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To some he is a gentleman rebel, to others a rogue.

For the history books, Wolfram Rohde-Liebenau is the risk manager who brought down Germany's property insurance cartel -- the konsortialkommission, or KOKO.

In his modest way, Mr. Rohde-Liebenau will tell you he did nothing of the kind. He merely helped his company, Siemens A.G., buy a large portion of its property insurance outside the domestic German market. But in so doing, Siemens broke the choke-hold of the KOKO cartel and changed forever the way commercial insurance is bought and sold in Germany.

It's not surprising that it was Mr. Rohde-Liebenau who catalyzed a shift in the market. During his career he has been a front-line defender of buyers' rights, a pioneer of risk management in his own country and a champion of insurance deregulation in Europe.

Mr. Rohde-Liebenau, 66, began his career in 1958 as a lawyer, became a banker and credit analyst for Dresdner Bank and later worked for Germany's largest insurer, Allianz A.G., and reinsurer Munich Re A.G. In 1975, he became head of Siemens insurance division.

Significantly, he was never really happy with the "golden age" of his early insurance years. When he discovered he had no effect on decision making, he rebelled and went to Siemens, where he has been making his ideas count with insurers ever since.

Germany's highly regulated, protected market made him uneasy. Mr. Rohde-Liebenau was one of the first in Germany to apply the principles of risk management and set up a captive. He also helped the captive brokers of industrial companies become a respected, powerful entity in Germany.

He retired in 1996 as risk manager and head of Siemens' insurance division and from the executive board of Siemens' German captive, Risiko A.G.

He recently spoke with Correspondent Don Lewis Kirk about changes in risk management in Germany and Europe.

What do you consider the most important changes during the last 30 years in insurance and risk management?

In Germany it has been a shift from insurance management to risk management. Freedom of services in the European market brought an end to national cartels, which gave us more freedom, but also more responsibility. As a result of deregulation, risk managers must closely scrutinize insurance conditions.

It's all been a slow process. Remember, European insurance deregulation started in 1958. For almost 30 years, German insurers were able to stall deregulation, which is a major reason why Allianz, for example, become as big and powerful as it is. German industry was always at odds with insurers over freedom of services, and it's a great accomplishment that deregulation has occurred.

As a member of national and international committees, you promoted the interests of German commercial insurance buyers. Why have you been so active in the politics of insurance?

As Siemens' risk manager, I had an effect on insurance conditions, but I wanted more. I wanted to have a formal influence on policy. If we leave the direction of the market to those whose commercial interests are opposed to ours, we're to blame for getting off course.

Insurers have an interest in minimum protection at maximum cost, and we want maximum protection at minimum cost.

What are the incentives for risk management and alternatives to insurance in Germany?

Foremost, is premium tax pressure. The German government has imposed a 15%tax on insurance, which means that non-insurance solutions to reducing risks cost 15%less than insurance solutions. That doesn't include brokers' commissions and fees.

Relatively few German companies have risk managers. Is that a conducive environment to change?

When I began my job at Siemens in 1974, I was told to forget risk management. My boss believed a wrong commercial or technical decision would cost the company more than foreseeable claims.

But luckily, I had support from the head of corporate planning, who told me to keep at it and not to expect changes overnight.

The environment did change. BMW took the first step in 1980, when it formed its own captive. We followed, and today risk management is an essential tool with insurance buying at a second level. It should be the second level.

What was the significance of Siemens buying property insurance from insurers outside of Germany?

When we dared to leave the German market in 1994, it brought the whole system down, which I personally did not intend to do. I thought German insurers would continue with their old patterns. I thought they would reproach me for taking a risk outside the German market. So when they decided to dissolve the KOKO, it came as a real surprise to me.

But wasn't it a good thing? At a time when German companies were already burdened by a recession, the KOKO began raising rates for very large risks, including yours, by up to 300%. Didn't that upset you?

The problem wasn't the premium, it was the inequity. The best risks were paying the highest rates. So we began to look around for alternatives. We needed a billion deutsche marks PML capacity and that was only possible as an HPR risk. I told our German insurers we'd qualify, but they did not grasp the significance of what I was saying. They thought we would fall on our faces.

Instead, the industrial property insurance market and the KOKO cartel collapsed?

German insurers began to underwrite any property risk at any price foreign insurers were willing to offer. No premium was too low. German insurers vowed no foreign insurers would take another risk from the market in our lifetime.

It reminds of the talk of wanting to defend the fortress Europe. Do German insurers see their market as a fortress to defend?

German insurers wanted to retain their totality. The German KOKO was an accepted legal instrument. Any risk seeking over 1 billion deutsche marks in insurance had go through the cartel. The KOKO remained as long as German buyers had no alternative.

The German insurance industry blamed me for bringing down the principles of solid insurance underwriting. I was the enemy, but I acted under different presumptions. I felt misunderstood. I found their view narrow and national.

In retrospect, it's hard to believe the KOKO stood up for so long, especially at a time when the European Community and Germany were deregulating their insurance markets. Why did it?

Believe me, the KOKO could have kept on. If Siemens hadn't taken the step, it's likely no one else would have, and we'd have fallen back into a cartel situation.

Unthinkable! What is the point of the European single market if we were not able to do what we had the right to do? Had we failed it would have been either through our own stupidly or the absolute power of the other side of the market. My company decided to go its own way.

As a result, the German property market has become quite soft. Is the job done?

Not at all. Don't believe I favor unsound underwriting. The market has gone overboard. Good risks and bad risks are getting the same low premium. That's insane.

But I do want to be able to call a spade a spade. The issue was not premium but inequity. German insurers like Allianz and Gerling accept risks outside Germany at international rates. We couldn't get those rates. Even though we're a Fortune 500 company, we were excluded from conducting business like any other international company.

You've often said the real issue is communication.

If the insurance industry believes it alone can tell us what we need, problems won't get solved. I remember when the International Chamber of Commerce in Paris was in the process of setting up an insurance committee and we had trouble getting in because the insurance industry wanted us out. I became a member anyway.

What do you consider the big issues for today's German market?

We still have to establish the principles of risk management in Germany. I see so many risk managers restricted in their freedom of movement. When the layout for a new factory is known, a risk manager should be called in. He or she should say, "No, we can't put the computer center near the production hall where it is exposed to a fire, because it would bring the whole process to a standstill." Factory plans should change as a result.

It's also a question of complete financial risk management control at the executive level. Risk management isn't just about safety and product liability issues; it is about financial risks. Very few companies -- not even Siemens -- have allowed this kind of competence. But it is where risk management must go. We need to be able to report not just to some second-level person, but to the top. Risk management isn't successful without that freedom.

German companies should form risk management departments with real responsibility for questions of risk at the highest level. This is what state-of-the-art standard international companies need to remain competitive.

Doesn't Germany's changing economic and social environment make CEOs hesitant to give you that kind of power.

Cost pressures and changes in social security are all the more reason to rely on risk management.

Just consider the cost of risk. Insurance costs alone account for up to 2% of company costs. If we include workers compensation, health insurance and pension problems, the cost of risk management may easily jump to 25% of total labor costs.

We have a strange mixture of public and private insurance in Germany. Much is antiquated and requires good risk management skills to bring it up to date.

German companies confront a number of difficult insurance issues, including problems with buying coverage for environmental liability risks. Doesn't that make you want to jump back in the ring?

It makes me question if insurers want to take risks at all.

Look at the EMF (electronic magnetic field) issue. I'm on a joint committee of industry, insurers and risk managers, looking at the problem. In a very blunt manner, we were told insurers will take EMF risks from product liability and shift it to environment risk, where coverage is very limited.

Do you see a greater need for captives and alternative solutions in a case this?

Yes. This is the point at which group captives might make good sense. If exclusions in standard policies take away the necessary cover, then the response should be that industry takes care of it without insurance.

Captive insurers have been utilized by a very small minority of German industry. They will be needed to a larger extent in the future, as an instrument for risk management and alternative risk transfer. But I'm afraid we are still far away from realizing that. German insurers are very jealous of German industry captives.

But aren't tax issues distancing you even more from conventional insurance solutions?

The government made this stupid change and increased the tax on insurance premiums to 15%. It's almost insane. It has forced German industry to invest in risk management. Every penny we swap with insurers is burdened with a 15%insurance premium tax. As a result, anything we can pay for ourselves should be paid for by ourselves.

What do see for the future?

For German risk managers and corporate insurance managers, there are two possibilities: Either we have support of insurers to solve our liability problems or we must take on these risks ourselves. Support would benefit both industry and insurance companies. But if insurers are fearful of risks, then industry must find alternatives.

We must be willing to fight. Quality is determined not by those who sell, but by those who buy.

How do you see globalization changing risk management in the future?

Globalization has a strong influence on risk management decisions. Production methods have changed radically. Today we produce with fewer parts, less factory space and a minimum of employees, and yet we produce a higher quality product and get it to the market in about one-third of the time it used to take.

Siemens has focused on simplification and acceleration of processes to get faster results at lower cost with competition being the dominant force. We have had to learn to compete in different volumes, using different technologies. We have had to learn new tricks and unlearn others.

As a result, one of the major change-related activities of our risk management department is to advise on the design and start-up of new facilities. This makes our risk managers real movers and shakers in our organization. One of the company's risk managers is assigned to every new factory project, venture or joint venture.

Our knowledge of global markets also has been an important factor in getting adequate protection and coverage. Information was one of the forces that drove us to foreign markets. Certainly the German cartel and its premium increases were pushing from behind, but we were also very attracted by new ideas and ways to contain risk.