RMs See Eye To Eye On ART

RMs See Eye To Eye On ART

NU Online News Service, Aug. 10, 1:29 p.m. EDT?Within the next five years, over half of European and U.S. risk managers will be using alternative risk financing as a key part of their risk programs, according to a research report by ACE European Group.[@@]

The apparent trend emerged after ACE European Group compared research conducted by ACE USA among risk managers in Fortune 500 companies with the results of a survey of risk managers in Belgium, France, Germany, Italy, the Netherlands and Spain, supported by the insurer.

In the U.S. survey, conducted by ACE USA, 55 percent of risk managers indicated they expected to increase their use of alternative risk financing in the coming year. Similarly, 50 percent of European risk managers said they would, or expected to use, alternative risk financing tools.

The European research, conducted by Insurance Research & Strategy, part of the FWD Group, surveyed the attitudes of risk managers for 502 companies, split evenly between mid- and large-size corporate businesses.

When asked whether they saw a trend towards spending on risk management rather than paying premiums, 60 percent said they did, with the vast majority--84 percent--also indicating that risk management was at the heart of their business.

The Hamilton, Bermuda-based insurer said the comparison demonstrates strong similarities between the Europeans and their American counterparts, reinforced by the type of alternative risk financing considered, or currently being used.

When the range of alternatives used, or most likely to be used, was considered, both groups shared further common ground.

Of European businesses questioned, 30 percent already have captives. In the United States, 43 percent of risk managers stated captives would be used or expanded.

Despite the favorability of alternative risk financing solutions, the carrier's research also revealed that European risk managers have not turned their back on traditional insurance options. A large percentage still place business in their local and international markets, with Spain and Italy viewing insurance as their main risk financing tool.

However, the research also identified challenges for European insurers. Close to 50 percent of the risk managers surveyed indicated that their local market did not adequately meet their requirements, with premium costs and a lack of capacity cited as the main issues.

"The use of increasingly sophisticated risk management techniques by the European and U.S. risk management communities has to be welcomed," said Michael Furgueson, president and chief operating officer of ACE Europe.

"However, the results of the research also highlight a challenge for insurers?namely, how to deliver the alternative risk management and risk transfer capabilities required by risk managers," he added. "Failing to meet the changing needs of today's businesses could lead to some insurers facing a potentially diminished role."