Finding Coverage in Tough Times

By Hair, Jackie | Risk Management, January 2003 | Go to article overview

Finding Coverage in Tough Times


Hair, Jackie, Risk Management


It is not news to say that the insurance market is tough. During the first half of 2001, rates were already climbing 20 percent to 40 percent. After September 11, Enron and WorldCom, rates have soared to over 400 percent for some lines of coverage. Although original predictions optimistically foresaw a rate peak in early 2002, analysts are forecasting another two years, perhaps more.

In addition to rate hikes, coverage is shrinking. Manuscripted forms are a thing of the past as carriers focus on conventional off-the-shelf products. New exclusions are being introduced often across all lines. The most common of these is the terrorism exclusion, which was first introduced on property but has been adopted in policies with no terrorism exposure such as errors and omissions (E&O). Multiyear policies, too, are becoming increasingly rare.

As a result, risk managers are being forced to accept higher deductibles and self-insure risks at heretofore unseen levels. Carriers are highly selective about the type of companies they want to insure--which in some cases translates into whichever company is willing to pay the most for coverage.

This is today's insurance market. It is extremely difficult, but as risk managers, we still have a job to do, and it can be done well. Just be aware that it will take more effort, dedication and creativity to find the appropriate level of coverage for your company. The key is differentiating your company from your competitors and others in your industry group.

Meet with Underwriters

As you approached the renewal seasons in the past, you may have relied on your broker to meet with underwriters on your behalf and test the waters for rates and terms. In a tougher market, relying on an intermediary is chancy. No one knows your business or your risks better than you do, so meet with the underwriters and excess carriers and tell them your story the way it should be told.

This is not new advice, but most of us only meet with underwriters or reinsurers for critical lines of coverage. Generally, it is easier to let the broker meet with the underwriter and communicate whatever enhancements we want to see accomplished for the renewal cycle.

For example, when Cisco went to renew its foreign general liability and foreign workers' compensation package, we assumed that there would be little change from the prior year. We had already negotiated policy enhancements to ensure that the foreign general liability dovetailed with our commercial general liability and umbrella/excess policies. While we paid lip service to meeting with the account's incumbent underwriter, we did not push hard.

When the broker called and gave us pricing indications, I was shocked. Instead of a minor increase, he was indicating that our premium would jump by more than 400 percent. All of a sudden, this standard type of coverage became a whole lot more visible on our radar screen. Unfortunately, we were only a few weeks away from the renewal date.

We immediately pressured our broker to set up a meeting with not only the incumbent carrier, but with the top two competitively priced carriers. Because we waited so long to set up meetings, we were not successful. The best we could do was a conference call with the incumbent underwriter. I wish I could report that we got our price down to a reasonable level. Unfortunately, I cannot. We were able to come to an agreement on retention, structure and price that might not have been possible without that live conversation, but we would have been far more successful if we had set up meetings in advance of the renewal and talked to several providers.

Provided that you can arrange such a meeting with a potential (or existing) carrier, the discussion is only useful if all parties (you, the broker intermediary and the underwriting team) are honest and up front about the expectations of the meeting. If you keep your agenda and expectations hidden, how can you possibly hope to achieve your objective? …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Note: primary sources have slightly different requirements for citation. Please see these guidelines for more information.

Cited article

Finding Coverage in Tough Times
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen
Items saved from this article
  • Highlights & Notes
  • Citations
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Search by... Author
    Show... All Results Primary Sources Peer-reviewed

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.