Eric Andersen was promoted to CEO of Aon Risk Solutions-Americas this year. As head of the Americas for Aon Corp.'s main brokerage unit, Mr. Andersen oversees operations in the United States, Canada and all of Latin America. In a recent interview, Mr. Andersen talks about some key issues for risk managers.

Q: Are you seeing signs of a turn in property/casualty pricing?

There is no one answer…in higher risk areas you have movement—cat property and other hard to place business is harder to place than it was last year. Traditional middle-market business had ticked up a little—a couple of percentage points—whether that holds is very hard to call. And then some of the specialty businesses, such as (directors and officers liability), have been soft all year, but we saw some not as soft. But I do struggle to see, when you look at the amount of capital in the business and when you look at the number of management teams in the business, how competition doesn't resurface in a way that causes prices to stay flat, if not move down.

Q: What's the No. 1 piece of advice you would offer risk managers to prepare for their next renewal?

They need to know their break points, because right now they've been fortunate enough to buy cheap insurance for decades….If the market is truly changing in an economy that is not really growing, there is no more money for insurance, so they are going to be forced into making choices between risk retention, risk management and risk transfer.

We have to be able to help them make those choices in a quantitative way. Not just “you shouldn't buy this or shouldn't buy that at all,” but really go at them and say, “you are a public company, here are your debt covenants, here are your earnings-per-share models, here's the loss experiences by product…this is a good buy for you, you don't have to buy this, put this in your captive.” As the market is changing, they have to know that or the market is going to take them there by the way it's pricing rather than what they want to buy.

Q: What's the biggest emerging risk you see for U.S. companies?

I'll give you two answers. Certainly the whole privacy, cyber world that we are all starting to learn about continues to be more on the verge of trying to understand the risks from a risk management standpoint rather than a risk transfer standpoint. The laws are changing, the regulations are changing and the technology is changing. (When) you put all those things together, it really is quite a challenging environment to understand that.

One of the biggest challenges is that insurers themselves have become very, very conservative. If you go down a list of the major industries, often the No. 1 thing that is worrying to them you actually can't transfer to the marketplace. You look at intellectual property for a technology company, you look at professional liability for a financial institution, you look down the list and the market has withdrawn from its confidence to be able to actually price and create a product that will help a client manage that risk. I think the reason why the market it going to be competitive is because they are commoditizing the standard product.

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Hope Picker, director of strategic research at Doremus