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Risk managers seek alternatives
(Lloyds List Via Thomson Dialog NewsEdge) YEARS of high premiums have now seen a number of major risk managers pushing ahead with investigations into captive insurance operations despite the pressure on rates, according to one leading broker, writes Jon Guy in New Orleans.
John Eltham, North American Business Leader at broker Miller Insurance Services, was speaking as 10,000 delegates attended the annual RIMS Conference in New Orleans. Underwriters have been faced with risk managers who are demanding rate reductions or easing-up of coverage limits, particularly in the marine and energy sectors.
Mr Eltham said over the past six years US risk managers have been faced by a series of premium shocks and the high levels of prices charged had seen many exploring other ways to mitigate their risk.
Miller issued the results of a survey of 130 senior risk managers which revealed that many were demanding new products and more specialist products along with a serious intention of looking at alternative risk transfer vehicles.
Mr Eltham said: 'It is clear risk managers are no longer prepared to suffer the vagaries of the insurance cycle.'
He added that as rates softened underwriters were now reducing the level of deductibles they had demanded, but there was a growing number of risk managers who were quite happy to retain significant portions of their risks.
'What we are finding is that there are a growing number of risk managers who are saying they are quite happy to keep their retention levels and are also still undertaking investigations into how they can set up a captive or explore alternative risk transfer methods,' he said. 'Underwriters are finding that risk managers are content to keep a bigger portion of their risk and while the market seems to be heading only one way there are some risk managers who are looking at other options.'
Mr Eltham added that the underwriters were still on the whole able to get premium levels which were above what they would deem to be the technical rating and added that the big test would be if the market started to soften to the point where the rates fell below that level and whether the underwriters would follow the market down or draw a line at the technical price.
Copyright 2007 Informa Martime Trade and Transport
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