Risk managers are being tested by insurance negotiations in the current market, says a new study by Prudential Financial. Rising rates, tighter terms and increased demand for information from corporate insurance buyers are leading to long, intense negotiations, reports the 2002 Insurance Buyers Survey. The survey, which involved interviews with 120 risk managers in Canada and the U.S. also finds that the price increases may be even steeper than is being reported by other sources. Over two-thirds of respondents who have renewed their coverage faced increases of at least 18%. Also, that same amount report tighter terms and conditions, and those who have not yet renewed expect to face such conditions as they head into negotiations. “This means their limits were reduced, their retentions were greatly increased, and in some cases aggregates were put on major programs like workers’ compensation, which is very unusual,” says Prudential Financial analyst Alice Cornish, who worked on the survey. However, risk managers were prepared for tough times, she adds. But the senior management to whom they report may not be so understanding, and risk managers are having to help their companies understand the intricacies of the insurance price cycle, especially given the low rates that have been experienced since the late 1980s. Other survey findings include the fact that rate increases are varying greatly by program, and that insurers are demanding more information and going through extensive re-underwriting processes. And while risk managers may be switching carriers, but not necessarily due to price alone, Many risk managers who have switched cite less stringent terms as the reason.