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Brokers, insurers, launch risk programs.

A new insurance program from Johnson & Higgins allows insureds to stabilize property premiums and coverage for up to 10 years, according to Michael Schiebert, vice president of J&H in San Francisco. "It's a new way of looking at property insurance," he says. "We're incorporating more risk management techniques into the traditional approach of buying insurance." The Risk Incentive Sharing Program allows the insurer and insured to agree on the term of the insurance contract, the amount of retention, premiums and possible discounts for good loss experience, according to Mr. Schiebert. At the start of the program, the insurer and the buyer agree on a premium level based on competitive market rates. The buyer retains a portion of the premium and creates a reserve fund. If claims are greater than the policy deductible, the insurer can recapture a portion of the reserve. Reserve funds can be invested to accumulate interest and, if not recaptured, used to increase the self-insurance. Because of the higher self-insurance levels, insurers do not have to pay small claims, which in turn protects the buyer from premium increases. If the firm has no losses above the self-insured amount during the program, it keeps the funds in the reserve account. Adds Mr. Schiebert, "Either a captive or a J&H rent-acaptive can be used in conjunction with this setup. Contracts for the program are in amounts of $25 million, with annual premiums at approximately $1 million. ... Recognizing the need for more sophisticated insurance programs for companies conducting business in the global marketplace, CIGNA Worldwide Inc. has established an organization to focus on risk management products and services for multinationals. Global Risk Management offers insurance products, advanced risk financing and transfer techniques and related services. It also helps companies structure captive insurance programs and controlled master programs for handling cross-border risks. The organization consists of a global network of multinational risk management units that provide underwriting and support services; underwriting services that handle the U.S. exposures of non-U.S. multinationals; a division that handles the international exposures of U.S.based firms; and a unit that provides unbundled insurance services. "Multinationals need more than just insurance, they need an asset protection strategy, an integrated program that can manage risk around the globe," says John Thomson, senior vice president of the operation. ... A multiline insurance product for U.S. companies conducting business overseas is available from The New Hampshire Insurance Co. in Manchester, a member company of the American International Group Inc. WORLDRISK offers up to eight insurance coverages in one package, including comprehensive general liability, foreign property, crime, travel accident and ocean cargo, as well as kidnap and ransom.
COPYRIGHT 1991 Risk Management Society Publishing, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1991 Gale, Cengage Learning. All rights reserved.

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Author:Oshins, Alice H.
Publication:Risk Management
Date:Mar 1, 1991
Previous Article:Captive premiums deductible.
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