If risk managers’ predictions are accurate, use of alternative risk transfer techniques, specifically captives and self-insurance, should grow significantly in the year ahead. While the traditional response to hard market pricing, taking larger deductibles, remains the most utilized tool, risk managers say they will be using more self-insurance and captives in the future, according to the annual alternative market survey released by American Re’s Munich-American RiskPartners. Pricing remains the top concern for risk managers, with 90% identifying it as such, a 17% increase over last year’s findings. “It is evident that market conditions hardened over the last year,” says Tony Kuczinski, president of Munich-American RiskPartners. “Risk managers are still dealing with price increases after years of inadequate pricing in the late 1990s and high losses and reserve increases over the past two years.” The top five tools used to combat rising prices are larger deductibles (80%), safety and engineering programs (77%), self-insurance (61%), captives (23%) and risk securitization (5%). But in the next year, anticipated use of self-insurance increases to 76%, and captives doubled to 46%. The survey also shows that risk managers increasingly categorize their relationship with their insurer as being based on price and commodity rather than a long-term relationship based on value-added services. Risk managers expect more price increases, coverage and capacity issues over the next two years, expect to self-insure more risk, predict higher attachment points and potentially a strained relationship with their insurer. “This emphasizes current market conditions,” comments Kuczinski. “Risk managers are shopping price right now, even though they see their relationship with their carrier as long-term.