“Risk managers who give Advisen their information can have one of the most critical pieces of the risk management puzzlecontemporary dataavailable to them instantly,” said Mr. Mandel, who is also vice president, enterprise risk management, at USAA in San Antonio, Texas.

Tom Ruggieri, chief executive of Advisen, pointed out that “because the survey is online, there is more data, its more timely, more reflective of market trends, and therefore much more valuable.”

“Not only are we getting dynamic insight into pricing and limit trends, we are also getting a broader view of the market across various types of insurance,” Mr. Ruggieri said.

“It is a tremendous advantage to see information quickly on the Internet, as opposed to a book that becomes outdated almost as soon as it is published,” Mr. Mandel added. But he pointed out that many people still want the book, and RIMS will also be making the data available in book form.

“The reason that the data are current is because risk managers are constantly adding new data to the system as their programs renew,” noted Dave Bradford, Advisens chief knowledge officer. “Virtually as soon as new data are entered, they flow through to the benchmarking tools.”

The RIMS benchmarking tool permits brokers and risk managers to compare limits, retentions, premiums, cost-of-risk and other metrics by industry or line of business. Lines of business include directors and officers, fiduciary, employment practices, professional, property, general liability, and workers compensation. There is also the option of comparing companies at all revenue levels or limiting the comparison to those with over or under $1 billion in annual revenue.

After the risk manager or broker enters the desired comparison parameters, the system produces charts and graphs showing where the company ranks by percentile, or how it compares to median and mean averages.

For example, assume that an electric utility with under $1 billion in revenue has a D&O retention of $50,000. The utility (or the utilitys broker) wants to know how that retention compares to other similar companies. After choosing the applicable industry from a drop-down menu and entering the retention amount, the system produces bar graphs demonstrating that about two-thirds of the utilities of similar size have retentions exceeding $250,000.

The implication is that this particular utility is not retaining as much risk as its peers and may be missing out on lower premiums available at the higher retention levels. “That will help risk managers when communicating their case for a retention increase to higher management,” Mr. Mandel explained.

In addition to providing management with a comfort level that their insurance programs compare favorably with others in their industry, benchmarking is also a potent bargaining tool, he noted.

“Lets say that D&O underwriters are offering an insured a 100 percent premium increase and tripling the retention,” he said. “Using benchmarking, the risk manager can go back to the underwriters and tell them that there is statistical data indicating that the premium and retention increases are way out of line.”

“Risk management professionals can leverage this data to make clear decisions, because it comes from their peers, rather than from potentially biased, sell-side market speculation,” Advisens Mr. Ruggieri noted.

Overall survey results indicated that commercial insurance buyers experienced only moderate price increases for many major coverage lines during 2003s third quarter.

“After the staggering increases we have seen in recent quarters, especially from professional liability lines, the market for many lines appears to be moderating,” Mr. Mandel pointed out.

“These results are the clearest indication of a market shift,” noted Mr. Ruggieri. “They come from the buyers of insurance and are a real-time insight into the market conditions risk managers face today,” he said.

Risk managers interested in contributing data to and using the benchmarking tool should go to http://rims.advisen.com.

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, November 26, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.