CHICAGO-An insurance market that is continuing to harden in many lines is forcing buyers to deal with higher retentions and deductibles and, in some cases, increased co-insurance requirements from insurers.

The pressure for higher retentions, deductibles and risk sharing runs across the board, said Marcia L. Hahn, senior vp in the Risk Management Services division of Arthur J. Gallagher & Co. Inc. in Chicago.

"I don't see any relief available for taking additional risk," Ms. Hahn said. "It's just a given that retentions and deductibles will be higher."

Ms. Hahn discussed current market conditions and their impact on retentions, deductibles and co-insurance earlier this month in Chicago, at the annual REBEX conference sponsored by the Chicago and Wisconsin chapters of the Risk & Insurance Management Society Inc.

Like other brokers, her firm is "facing so many tremendous challenges," both from a client perspective and a broker perspective, Ms. Hahn said. "It's just progressively deteriorating out there."

Ms. Hahn said she recently worked on a Nov. 1 renewal that was more difficult than a Oct. 1 renewal she was involved with, which itself was more challenging than a Sept. 1 renewal she'd done before that.

In the current market, underwriters are requiring detailed submissions and performing extensive analyses of risks, Ms. Hahn said, adding that insurers' unprofitable underwriting over the last 10 years "is having a huge impact on what's going on."

"Without submission of complete data, I can tell you, the market would just as soon decline the risk," she said. And the pricing and conditions buyers are receiving are "a direct reflection" of their loss experience.

Rates have to match exposures, Ms. Hahn said, and market conditions are similar in every line of property and casualty coverage. Expiring rates, she said, are no longer a benchmark for renewal pricing. "That is so far gone right now," she said.

In the past, co-insurance requirements were most typically seen on property programs, Ms. Hahn said, but in recent months, they have begun to emerge as requirements in some liability programs as well. She noted that there's also a lack of available coverage for certain risks. "Carriers are focusing on making a profit," she said.

Insurers also have reduced underwriting capacity, Ms. Hahn said. "I know of only two markets right now that will give you blanket property coverage," she said. "Without a doubt, whatever you had is not what you're going to get."

Meanwhile, coverage restrictions introduced in policies are "becoming more permanent," she said.

With the failure of Enron Corp. and other corporate scandals, in the directors and officers liability and errors and omissions markets, "retentions and deductibles have just escalated tremendously in that area since July of this year," Ms. Hahn said.

Among the ways buyers can improve their bargaining power with underwriters at renewals is to portray exposures clearly and accurately and to differentiate themselves from others seeking coverage from the same insurers by improving the quality of those risks, she said.

Noting that buyers audit their claims on a regular basis, Ms. Hahn said, "I can't tell you how important it is that the markets know what the history is on our claims and what the trends are and how they're developing."

And, given that there are no set formulas for determining appropriate deductible and retention levels, she suggested using some of the software tools brokers can provide to examine various scenarios.

"Another area that I think should be considered is aggregate stop-loss on large casualty programs," Ms. Hahn said.

Buyers also should consider risk sharing options such as risk retention or purchasing groups, she said. Capital markets risk transfer alternatives can provide enhancements to risk transfer programs but are not substitutes for insurance products, Ms. Hahn said. And captives, she noted, can provide such benefits as cash-flow opportunities, smoothing of losses over a long period and a way to address uninsurable or difficult-to-cover risks.

Ms. Hahn suggested buyers develop a comprehensive loss database of at least five years. "History, history, history-you just can't provide enough of it," she said. She also recommended buyers review claims information to ensure that what is provided to underwriters is accurate, current and thorough.

Ms. Hahn said she would advise a risk manager to review his or her company's risk retention capacity and budget, making sure to understand management's risk appetite before going into renewal negotiations.

Once into the renewal process, buyers should research a variety of attachment points, getting quotes at the various levels, she said.

Stepped-up safety and loss control efforts also can help provide leverage at renewals, Ms. Hahn said. "Be as proactive as possible in knowing your risk and addressing the kinds of losses that you have," she said.