General Liability, Excess Umbrella Liability, Workers Compensation / Employers Liability, Directors and Officers, Errors and Omissions, Aviation, Auto, Employment Practices Liability, Crime, Fiduciary Liability and other Ancillary third-party coverages.

1. Capacity – It appears that there is little reduction in actual capacity except the insurers have become highly selective. Insurers are currently reluctant to commit their full capacity. It has become very select based on that individual client’s risk profile. The reluctance to commit is due to the fact that many have not negotiated their treaty reinsurance. Many reinsurance agreements renew on December 31st and therefore there is “unwillingness” to go beyond their own net lines. Insurers are hesitant to buy reinsurance previously negotiated and purchasing facultative reinsurance has become expensive and restrictive, therefore either non-action or dramatically increased costs result.
   
   In summary, although capacity still exists, its availability is limited to those who can properly present their Risk Profile and are focused on their Risk Management Plan, which is to achieve long-term reduction and loss control.
   
   
2. Pricing – Most Casualty lines of coverage have had double digit increases in pricing prior to September 11th and clearly the intention is that there are more aggressive costings anticipated. Depending on your industry, the increases will vary. Among the hardest hit sectors are transportation (inclusive of trucking and rail and public conveyances). All have seen dramatic cost increases.
   
   The Excess and Umbrella Marketplace which in the past was often priced as a Commodity “$250 per million to $1,000 per million” are now being underwritten as the norm in the manner as primary coverage. “The WTC events has changed the paradigm of maximum foreseeable loss”.
   
   
3. Workers Compensation – Excess specific stop loss coverage has risen aggressively with aggregate protection, often times becoming unavailable. Once again, insurers no longer believe in the almost impossible and would rather not place any aggregate stop losses.
   
   
4. Directors and Officers and Employment Related Practices Coverage have had 25% to 35% increases unless you’re renewing for the first time after three years. In that case, it will generally be a multiple of that one year of the year’s annual cost. Co-insurance percentages, deletion of entity coverage and reduction in previous coverage enhancements are becoming commonplace.
   
   
5. Aviation – Has had steady increases, depending on the type of aviation exposures. The premium is such a moving target. In some cases it has become impossible to pay increases and/or obtain the necessary capacity to offer companies adequate protection. The renewals that we have negotiated post WTC have had a doubling of the rate with additional surcharges for Terrorism and a reduction in limit. Once again, this is a volatile area and depending on the specific risk profile and limits desired, will clearly affect the rates.
   
   
6. Auto – General increases in the 25% to 40% range for risks that have a developed safety culture and favorable losses. For those risks that have not observed fleet safety prescriptions and have unattended losses increases are much higher if coverage is available at all.
   
   
7. Crime, Fiduciary, Kidnap and Ransom – 10% to 20% increases. The impact of Enron has caused a great deal of awareness in the fiduciary liability community as has the overall decline of the stock market. Standards of care (for fiduciaries) are being scrutinized more carefully.
   
   
8. Retentions – Where there were no retentions (i.e. first dollar coverage) retentions have been requested and any coverages that had retentions, insurers have been requesting those to be increased from 50% to 500%, depending on “burning layer” of losses and type of coverage. This follows the current insurer strategy of getting back to underwriting principles and underwriting profit, in not wishing to insure clients for those losses, which the client should anticipate due to their own loss experience. Insurers do not wish to trade dollars at the lower level retention. Naturally, clients must be conscious of the tradeoff between retention and premium, as well as financial ability to absorb claims below the retention in a bad year. Investment of resources need to potentially shift towards risk analysis and control as opposed to the immediate transfer to an insurer, is becoming increasingly less available. UIC can assist you in any analysis to help achieve the correct balance of retention and cost.