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Risk managers, now well accustomed to the free fall of insurance premiums, are looking to pick up additional coverages while prices are right.

Buyers are particularly interested in employment practices liability insurance as they grow more aware of their exposure and the coverage becomes more widely available and affordable.

Apart from coverage concerns, risk managers have the millennium on their minds. They worry that not everyone is ready for the problems that the year 2000 could bring to computer systems (see story, page 28).

"There are computer chips everywhere," said Grant Johnson, risk manager at Hormel Foods Corp. in Austin, Minn. "There are a lot of unknowns."

More immediately pressing for many is the need for risk managers to cover the risks they do know about. During this midyear renewal period, employment practices liability insurance is high on many shopping lists.

"We're thinking about adding EPL," said Iris Owen, director of risk management at Pizza Inn Inc. in Dallas. "I don't think it's that high," she said of the coverage cost. "It's very reasonably priced."

"Risk managers think that (EPL) prices will continue to come down and forms will continue to broaden, as they have in the past two years," said Christopher Johnson, director-risk management at Campbell Soup Co. in Camden, N.J.

Larry Sokolowski, vp-risk and benefits at U.S. Cold Storage Inc. in Cherry Hill, N.J., is sorting through insurers' EPL offerings to find the one that's best for his 1,300-employee company.

"How long do you wait to jump on?" Mr. Sokolowski wondered about the growing movement to buy the coverage. "It's still too new; there's nothing to compare it to."

He said the coverage is "definitely more appealing now. I don't think there's a reason not to get it, especially for diverse, decentralized organizations."

Mr. Sokolowski had hoped to get the coverage in place by July 1 but, faced with so many options, he said it more likely will be later in the year before he makes a decision.

Burlington Industries Inc., a textile manufacturer in Greensboro, N.C., hasn't bought the coverage, but "we are going to take a serious look at buying some," said Gerard McCabe, director of risk management.

Mr. McCabe said "continued improvement in the employment practices area," in the form of more insurers offering the coverage, broader terms, and lower deductibles and premiums, is tempting buyers.

But not all risk managers are biting.

"We decided against it; I still think the cost is too high," said W. Michael McDonald, director of risk management at Tampa, Fla.-based Walter Industries Inc.

Mr. McDonald said insurers increasingly are offering the coverage in conjunction with directors and officers liability insurance under shared aggregates, another reason it was an unattractive option to Walter Industries.

Instead of buying the coverage, Walter Industries thinks its money is better spent on improving loss prevention in the form of stronger human resources policies and programs to prevent employment practices claims, he said.

Risk managers are in the market for other coverages as prices continue to sink.

Ms. Owen said Pizza Inn buys insurance for its corporate operations and recommends coverages

for its franchised operations, without requiring it. "So we're looking for anything that will benefit our franchises."

She said Pizza Inn is looking into coverage that would respond to food contamination claims for the restaurant chain.

It's a coverage that is becoming more appealing, according to Mr. Johnson of Hormel. Competition among insurers to write the specialized liability coverage has intensified, he said.

That scramble has encouraged underwriters to drop a copayment requirement that buyers were forced to make in addition to the deductible. Along with broader terms, contamination coverage costs have fallen about 3%, Mr. Johnson said.

"We're looking at product recall," said David Hennes, director of risk management at The Toro Co. in Bloomington, Minn. The manufacturer of outdoor products currently self-insures that exposure.

"I'm finding it's more competitively priced than I would have imagined," Mr. Hennes said of product recall coverage. "The initial reaction from the market has been very encouraging, and we're looking more closely at that."

Also, because Toro's products are used outdoors, weather can affect sales. Mr. Hennes said he is "looking at the financial markets to see if there are deals that can be done" to protect against that exposure.

Mr. Johnson of Hormel Foods said he's "been asked to look at hedging" for the first time in his 12-year career.

Buying hedges could lessen some exposure related both to hog prices and the cost of grain to feed turkeys, he explained. "Earlier this year, the price of hogs was way down, and we had contracts where we paid (farmers) over the market price."

Price breaks were available on other coverages Toro has purchased, Mr. Hennes pointed out. The company was able to get higher casualty limits at lower prices "in spite of a particularly large auto claim," he said.

Renewing with the same insurers, Toro was able to double its primary liability limits to $50 million, Mr. Hennes said. Toro carries coverage written in the Bermuda market above that amount. Altogether, coverage was about 15% less expensive this year for Toro.

Liability coverages were also less expensive for White Castle System Inc., a Columbus, Ohio-based restaurant chain.

White Castle self-insures the first $950,000 of its general liability exposure, and it buys a $50,000 layer of coverage above that from Nutmeg Insurance Co., a unit of Hartford Financial Services Group Inc. On top of that $1 million in coverage, various insurers write excess liability limits to $50 million.

"(Renewal) went very well; it is a very soft market," said Richard D. Randall, director of risk management at White Castle. He said coverage costs at renewal were about 17% lower than a year ago.

Concern about potential Year 2000 computer problems are leading some risk managers to ask for three-year liability policies as a way to make sure they have coverage and to lock in terms that will remain unchanged when the new millennium begins.

Hormel locked in a three-year directors and officers liability insurance policy last fall to ensure that it had Year 2000 coverage for that exposure, Mr. Johnson explained. At the time, the company obtained a 30% reduction in annual D&O premiums.

Mr. Hennes of Toro and Mr. McDonald of Walter Industries used the same strategy when renewing D&O and other liability coverages.

Risk managers looking for property insurance coverage are finding continued low rates.

Mr. Johnson of Hormel said the market for commercial property insurance "is still very, very soft." His company's coverage, written in a highly protected risk policy, runs through November 2000. But even during the policy period, underwriters extended a 10% premium reduction and an extra year of coverage. "We may see a slight decrease in premiums," said Bill Saliga, assistant director of risk management for White Castle. The chain buys property coverage for its corporate offices and self-insures the risk for its 316 company-owned restaurants.

Quotes for White Castle's property coverage aren't in yet, but the market remains "pretty stable," Mr. Saliga said.

Even with a significant California earthquake exposure -- the company has manufacturing sites for irrigation equipment there -- Toro currently is paying much lower property premiums than under its previous coverage.

Mr. Hennes said that structuring Toro's property risks as part of a global program as the company expands worldwide has helped attract foreign reinsurers. Heading into the second year of a three-year program, annual coverage costs are about 40% lower than before the policy was written.

Mr. McCabe of Burlington Industries said he may see a slight increase in coverage prices for highly protected risks. While the market is soft, the manufacturer has suffered losses in recent years that could drive up its property insurance costs.

"We had some poor loss experience from Hurricane Fran two years ago," said Mr. McCabe. Claims totaled about $2.3 million for about 26 manufacturing or storage facilities damaged by high winds or flooding.