The Commercial Insurance Market Index for the third quarter 2002 shows brokers and agents in the U.S. are worried about insurer solvency. In a poll, the Council of Insurance Agents and Brokers noted that 86% of respondents are concerned about the industry’s financial viability. Citing terrorism losses, investment declines and environmental claims as among the threats to insurer solvency, brokers fear that absent an economic turnaround some insurers may not be in the market come next year. “Large brokers are concerned state regulators and other solvency watchdogs do not confront solvency issues quickly enough to rehabilitate troubled carriers or get them out of the market,” says CIAB president Ken Crerar. He notes that with no federal watchdog, brokers must rely on these other sources to assess solvency. Since 9/11, many carriers have faced downgrades from rating agencies or been placed on “watch” or negative outlook status. “We are seeing downgrades almost on a weekly basis,” reports one broker. “We figure one (insolvency) is just around the corner,” says one agent. Brokers also cited the same concerns about rising rates, depleted capacity and stricter terms on commercial lines voiced since 9/11. More than 60% of mid-to-large accounts continued to see increases in the 20% to 50% range for the quarter ending September 30, 2002. Small accounts rose between 10% and 30%. Lines specifically affected include construction risks, directors and officers and umbrella policies, although no line was spared. Medical malpractice was amongst the hardest hit, with almost 20% of accounts seeing a 100% increase. The survey also shows an increased interest in alternative markets by brokers and agents, specifically the use of surplus lines and captives. Higher deductibles, self-insurance and even “going bare” and foregoing coverage for certain risks are becoming popular options for clients, brokers report.