Upfront: Hard Insurance Market Boosts Alternatives

As the hard insurance market tightens even further, risk managers and CFOs face increasing premiums and coverage limitations, and they see more and more insurance companies exiting certain lines of business, according to a recent survey by Munich-American RiskPartners. Companies are responding by taking on large deductibles or trying out self-insurance and captives.

Eighty-nine percent of the CFOs and risk managers surveyed claimed to face at least one problem related to the hard market, including price of coverage (73 percent), coverage terms and availability (48 percent), and policy limits and adequate capacity (25 percent). In an effort to control costs, respondents are turning to five risk management tools (see chart at right).

The survey also revealed changing attitudes toward relationships with carriers. While more than half of respondents view their relationship with their carrier as long-term, 23 percent expect to change carriers or consider new carriers over the next 24 months.