Capacity Tight For WC, RMs Told

Tony Tam, managing director at Marsh in New York, said that workers' comp coverage is available, but it is a matter of price.

"And the way carriers look at it?it's a different underwriting process," he said. Before Sept. 11, workers' comp programs were loss-rated, "a pretty easy way to get to a final total cost-of-risk."

Carriers are also examining exposures such as location and type of industry. "It's not just a loss experience rating, it's more who you are and where you are."

Mr. Tam said he believed this trend would continue because industry statistics show that if carriers are not getting the rates they need for a specific line, all lines of business will be impacted.

James W. Macdonald, senior vice president, ACE USA in Philadelphia, said that underwriters are requiring more information of risk managers, such as how many employees are in a location. In retrospect, he said, the question should be refined.

"What we really want to know is how many employees do you have at a given location at a peak time," he said. He said "peak time" is considered to be 2 p.m., Tuesday, Wednesday and Thursday.

He said breaking down employee concentrations is especially important for airports, hotels and other 24-hour businesses that may be having their probable maximum loss figures overestimated.

"That's going to be pretty tough information for us to get," said Diane Askwyth, director of risk management for Avaya Inc. in Basking Ridge, N.J, and panel moderator.

But Mr. Macdonald said that "We'll estimate it, because we don't want to be unreasonable. If you tell us you've got 9,000 employees and you're a nursing home, we'll assume it's three shifts" and that a third of the employees are there at a given time. "But that's the kind of thing that could lead to a significant difference."

Mr. Tam said he has had clients who were non-renewed by carriers that lost their reinsurance treaties. "We're getting a better handle on what treaties are coming up and what problems are being faced," he said.

Self-insurance is an option, he said, but the process takes 90 days in New York, and also the state is "inundated with applications from other insureds." But even in the case of a self-insurance alternative, he added, "where is the excess insurance coming from?"

Mr. Iglesias said AIG's position is that "We write workers' comp." He said that in addition to reviewing losses and individual issues for certain accounts, his company must now look at other details, such as location of employees and employee concentrations to develop new models for workers' comp.

"These are somewhat similar to the way you look at property accumulations," he said.

Both Mr. Iglesias and Mr. Macdonald remarked on the need for federal legislation providing government support for terrorism insurance. Congress is expected to address a proposal for a compromise measure after Nov. 5 elections.