Employee layoffs, doing more with less, feeling the pinch of federal cutbacks: More than ever before, public entities need to protect themselves against liability arising from the current uncertain economic climate. AA&B spoke with Paul Fuller, president of wholesale specialty program operations, Glatfelter Insurance Group, about market conditions and the ways in which agents and brokers can act as knowledgeable advisors to their public entity customers.

AA&B: How would you characterize market conditions for public entity coverage from last year at this time?

Fuller: Frenetic and a bit schizophrenic. Last year there was more focus on market share and market penetration with less emphasis on underwriting results. Now, redundancies in reserves are gone, and carriers are realizing they're underwriting at a loss. Plus, investment income has disappeared and there are other pressures by rating agencies on reserves and surplus, so carriers are now forced to be very conservative in what they're underwriting. Right now, the marketplace is waiting for that first carrier to take the lead and announce they will have substantive rate increases, but that hasn't happened yet. Well-financed insurers with good reputations that have made a commitment to the public entity sector will be able to present their case for higher terms, and they will be in a better position than new entrants to the field. Some of the more aggressive carriers will take an accounting of losses and reevaluate their commitment to this niche, and the newer entries will likely take an exit strategy.