Doing battle in this hard market: while risk managers can't do much about premium increases, they are doing something to ease the burden of lengthy applications

Risk & Insurance, Sept 1, 2003 by John Otrompke

Renewing a casualty policy in this hard market is not easy. Just ask Matt Jablonski, director of insurance for the New York-based media company Hearst Corp. Despite working for one of the most visible companies in the world, Jablonski's insurer has reason to believe that Hearst's employees are not as safe as they used to be.

Applications, which in the soft market were often waived, have mushroomed to as many as 60 pages and answers to questions are completed using e-mail attachments. "During our first renewal application on our casualty program, our insurer had huge concerns regarding the concentration of employees in tall buildings in large cities," says Jablonski. "We have 130 operations throughout the U.S., and I had to work with an assistant over the weekend to answer all their questions."

More than 3,000 miles away, at San Francisco-based Del Monte Foods Co., the days of renewing a casualty application for less than $50,000 with just a phone call has become a relic of the 20th century. Today, says Chris Addieg, Del Monte's director of risk management, risk managers are lucky if their insurance policies don't increase by $50,000. If risk managers can't do anything about double-digit premium increases, at least they can ease the pain by simplifying the process of filling out applications.

Jim Jannuzzo, assistant vice president for risk management at Axa Financial, says he's found a cheap way of getting around laborious application renewals.

CDs to the Rescue

Data that was once transmitted on paper, floppy disks and emails is now submitted on CDs, each holding 700 megabytes of memory. CD recorders and Excel spreadsheets do the trick, he says.

At Philadelphia-based specialty chemicals manufacturer Rohm and Haas Co., Henry L. Good, director of insurance and travel, is keeping his fingers crossed hoping insurers will take kindly to transmitting data on compact discs. "We've tried the CD-cutter approach this year, but we're not sure what the response is going to be on the insurer side," he says. "These applications are probably three or four inches thick, and the majority of the information is already on our Web site."

Good says underwriters ought to be more cooperative in allowing risk managers to assemble the required data. Insurers should cooperate in the design of applications to eliminate formatting incompatibility. "The format for Travelers for workers' compensation is different from St. Paul's for auto--no format speaks to one another," he says. Not that Good is in much of a position to dictate what he wants from the under-writers. "In a soft market, my position is that I don't have to answer any questions," says Good. "In this market, unfortunately, I have to answer most of them.

Good, who helped design an automated property engineering report system for Rohm and Haas in conjunction with Willis, is not alone in his desire to see information systems speak to one another.

Andy Gainey, corporate risk manager at Collins & Aikman Products Co. in Troy, Mich., helped his company design a proposal for a risk management information system a few years ago. He agrees that some insurers don't offer sufficient technology for coping with the renewal application process. "My dream system would be to put all the data in one mass and get it out to the insurers as desired," he says.

Software Answers

Ray" Bennett, manager for global risk and insurance at Owens Coming in Toledo, Ohio, has been using special software for the past two years. Gone are the days of three-inch thick notebooks full of paper providing insurers with company information.

A product, branded as "MyAnalysis," allows him to send his company's data in the form of an attachment. "We send additional information about Owens Corning to other insurers in electronic format, in addition to MyAnalysis," Bennett says. "In the hard market, underwriters are offering less coverage on each account. The risk manager who once had two or three insurance companies to meet with now has 10. Each risk manager has to meet with more insurers. I don't how we could provide that much data in written form, without having this kind of technology to make the hard market easier for us."

The software, distributed by GE Commercial Insurance, includes information on the largest 100 of Owens Corning's 500 locations, the size and location of Owens Corning sites, protection systems such as sprinkler units, building construction data, exposure of buildings to natural catastrophes, diagrams, plot plans, charts and graphs.

"In addition, GE provides bench-marking in that we give each facility a numerical rating, from excellent to poor, and from there you can drill down to facilities that have problems," says Andreas Spintzyk, principal consultant with GE Global Asset Protection Services headquartered in Avon, Conn. MyAnalysis is Web-based.

Risk Managers Pitch In

Though many risk managers claim few insurers are rolling out connective tools to renew submissions and fill out underwriting documents, many risk managers are helping engineers improve IT systems for insurance purposes.