“For instance, we were named in a few hundred asbestos cases in California, Illinois and Michigan, but never had to pay anything,” Mr. Andrews noted. Nevertheless, the exposure remains, and Mr. Andrews said that he will continue to closely monitor the role that manufacturers will have to play in the asbestos reforms being considered by Congress.

Mr. Andrews cited as an additional challenge the reining in of premium increases for directors and officers liability insurance. “Even as a private company, our premium went up about 15 percent. I havent noticed any softening,” he said.

Also on Mr. Andrews list of important industry-wide risk management issues in 2004 is monitoring insurer and reinsurer solvency. He noted that “the market seems ripe for more consolidation,” given recent rating downgrades.

As a risk manager in California, it comes as no surprise that Ellen Vinck thinks a lot about workers compensation. Ms. Vinck, vice president of risk management for United States Marine Repair Inc. in San Diego, noted that the companys workers comp premium for its clerical employees alone went from $20,000 to $200,000 in a very short period of time. Ms. Vinck added that she “supports Arnie” and is hopeful that the new governor, Arnold Schwarzenegger, will “terminate” some of the states workers comp woes in 2004.

Insurer solvency is also a concern of Ms. Vinck, after being burned by the failures of Reliance and Legion. “I joke with underwriters that they should provide me with surety bonds guaranteeing that they will pay, instead of the other way around.”

“The best Christmas present,” Ms. Vinck continued, “would be tort reform, such as an asbestos fund. Attorneys keep naming our company in asbestos suits; it must be one of the names in their computers,” stated Ms. Vinck. “They name every contractor that worked on the job, and it costs money to get out of these suits. This kind of unnecessary litigation really beats you down.”

Sheila Small, assistant treasurer of risk management for Verizon Communications Inc. in New York, sees burgeoning litigation of all types as one of the new years key challenges.

“People sue for everything now,” Ms. Small said regretfully. “I predict that due to the volume of lawsuits, risk managers will become more involved in litigation-related negotiations, such as in D&O matters. Even with Sarbanes-Oxley rules in place for about a year now, almost every day it seems another company is investigated or indicted.”

Premiums in the property insurance market also continue to concern Ms. Small, given Verizons many locations in large metropolitan areas. Although Ms. Small refuses to use the word “softening” to describe the current market, she said she has noticed some “stabilizing.”

Verizon received smaller increases during last years property renewal, and Ms. Small hopes that trend will continue. But if it doesnt, she indicated that making greater use of Verizons Vermont captive insurer, which already writes some of the companys property risks, is an option.

For health care sector risk manager Sanford Bragman, the snowballing turmoil in the medical malpractice market is a major concern. Mr. Bragman, senior risk management advisor for Tenet Health System in Dallas, pointed out that there is a shortage of acceptable malpractice coverage options for doctors at Tenet hospitals, due to the recent troubles of many of the physician-owned carriers.

“Some physicians that work in our hospitals are insured by SCPIE, which was recently downgraded by A.M. Best,” Mr. Bragman said. “We also had med mal availability problems when PHICO went under,” he added. “But the catch is if you go with a better-rated company, there will be significantly higher premiums.” So making certain that physicians who treat patients at Tenet hospitals carry malpractice insurance with a stable insurer has become a challenge for him.

If you are a public sector risk manager in California, the anticipated effects of proposed budget cuts take center stage. Deborah Luthi, director of risk management services for the University of California at Davis, is already busy determining how those cuts will affect the university.

“There will be difficult decisions regarding employees,” she noted, implying that layoffs may be necessary. She is therefore bracing for the possibility of an increase in employment-related lawsuits.

Ms. Luthi also pointed out that high workers compensation costs continue to be a problem in California, despite recent reforms to the system. She also mentioned maintaining campus security as a risk management hot button, in light of budget cuts and the terrorism exposure.

Continuing price hardness in the insurance market is viewed as the primary risk management challenge by David Holland, vice president of treasury for San Jose, Calif.-based Cisco Systems Inc.

“This [the hard market] has to reverse itself. We are at a point now where we see some premiums coming down,” Mr. Holland noted. “D&O has seemed to run its course. Hopefully it will soften up even furtherand the property market also.”

“Companies will look for alternatives, such as placing more business in captives, if there are no significant premium reductions or further increases,” predicted Mr. Holland. He stated that Cisco has a Bermuda-based captive insurer, but it is “not highly active” right now, although that could change if the market does not reverse course.

True to his technology orientation, Mr. Holland sees as another challenge increasing the degree of online collaboration for insurance-related transactions. “Insurance is still too paper-based,” he said. “We want to make greater use of the Internet to manage our risks.”

Insurer financial solvency is on the mind of Bill Chapin, director of facilities and risk management for the Diocese of Rockville Centre in Long Island, N.Y. “There are fewer and fewer carriers out there with high ratings,” he noted. “The carriers that are strong are starting to charge for their financial strength in the form of higher premiums,” he added.

Mr. Chapin also views insurers tendency to “pare down coverages” by adding more exclusions to policies as cause for concern. For instance, terrorism was excluded from the Dioceses property coverage and had to be bought back for a 10 percent additional charge. “I am hoping for a moderation in policy terms and conditions, in addition to rates.”

Also important to Mr. Chapin, given the nature of the Dioceses operations, is errors and omissions coverage for clergy, teachers and other employees that render services or deal with parishioners or the public. “All churches are fraught with E&O issues now. There are charges out there all the time,” he said.

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, January 23, 2004. Copyright 2004 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.