Although the ongoing soft market hasn't been a big hit with carriers, who are doing their best to stay competitive while maintaining underwriting discipline, corporate insurance buyers are giving glowing reports.

Michael Liebowitz, director of insurance and risk management for New 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, this year buyers are not only able to drive down the price “from a dollars-and-cents perspective,” but they are also seeing expansions in coverage.

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

Even with difficult lines and international placements, he said, pricing has been flat. “My property is down. My workers' comp is down. 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 carriers who want to play. It's a good market. I like to see the capital coming into the market because it helps.”

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

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

Mr. Liebowitz explained that he has had long relationships with his insurers, “and they are now more than happy to listen to what they have done wrong and they attempt to make changes whenever possible.”

While in the past the focus of carriers was on terms and conditions and pricing, now, he said, “we're able to bring some of the service issues the buyer has been complaining about for years to 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 our attention.” Before, he pointed out, some issues might not have been acknowledged.

Now, Mr. Liebowitz said, “we're seeing flexibility on handling of claims and getting claims allocated to the right entity. That's becoming very helpful.” Carriers are also more willing to provide information “and what I'm seeing now is a partnership. For the first time, I can say the insurer is attempting to be a partner with us.”

He added, “I think people have learned a lot from the financial issues the world is going through. It's a global problem and we have 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 contract certainty.

The length of time for policy issuance is still around three months with some carriers, he said. “This is not an endemic problem, but it's still problematic,” especially with Bermuda carriers.

His advice to risk managers facing renewals: “Keep those relationships going, but always keep an eye toward the competition.”

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

Those incumbents, he said, have come back and said, “'You had your 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: Get your information in early, provide as much detail as possible, and provide as much transparency as possible.”

William J. Montanez, director of risk management, ACE Hardware Corp. in Chicago, said he is seeing similar positive conditions.

“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 means that a lot of the decrease reflects the company's favorable loss experience.

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

Because the company has actively pursued loss control measures and corporate safety, he said it has seen significant reductions over the past three or four years– “and we're still making headway.”

“We have about 5,000 employees and 4,000 of them work at our distribution centers,” he said. “A majority are working in warehouses, so we have a lot of soft tissue claims, cuts and bruises.”

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

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

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

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

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

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

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

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

He noted, “We've also rolled out a sophisticated allocation and reporting 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 concerned about retention levels and making sure they are going to write premium. The risk manager should take advantage of the situation and leverage their relationships to try to get better pricing.”

Special Reports /

Current Soft Market Just Right For Buyers

Related Stories

Recommended For You