Germany's Gerling Konzern and London's Risk and Insurance Research Group are co-operating to run what will be the third of their biennial risk management and risk financing conferences in Cologne on 10 June and 11 June.

There is a paradox about the German market. On the one hand its insurers and risk managers, when speaking on behalf of their industry, will openly recognise the inevitability and necessity of radical reform to cope with a transformed marketplace, inescapable future liability, catastrophes, globalisation, the financial services revolution, etc. On the other hand, at the level of the individual risk manager and his approach to protecting his own company's risks, there is an unrealistic tendency to assume that the hurricane will only hit everybody else. Or, dispensing with metaphor, that somehow and for some reason - one which understandably is never clearly articulated - he is an exception to the rule and can therefore carry on doing this in the same way as for the past 20 years.At the second Risk & Insurance Research Group and Gerling Konzern Risk Management and Risk Financing in Europe conference held in Cologne on 12-13 June 1997 “the German paradox” kept re-surfacing as the real focus of debate. Whether the issue was industrial fire insurance, liability insurance, captives, risk management, or whatever, what seemed to be contentious was not what the general and best solution to the particular problem was, but whether such a solution was relevant in the German context or disbarred because German conditions are unique and justify plodding on in the same old way.At least the meeting of speakers and participants from Germany, France, UK, USA, Switzerland, even as far afield as Japan, ensured that a culture clash occurred and the relevant important issues were discussed.

The first day conference chairman Dr Hermann Jörissen of Gerling Konzern set the tone in his “welcome” address by candidly admitting that: “We are facing and experiencing many upheavals in our industry which are changing the markets we operate in and the instruments we use.” In that respect there will be no change this year.

The frontiers between insurance and reinsurance are falling, he said, and risk management is ceasing to be a theoretical concept and rapidly becoming a practical aid throughout industry.

Allianz's Manfred Illner spoke on industrial fire insurance - inevitably from an insurer's perspective - and quickly dispelled any illusions some participants might have entertained that here, at least, a measure of continuity of tradition could be relied upon. On the contrary, traditional industrial fire insurance will soon form only a very small part in the cover of large industrial companies, Mr Illner asserted.

In his view, the insurance market will increasingly have to cater for the individual insurance needs of companies across a range of lines of business.Separate lines will no longer dominate products formerly judged as exotic - i.e., alternative risk financing products - will become routine, etc. Strange to say, but Mr Illner's recognition, if not wholly enthusiastic welcoming, of these changes seemed to upset rather than warm some of Germany's risk managers.Karl-Heinz Jaeger, head of insurance at chemical group BASF, was moved to comment on Mr Illner's vision to the effect that as long as insurance engineers are not qualified to carry out combined fire, liability, etc, surveys at their clients' premises then the multi-line approach will be unrealistic.

It was not the last time during this conference that such a dialogue, rich in irony, was to develop; a dialogue in which the risk manager always seemed to be searching for reasons to hold back market developments that - on any rational and independent assessment - must be in his employer's interests.These “dialogues” were strong and inescapable reminders that change, whether for good or ill, always finds its support among the young and is invariably opposed by the old. Most German risk managers at the larger German companies are within a stone's throw of retirement.

Of course, it is only buyers who can complacently oppose change; the sellers have to respond to marketplace demand or go under; hence the phenomenon of ageing insurance company chiefs heralding the new world with enthusiasm (albeit sometimes simulated).

Mr Illner recognised that the changes he foresaw would hurt insurers. Cost pressures for both insurers and intermediaries are going to cause problems, he said, as clients opt for higher deductibles and more ART solutions. We have seen the truth of these words over the past two years.

Captives and other alternative financing possibilities were at the centre of much of the discussion, which took place in Cologne in 1997, as they will be in 1999. The subject of captive insurance companies and their relevance to German and other European-owned companies was given an added stimulus by the breaking of the news during the 1997 conference that Gibraltar had completed a complex legislative and administrative programme - developed and implemented gradually over the previous several years - that not only put it on an equal footing with other European captive and cross-border insurance jurisdictions but gave it some distinct advantage, chiefly that it could write direct into European countries.

This year's conference is already arousing widespread interest - the exhibition facility is fully booked and includes a wide range of service providers: Softronic, Heath International, Mauritius Offshore Business Activities Authority, SINSER, Zurich Insurance, A.M. Best, Protection International, Royal & SunAlliance, Euroguard Insurance Company, Reuters, Sampo, Chubb Insurance Company of Europe S.A., Nordic Mutual, Eastgate Group, J&H Marsh & McLennan, States of Jersey, International Network of Insurance (INI), Allnet, Munich-American Risk Partners, Gibraltar Government, Gerling and Amlin Capital Management Limited.The topicality of the conference agenda - intangible property risk, cell captives, internet/digital risks, getting claims paid, outsourcing, the future of brokers, etc - should ensure that the 300 plus participants which this conference regularly attracts will get good value for money.

Chris Best is director of the Risk and Insurance Research Group.