 percentover the last year.

|

“The mantra this year is coming in below budget,” he said,noting he also has seen some enhancements on terms andconditions.

|

The company also has a captive based in Bermuda, which he saidis used for corporate retentions for workers' comp, products,general liability and auto.

|

During a midyear review with the board, he said board memberswere pleased with this year's results. The caveat is that pricingcan change. “However,” he added, “a lot of our costs are driven byour own claim activity. So that drives probably 85 percent of thecosts.”

|

To keep claims down, Mr. Montanez said that “risk management isan important piece of the equation and company-wide participationis paramount for success.” He added, “We partner very closely withour internal customers. The distribution center is our mainclient.”

|

They are provided with the resources they need to do their job“and stay in front of the trends that are taking place–the claimactivities that we see going on.”

|

He noted, “We've also rolled out a sophisticated allocation andreporting system this year, and that is paying off.”

|

What is Mr. Montanez's advice to risk managers?

|

“While the market is soft, a lot of the insurers are concernedabout retention levels and making sure they are going to writepremium. The risk manager should take advantage of the situationand leverage their relationships to try to get better pricing.”

Want to continue reading?
Become a Free PropertyCasualty360 Digital Reader

  • All PropertyCasualty360.com news coverage, best practices, and in-depth analysis.
  • Educational webcasts, resources from industry leaders, and informative newsletters.
  • Other award-winning websites including BenefitsPRO.com and ThinkAdvisor.com.
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.