Magazine article Risk Management

What's in Store for 1996?

Magazine article Risk Management

What's in Store for 1996?

Article excerpt

The key word in describing the insurance industry in 1995 and continuing into 1996 is CHANGE. While some markets remain stable, others are on the brink of a major revolution. This change, for the most part, is reflective of the clients' needs and is characterized, in some part, by consolidation, globalization, expense control and technology. Risk managers and insurers are taking on new roles and forming new partnerships, as companies are utilizing their risk management strategy to protect the bottom line.

"This year begins at a time of opportunity for the corporate buyer. The risk managers are in the driver's seat and should take advantage to meet their corporate and risk management goals. With few exceptions, prices will be lower, coverage broader, capacity, stability and services, more available," says Larry Geneen, managing principal and senior vice president at Johnson & Higgins. "More importantly, we are beginning to see a structural revolution in the design of risk management programs, which will result in more efficient use of capital, reduced underwriter expense factors and premium charges, and allow for long-term commitments and entry of the capital markers into the underwriting business."

Johnson Higgins reviewed the changes that swept the insurance industry, including insurers and brokers, in 1995 and gave predictions for 1996 at a recent New York seminar, along with distributing the company's "1996 Insurance Market Review Forecast." A panel of risk management professionals participated in the half-day event to share their experiences of the past year and interpret Johnson Higgins' reviews from a risk management perspective.

What types of relationships are being formed? Large insurance buyers are changing the way they approach risk and this is having a significant effect on their relationships with underwriters and insurance brokers, according to Norman Barham, executive vice president of Johnson & Higgins and head of their global practice.

In the coming year, Johnson & Higgins predicts buyers and their brokers will work together to develop customized risk financing mechanisms that will fill shortfalls and gaps in the capacity of the traditional insurance market. This trend toward the development of customized solutions will slowly transform the insurance marketplace over the long term. While there will still be a need for standard insurance products, the largest customers will look increasingly outside traditional insurance for many of their risk financing needs.

However, with all the transformations in the industry, the traditional markets continue to play a primary rule. …

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