regularly. There, he tries to explain the impact of the disaster on the

insurance markets and why, after so many years of bargain basement premiums,

insurance now costs more for less. I'm

in the spotlight now, says Pinner, and

it isn't a very nice light.

Of course, he's only half-kidding about his 15

minutes of fame. These days the lives of corporate risk managers across the

nation are really beginning to live up to their title. I've never seen a hard market like the one we have now,

Pinner says. In some cases, we're

not talking double-digit increases, we're talking triple-digit increases.

And all this comes at a time when companies are

feeling the teeth of the current recession. [Farr's]

got great pressure on him to reduce the bottom line and expects all of us to cut

our budgets, Pinner explains. Even

though he reads in the papers every day that the insurance market is chaotic,

coming in with a budget that is up 50% doesn't make him a happy man. Insurance

is something, given all his operational responsibilities, that he really

doesn't want to have to think about.

Reverse of the '90s

Unfortunately, Farr and his fellow CFOs don't

have that luxury anymore. Neither do the foot soldiers like Pinner who must go

out and negotiate the best deals they can for their companies.Fortunately,

Pinner says, he never tried to take credit for the soft insurance market of the

1990s as other risk managers did. I

made sure I told our treasurer Bill Stavro that insurance is a market, and the

low prices would someday be followed by higher prices, he explains. But Pinner

has to admit he never expected the spike, when it finally hit, to be so extreme.

Fellow risk managers also bemoan their sudden

notoriety. I used to have a pretty

easy job, says Sewell Mechem, insurance and risk manager at SEI Investments Co.,

an Oaks, Pa.-based global provider of asset management and investment technology

solutions with $600 million in annual revenues. I

report to the chief legal counsel and, every year, I would tell him my budget

was either equal to or 10% less than it was the year before. He liked me. He'd

say, OECome on in.'

Those days are gone. I recently had to write up a report for my boss explaining why

our premiums were increasing, even though we were retaining more risk

internally, Mechem explains. There

wasn't much he could say. But he listened intently.

Prior to August 2001, Mechem had a three-year

professional-liability insurance policy with CNA Insurance Cos. in Evanston,

Ill. The insurance is critical to SEI, protecting it against lawsuits alleging

professional malpractice. When the policy expired one month before the terrorist

attacks, Mechem tried to extend it another year

interested in a long-term deal. And

this was before Sept. 11, she sighs. The

best deal I could negotiate was a single-year policy, with a much higher

deductible and co-insurance element.

Greater Appreciation

Excess of SEI's deductible, the company pays

20% of the loss and the insurer 80%, up to a certain limit of liability, which

Mechem is not at liberty to disclose. Even with all this extra risk on the

company's books, SEI is still paying about 35% more for the insurance,

although Mechem says it is difficult to compare the single-year deal to the

previous three-year program. This

is a very complicated insurance policy we have put together, given the sliding

deductible and the co-insurance, she notes.

The current level of sophistication required in

most insurance deals explains why, despite the bad news they keep delivering,

skilled risk managers are appreciated more than ever.

Next up for Mechem, for instance, are

negotiations on the company's property insurance policy, which expires in

April. From what I've been

hearing and reading, our premiums are more than likely to double, she says. So

she is exploring alternative risk transfer mechanisms, including possibly

forming a wholly owned captive insurance company. Says Mechem: To just sit around and absorb higher costs and greater risk is

not doing my job.