Risk Managers Disagree On Market Conditions
By Caroline McDonald
NU Online News Service, May 9, 12:30 p.m. EDT, Boston?A panel of risk managers from major New England organizations were at odds here yesterday on the outlook of the insurance market.
Their meeting served as a briefing platform to train 30 executives from Lloyd's of London syndicates, all under 30, who undertake a semi-annual business tour to learn about different facets of the insurance industry in different locales.
The tour of Bermuda and the U.S. East Coast was hosted in Boston by a number of companies. The risk management panel session was put on by the Robins, Kaplan, Miller & Ciresi law firm.
Deborah Harder, director of risk management for Staples Inc. in Framingham, Mass., said that since Sept. 11, 2001, the market landscape has changed. Carrier insolvency has not helped with some classes of insurance and has "made insurance more of a commodity."
She said insurance buyers will continue to see casualty coverages go up and that increases will most likely continue until 2004. She noted that Staples, which has $6 million in assets insured, is just coming off of a three-year coverage program that was "phenomenal. We're not seeing anything like that now."
Matthew Lupa, risk manager for Raytheon Company in Lexington, Mass., said he is seeing a similar situation. On a "composite basis," he said his company's premiums have doubled.
Janet Breen, director of risk management for Boston Properties in Boston, said that short of terrorism coverage, the commercial market is "flattening out of premium pricing." She explained that the organization's quotes for coverage came in on time or early. She said carriers that were not on time were blocked out of the program because all "indications are that the property market is softening."
Steven Ethridge, director of risk management for Iron Mountain Inc. in Boston, said he has not yet seen the market softening, but there are some "positive signs."
Michael Lipcan, risk manager for Olin Industries in Norwalk, Conn., said he is not optimistic about the market yet because "D&O is terrible" and the coverage has taken a significant hit because of the scandals surrounding ENRON and WorldCom management.
Mr. Lipcan said his company was hit with increases for renewals on the premium and the deductible side?"Umbrella [coverage] was better," he said.
On the positive side, Mr. Lipcan added that there is a renewed interest in loss prevention. "We spend time seeing what is happening [in the company's plants]," he said. "When the recommendations are given, they may not be welcome, but they are addressed."
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