“The market has been good for us, but the other side of the coin is that underwriters don't have much risk with us,” said Wendell Farrell, risk manager for Armstrong World Industries Inc. in Lancaster, Pa., which makes ceiling and floor products.

In 2004, Armstrong's net sales totaled more than $3 billion, according to the company's Web site. The company has 42 plants in 12 countries and approximately 15,000 employees worldwide.

Mr. Farrell said Armstrong is completing May 1 renewals of its casualty program. Renewals scheduled for the end of the year are property and crime.

“We found rates to be declining,” he noted. “The only thing that went up was aircraft hull and liability [for two corporate aircrafts], but that was flat,” taking into account “having to increase the war risk limit for the [European Union] countries.”

He explained that the policy, which is worldwide, required increased limits for war risks because of European Union regulations.

“If we hadn't had to do that, it would have been a flat renewal,” he noted.

The company's directors and officers risk is unique because of its asbestos legacy, he noted.

However, with an agreement that has been extended for the past two years, he said the firm's D&O policy remains “significantly below market.”

In general, he added, “for our risks, I would say the market is loose. We have very good relationships with our underwriters and I think that is the key. We work directly [with carriers] and have been doing so since the turn of the century, so it's nothing new for us.”

Marty Strzelczyk, risk manager and financial analyst for INX International Ink Company in Elk Grove Village, Ill.–a firm with $230 million in sales and 1,100 employees–noted that renewals on Jan. 1 for 2005 were flat, and that terms and conditions had remained the same.

“The rates stayed exactly the same as the previous year,” he added.

However, Mr. Strzelczyk explained that general liability renewals were flat “in relation to the rates we were charged. If your exposure goes up, obviously your premium goes up. So if your sales increase, your GL will go up with the volume. Our conditions were similar.”

He added that commercial insurance overall is “making a change from a bull market to a bear market. It's started to come down in price.”

David J. Hennes, director of risk management for the Toro Company in Bloomington, Minn.–which had sales of $1.6 billion in 2004, according to its Web site–was also very pleased with his most recent renewals.

“We renewed our casualty program as of April 1 and our property as of last Nov. 1. Renewals went very well,” said Mr. Hennes, whose firm provides outdoor maintenance and beautification products for home, recreation and commercial landscapes internationally.

“Our property renewal had a nice reduction and improvements in coverage, and there was a fair amount of competition,” he added.

He said the company saw a slight improvement in terms and conditions for its directors and officers liability policy. However, in terms of price, even though the firm saw a slightly larger D&O rate reduction for the second year in a row, such cuts have yet to make up for “a huge increase two years ago,” he said.

With excess liability, terms and conditions were stable and premium slightly lower, he added.

Mr. Hennes noted that casualty renewals “went equally as well,” although price reductions weren't quite as significant.

Even though the company had premium cuts in virtually all lines, “reductions in the excess liability area were slight,” he noted. “That still seems to be the toughest area for our risk.”

This is a difficult coverage, he explained, because the company has a product liability exposure “due to our power equipment–we sell lawn mowers and snow throwers, and we sell to consumers.”

He said situations come up “that give rise to liability, so it does make our risk a little tougher than most.”

Even though the company has “great safety records,” he added, “we are lumped into that category of risk by underwriters, so we were pleased when we had even a slight reduction on our excess liability.”

Mr. Hennes said the market appears to be “stable to loosening–some lines are stable and some loosening, but I haven't seen any tightness yet.”

Carlton Sims, risk manager for Goodman Manufacturing in Houston, Texas–which has 3,800 employees and is the largest privately held manufacturer of residential air conditioning and heating systems in the United States–just completed its renewal process, with prices falling.

“We renewed our primary casualty program, workers' comp, [general liability] and [commercial] auto, and had a drop across the board,” he said.

“Umbrella excess liability was down–we expected a reduction and we got a little more than expected,” he noted, adding that terms and conditions were “the same or better.”

Last year, he said, renewals were flat. “I would say it is a somewhat loosening market. We saw more competition [for the business] this year.”

Mr. Sims noted that he is seeing more aggressiveness on the part of brokers and “primarily the carriers. People are looking to either maintain or gain market share. There is capacity, more so than last year.”

Tara La Bree, risk manager in the Colorado Springs, Colo., office of Quantum Corp.–a technology company headquartered in San Jose, Calif.–said she is preparing for renewals. Quantum has 1,809 employees and annual sales of $808.4 million, according to its Web site.

“Everything I'm hearing suggests the market is soft, but I haven't had those in-depth conversations yet,” she said. “I think it seems to be fairly soft at the moment, but I'm curious as to what effect TRIA will have on it–whether TRIA is renewed or not.”

Herschel Vance Jr., who purchases coverage for Independent Agency Marketing Services in Clearwater, Fla., said their renewals come up in July.

“We are talking to our brokers and insurers regularly,” he said. “We're not anticipating any giant increase, although property may be a bit worse.”

He explained that he is apprehensive about property renewals because “we're right here at sea level and right on the bay, so I do have some concerns for our property coverage” due to catastrophe exposure.

One risk manager of a large manufacturing company who is facing renewals commented on the state of his markets but said he preferred not to be identified.

“Everyone is saying 'no surprises,' but I don't know what that means yet,” he noted. He is most concerned about D&O executive protection, “but I could be surprised with workers' comp,” he added.

Whether his rates will remain flat depends on “the position of the carrier the day they finally release the quote,” he said. “With all the things going on right now with carriers, this is one of the years where it is unpredictable.”

He added that he has other concerns about ongoing investigations of the insurance industry.

“I would love to get quotes 30 days ahead of time and wrap it all up, but I don't know that I'm going to get quotes early because I don't think carriers know what's going on and where they are,” he said, adding that carriers are all being tentative.

“I suppose you could call it 'the Spitzer factor,'” he said, referring to high-profile probes into industry practices by New York Attorney General Eliot Spitzer and other regulatory agencies. “When he comes knocking, I'm not getting quotes.”

Rob Jenson, owner of SVC Center Inc. in Millbrae, Calif., said his workers' compensation coverage was renewed and remained the same. His businessowners policy and errors and omissions renewals are scheduled for August.

“I don't know what to expect, but I know what I'm hoping for,” he said. “I don't know about the professional liability, but I don't expect the other [coverages] to change.”

Mr. Jenson said he wasn't surprised that the market is showing more softening for larger businesses than for smaller insureds.

“People want the larger business more and it's going to be more competitive,” he said, noting that the market is “stable to a little loosening. Things are loosening up–that is my experience.”

Callouts (no mugs, so might have to do something fancy–see 11/15/04, page 21):

“For our risks, I would say the market is loose. We have very good relationships with our underwriters, and I think that is the key. We work directly [with carriers] and have been doing so since the turn of the century, so it's nothing new for us.”

Wendell Farrell, Risk Manager

Armstrong World Industries Inc.

[Commercial insurance overall is] “making a change from a bull market to a bear market. It's started to come down in price.”

Marty Strzelczyk, Risk Manager/Financial Analyst

INX International Ink Co.

“I would love to get quotes 30 days ahead of time and wrap it all up, but I don't know that I'm going to get quotes early because I don't think carriers know what's going on and where they are. I suppose you could call it 'the Spitzer factor.'”

Anonymous Risk Manager