A new white paper from Lockton has sought to address ways of coping with insurance collateral challenges.
Gary Shertenlieb, Lockton's senior vice president in risk finance, discussed the three key problems and alternative solutions in the paper, 'Dulling the Pain of Collateral.'
"The renewed focus on capital preservation has attracted greater internal scrutiny of collateral posted to support insurance programs," said Shertenlieb.
He stated the first obstacle was some insureds dealing with changes in credit lines and borrowing/letter of credit rates. The second challenge Shertenlieb attributed to insurance carriers underwriting their credit exposure to their insureds more stringently.
Finally, he stated that carriers have been actively monitoring their credit concentrations to the banks and financial institutions that are providing collateral on behalf of their insureds.
"Alternative collateral strategies can make a significant impact on the efficiencies and cost-effectiveness of a complex insurance program. By understanding that the insurance placement is truly a utilization of capital, we work with our clients to deliver creative, value-added solutions in challenging economic times," said Shertenlieb.
