Public Sector RMs Face More Hurdles When Seeking Coverage
While it is not impossible for government entities to get insurance in this tough renewal season, public risk managers must approach more carriers and expect to get less coverage at a higher cost, one leading broker contends.
This is the new reality that public risk managers and other insurance buyers face today, and will have to deal with for some time to come, observed Daniel J. Cullen, vice-president of the Public Entity and Higher Education Global Brokerage Team for New York-based Marsh.
His assessment came during a national phone-in seminar sponsored by Arlington, Va.-based Public Risk Management Association last week. The seminar focused on the state of the insurance market since Sept. 11 and brokers' experience with Jan. 1 renewals.
In what would probably be considered the toughest line, insurance was available for property risks, said Mr. Cullen, but where one or two carriers used to cover an exposure, it took "many carriers" to "make the placement whole" this year.
Capacity is a problem for risks with high exposures such as wind, flood and earthquake, Mr. Cullen went on to say. Insureds should also expect to be paying more and to see specific limits placed on locations, where coverage was much broader in the past, he said.
Renewal standards have also risen, with insurers insisting that applications be done on their own forms and be very detailed and complete, Mr. Cullen noted. Carriers, he said, are looking for information to make more predictable and profitable underwriting decisions.
More and more exclusions, such as for terrorism and mold are also cropping up, he noted, adding that while there is room to find coverage, it will come at a price.
While renewal coverage is usually available from current carriers, observed Mr. Cullen, placing business with new insurers might be a problem simply because underwriters are swamped dealing with current submissions.
Even though many public entities were able to stay with their current carriers, Mr. Cullen explained that brokers did have to shop a number of accounts around because carriers are not submitting quotes until the last minute.
Carriers are also demanding that insureds have an active risk management program and take on higher retentions, noted Mr. Cullen.
Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, January 14, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.
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