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DALLAS-Risk managers are putting reinsurers on the spot.

Risk managers want to work more closely with reinsurers because that's where a key part of their risk financing lies. But that leaves the reinsurer with the challenge of meeting buyers' needs while not stepping on the toes of its own insurance company clients.

Large commercial buyers want to understand how much of their insurer's capacity is attributable to its reinsurer and what services the reinsurer can provide directly to the policyholder, according to Heidi E. Hutter, chairman, president and chief executive officer of Swiss Re America in New York.

"We are obviously trying to manage this, because on the one hand there are people coming to us saying, 'We want to work directly with you,' " she said. "On the other hand, of course, our business is with our insurance company clients."

That leaves reinsurers with the delicate balance of trying to "provide our capital and our services through our insurance companies, who are our traditional sources, but also find ways where we can work directly, especially with large commercial insureds," Ms. Hutter remarked.

The conundrum reinsurers face was part of a far-ranging discussion by a panel of insurance industry experts at the annual meeting of the Society of CPCU in Dallas Sept. 28-30. Much of the discussion centered on the changing insurance distribution system and how technology will alter the way the industry conducts its business.

Ms. Hutter said reinsurers have to be aware of "what they're good at" when providing services to risk managers.

"As a reinsurer, we are very good at diversifying risk," she stressed. "We have an enormous spread both globally, in terms of geography, and also in product line. We are not good at servicing local claims" or hand-holding customers through the claims process.

Ms. Hutter said Swiss Re has worked directly with some large risks that needed very high excess layers, "generally $300 million excess of $200 million, very high severity, low-frequency-type products. The value that we bring to the table is risk diversification and an expertise at that end."

Risk managers are taking a hard look at the distribution system and the role of insurers, reinsurers and intermediaries within it, said William C. Hartnett, worldwide insurance industry manager at Microsoft Corp. in Redmond, Wash.

The system has evolved into one that has muddied the roles of those who deliver the insurance product, he noted. With the reinsurer on one end of the system and the policyholder on the other, some risk managers are beginning to see the primary insurer, not the broker, as the man in the middle.

"Most risk managers that I talk to today, especially with large corporations, see that primary insurer as the middleman," Mr. Hartnett remarked. And some wonder if the value added by having both an insurer and broker in the system is worth the cost it adds to the transaction.

An insurer on the panel pointed out that Mr. Hartnett's middleman scenario does not apply, however, in a continuum that doesn't include a reinsurer.

"There's a whole lot of capital, and there's a whole lot of risk assumption that's taking place by the non-reinsurers, primary companies that are out there," said Boh A. Dickey, president and chief operating officer of SAFECO Corp. in Seattle.

"There are a lot of companies like SAFECO that don't trade dollars with reinsurers," he pointed out. "We assume risk, we assume it up to a whole lot of levels," only laying off catastrophe risks, Mr. Dickey added.

"So I think you have oversimplified this middleman concept," he told Mr. Hartnett, except in cases where very large commercial risks need "a ton of reinsurance to do it."

Mr. Hartnett emphasized that even though the insurance distribution system will continue to evolve, particularly as technology advances, it is unlikely that intermediaries will vanish from the landscape. Their work styles, however, could look vastly different in years ahead, he said.

Portable technology could put intermediaries on the street, not looking for jobs but doing their jobs, he explained.

In some areas, demand for insurance agents will increase, he added.

An agent on the panel agreed there will be a greater need for agents.

"But I think there will be a tremendous amount of change," said Ronald A. Smith, president of Smith, Sawyer & Smith Inc. in Rochester, Ind.

Agents should be creating World Wide Web pages to showcase their offerings, pointed out Mr. Smith, who is past president of the Independent Insurance Agents of America. And insurers could help by including on their pages instructions for contacting an agent.

For their part, insurers are playing catch-up with technology, Mr. Hartnett said.

"For an industry that's supposed to understand risk very well," a lot of insurance companies have been "extremely risk adverse to technology," he said.

But, he acknowledged, "I see that changing now," with "a lot of insurance companies becoming very, very aware" of Internet technology and how it can be used as a business tool, for example.

Mr. Dickey of SAFECO said insurers shouldn't be painted with the image that they are all techno-idiots.

Many insurers are more technologically adept "than we're given credit for," he said.

In fact, Mr. Dickey said, "The thing that today distinguishes a lot of good companies from average companies in the property/casualty business is the technology" the good companies use.

Very few companies are using that technology to sell insurance.

"For all practical purposes," there is no insurance sold over the Internet, Mr. Hartnett remarked.

Less than one-tenth of 1% of insurance purchased today is bought over the Internet, according to Herbert E. Goodfriend, managing director of KPMG Peat Marwick L.L.P. in New York and moderator of the panel discussion.

The sale of coverage over the Internet has raised questions with which regulators are grappling.

It is unclear which state laws would apply in the sale of insurance over the Internet, said Julie McPeak, attorney with the Kentucky Department of Insurance in Frankfort. "Is it the state where the company is putting the Web site on the Internet, or is it the state where the consumer is pulling up the information? Is it the state where the agent is going to help the consumer with the information?"

Insurance buyers eventually will rely on the Internet for transactions or at least to obtain information on coverage, Ms. McPeak said. "And we're going to have to figure out how to regulate that."

Ms. McPeak also pointed out that regulators have moved slowly in the technology scramble and have some catching up to do.

The increasing demands of keeping up with an insurance industry that is expanding beyond U.S. borders means regulators will have to rely more on technology to handle tasks such as licensing and tracking continuing education requirements, Ms. McPeak said. The electronic transfer of funds is becoming important as insurers spread across the globe.

Unlike insurers that can analyze the costs and benefits of technology, regulators "don't have a choice," she said. "We have to move in that direction to enable us to maintain state regulation of insurance."

Also on the panel were Gordon J. Cloney, president of the International Insurance Council in Washington, and Lawton Swan III, president of Interisk Corp. in Tampa, Fla.