Exhibit 10(iii)(b)

                                    As amended and restated effective 1/1/98

                    HSB GROUP, INC. SHORT-TERM INCENTIVE PLAN


1.   Purpose of Plan

     The purposes of this Plan are: (a) to provide an  additional  incentive for
     officers and other selected key employees to make significant contributions
     to the performance and growth of the Company, and (b) to attract and retain
     in the employ of the Company persons of exceptional ability.


2.   Definitions

     As used in the Plan, the following  terms shall have the meanings set forth
     below:

     a)   "Affiliate" shall have the meaning set forth in Rule 12b-2 promulgated
          under Section 12 of the Exchange Act.

     b)   "Award" shall mean any award payable under this Plan.

     c)   "Beneficial  Owner"  shall  have the  meaning  set forth in Rule 13d-3
          under the Exchange Act.

     d)   "Board" shall mean the Board of Directors of the Company.

     e)   "Change in Control" shall be deemed to have occurred if the events set
          forth in any one of the following paragraphs shall have occurred:

          (i)  any  Person is or  becomes  the  Beneficial  Owner,  directly  or
               indirectly,  of securities  of the Company (not  including in the
               securities  beneficially  owned  by such  Person  any  securities
               acquired   directly   from  the   Company   or  its   affiliates)
               representing  25% or more of the  combined  voting  power  of the
               Company's then outstanding  securities,  excluding any Person who
               becomes such a Beneficial  Owner in connection with a transaction
               described in clause (A) of paragraph (iii) below; or

          (ii) the  following  individuals  cease for any reason to constitute a
               majority of the number of  directors  then  serving:  individuals
               who,  on  December  23,  1996,  constitute  the Board and any new
               director  (other  than a director  whose  initial  assumption  of
               office is in  connection  with an actual or  threatened  election
               contest,  including  but not  limited to a consent  solicitation,
               relating  to the  election of  directors  of the  Company)  whose
               appointment  or election by the Board or nomination  for election
               by the Company's  shareholders  was approved or  recommended by a
               vote of at least  two-thirds (2/3) of the directors then still in
               office who either were  directors  on December  23, 1996 or whose
               appointment,  election or nomination  for election was previously
               so approved or recommended; or

          (iii)there is consummated a merger or  consolidation of the Company or
               any direct or indirect  subsidiary  of the Company with any other
               corporation, other than (A) a merger or consolidation which would
               result  in  the  voting  securities  of the  Company  outstanding
               immediately  prior to such merger or consolidation  continuing to
               represent (either by remaining  outstanding or by being converted
               into  voting  securities  of the  surviving  entity or any parent
               thereof),  in  combination  with the  ownership of any trustee or
               other fiduciary holding securities under an employee benefit plan
               of the Company or any subsidiary of the Company,  at least 60% of
               the  combined  voting power of the  securities  of the Company or
               such  surviving   entity  or  any  parent   thereof   outstanding
               immediately after such merger or  consolidation,  or (B) a merger
               or consolidation  effected to implement a recapitalization of the
               Company (or similar transaction) in which no Person is or becomes
               the Beneficial  Owner,  directly or indirectly,  of securities of
               the Company (not including in the securities  Beneficially  Owned
               by such Person any securities  acquired directly from the Company
               or its  Affiliates)  representing  25% or  more  of the  combined
               voting power of the Company's then outstanding securities; or

          (iv) the  shareholders  of the  Company  approve  a plan  of  complete
               liquidation or dissolution of the Company or there is consummated
               an agreement for the sale or disposition by the Company of all or
               substantially all of the Company's  assets,  other than a sale or
               disposition  by the  Company of all or  substantially  all of the
               Company's  assets  to an  entity,  at least  60% of the  combined
               voting  power of the  voting  securities  of which  are  owned by
               shareholders of the Company in substantially the same proportions
               as their ownership of the Company immediately prior to such sale.

               Notwithstanding the foregoing, a "Change in Control" shall not be
               deemed to have  occurred  by virtue  of the  consummation  of any
               transaction  or series  of  integrated  transactions  immediately
               following  which the record  holders  of the common  stock of the
               Company  immediately  prior  to such  transaction  or  series  of
               transactions    continue   to   have   substantially   the   same
               proportionate   ownership   in  an  entity   which  owns  all  or
               substantially  all  of the  assets  of  the  Company  immediately
               following such transaction or series of transactions.

          f)   "Code" shall mean the Internal Revenue Code of 1986, as amended.

          g)   "Committee" shall mean the Human Resource  Committee of the Board
               or  any  future  committee  of  the  board   performing   similar
               functions.

          h)   "Company"  shall mean HSB Group,  Inc. and, except in determining
               under  this Plan  whether  or not any  Change in  Control  of the
               Company has occurred, shall include any successor to its business
               and/or  assets  which  assumes  this Plan by operation of law, or
               otherwise.

          i)   "Covered Employee" shall mean a "covered employee" within the
              meaning of Section 162(m) of the Code.

          j)   "Disability"  shall mean any  condition  which  would  entitle an
               employee of the Company to receive  benefits  under the Company's
               Long-Term Disability Plan.

          k)   "Exchange Act" shall mean the Securities Exchange Act of 1934, as
               amended.

          l)   "Fair  Market  Value"  shall mean the average of the high and low
               prices per share of the  Company's  Shares as reported by the New
               York Stock Exchange Composite Transaction Reporting System (NYSE)
               on the date for which the Fair Market Value is being  determined,
               or if no quotations are available for the Company's  Shares,  for
               the next  preceding  date for which a quotation is available.  If
               the Company's Shares are not then listed on the NYSE, Fair Market
               Value shall be reasonable determined by the Committee in its sole
               discretion.

          m)   "Net  Income"  shall mean  after-tax  income  per  share,  before
               cumulative  effect of accounting  changes,  as  determined  under
               generally  accepted  accounting  principles,   consolidating  all
               subsidiaries and inclusive of realized capital gains and losses.

          n)   "Participant"  shall mean an  employee  of the Company to whom an
               award has been made under the Plan.

          o)   "Person"  shall have the meaning given in Section  3(a)(9) of the
               Exchange  Act, as modified  and used in Sections  13(d) and 14(d)
               thereof,  except that such term shall not include (i) the Company
               or any of its  subsidiaries;  (ii) a trustee  or other  fiduciary
               holding  securities under an employee benefit plan of the Company
               or  any of  its  Affiliates;  (iii)  an  underwriter  temporarily
               holding securities pursuant to an offering of such securities, or
               (iv)  a  corporation  owned,  directly  or  indirectly,   by  the
               shareholders of the Company in substantially the same proportions
               as their ownership of stock of the Company.

          p)   "Plan" shall mean the HSB Group, Inc. Short-Term Incentive Plan.

          q)   "Plan Year" shall mean a calendar year.

          r)   "Retirement"  shall  mean the  termination  of  employment  under
               circumstances  which  entitle an employee  to receive  retirement
               benefits under the Company's Employees' Retirement Plan.

          s)   "Shares" shall mean the Common Stock of the Company.

          t)   "Stock  Grant"  shall  mean a grant  of  Shares  or of a right to
               receive  Shares (or their cash  equivalent  or a  combination  of
               both) in the future subject to such  conditions and  restrictions
               as the Committee shall determine at the time of grant.

          u)   "Target  Award"  shall mean an Award  level that may be paid if a
               certain level of Net Income is achieved for a Plan Year.


3.   Administration of the Plan

     The Plan shall be  administered  by the Committee as defined  herein.  Each
     member of the  Committee  shall be a  "disinterested  director"  within the
     meaning  of Rule 16b-3 of the  General  Rules and  Regulations  promulgated
     under the  Exchange  Act and an  "outside  director"  within the meaning of
     Section  162(m) of the Code.  The  Committee is authorized to interpret the
     Plan and shall adopt  guidelines  for  carrying out the Plan as it may deem
     appropriate.  Such  guidelines  shall be  consistent  with the Plan and may
     include,  but need not be  limited  to,  the size and terms of awards to be
     made and the  conditions  for  payment  of such  awards.  Decisions  of the
     Committee  shall  be  final,   conclusive  and  binding  upon  all  parties
     concerned,  unless  otherwise  determined  by a vote of a  majority  of the
     disinterested members of the Board of Directors.


4.   Eligibility for Awards

     Any employee  who is an Officer of the Company  (other than any Officer who
     is the chief  executive  officer of any  Affiliate  of the Company and is a
     participant in the annual bonus plan of such subsidiary,  or any individual
     expressly  excluded  by the  Committee)  on or prior to December 31 of each
     Plan Year is  eligible  to  participate  in the Plan and  receive  an Award
     pursuant to Section 5 except as provided in Section 6. The Committee may in
     its  discretion  designate  other key employees to participate in the Plan.
     Eligibility will be determined at the close of each Plan Year.


5.   Basis of Awards

     At the beginning of each Plan Year, the Committee  shall  establish  Target
     Awards and the level of Net Income  which must be achieved  for a Plan Year
     in order for  Target  Awards to be  payable to  Participants.  The  maximum
     amount  of any  Award  to be  paid  to a  Participant  under  the  Plan  is
     $2,000,000.  The Committee  shall have the sole  authority to determine the
     amount of any Award  within  the above  maximum  for each  Participant.  In
     determining such Award, the Committee shall consider the contribution  made
     by the  Participant  towards  achievement  of the Net Income and such other
     factors as the Committee considers appropriate.


6.   Awards to Covered Employees

     a)   If the  Committee  determines  at the  time  that a  Target  Award  is
          established for a Participant  that such  Participant is, or may be as
          of the end of the tax year for which  the  Company  would  claim a tax
          deduction for such Award, a Covered  Employee,  then the Committee may
          provide  that this  Section 6 is  applicable  to such Award under such
          terms as the Committee shall determine.

     b)   If an award is subject to this Section 6, then the level of Net Income
          which  must be  achieved  for a Plan Year will be  established  by the
          Committee  within  90 days of the  beginning  of a Plan Year or within
          such other time period set forth under  Section  162(m) of the Code or
          any  regulations  thereunder  in order for such level to be considered
          "pre-established".

     c)   The  Committee  may, in its  discretion  reduce the Award payable to a
          Covered  Employee at any time prior to payment  based on such criteria
          it may  establish.  Notwithstanding  any provision in this Plan to the
          contrary,  the  Committee  may not adjust  upwards the amount  payable
          pursuant to any award  subject to this Section 6, nor may it waive the
          achievement of Net Income pre-established by the Committee pursuant to
          this Section 6 except in the case of a Participant  who no longer is a
          Covered Employee at the time such award is paid.

     d)   Prior to the  payment of any Award to a Covered  Employee  pursuant to
          this Section 6, the  Committee  shall  certify in writing that the Net
          Income level applicable to such Award has been met.

     e)   The Committee  shall have the power to impose such other  restrictions
          on  awards  subject  to this  Section  6 as it may deem  necessary  or
          appropriate  to ensure that such Awards satisfy all  requirements  for
          "performance-based  compensation" within the meaning of section 162(m)
          of the Code, and any regulations thereunder.


7.   Timing and Form of Payment of Awards

     The  Committee  will  have the sole  discretion  to  determine  the form of
     payment of an Award for each Participant.  Awards may be payable in cash or
     in the form of a Stock Grant,  or a combination  of the foregoing and shall
     be subject to such other conditions and restrictions as the Committee shall
     establish.


8.   Deferral of Payment

     a)   A  Participant  may, with  permission of the Committee  elect to defer
          receipt  of all or a  specified  part of any Award.  Such an  election
          shall be subject to such terms and conditions as are prescribed by the
          Committee.  Deferral elections are irrevocable and must be made during
          the time period and in the manner prescribed by the Committee.

     b)   To the extent that the Committee,  in its discretion,  determines that
          the  payment  of an  Award  would  not be  deductible  by the  Company
          pursuant  to  Section  162(m) of the  Code,  the  Committee  may defer
          payment of all or the non-deductible  portion of such Award until such
          time as such amount would be  deductible.  The terms and conditions of
          any such deferral shall be prescribed by the Committee.

     c)   The right of a Participant to receive any unpaid portion of any amount
          deferred  hereunder  shall be an unsecured  claim  against the general
          assets of the Company.


9.   Tax Withholding

     The Company  shall have the right to require  Participants  to remit to the
     Company an amount sufficient to satisfy any tax withholding requirements or
     to deduct from any payments made pursuant to the Plan amounts sufficient to
     satisfy tax withholding requirements.


10.  No Right to an Award or Continued Employment

     a)   Nothing  contained in this Plan or in any resolution  adopted or to be
          adopted by the Board of Directors  will  constitute the granting of an
          Award  hereunder.  The granting of an Award  pursuant to the Plan will
          take  place only when  authorized  by the  Committee.  No Award and no
          rights of ownership  thereunder  will be  transferable  otherwise than
          pursuant  to  Section  12.  There  is no  obligation  imposed  on  the
          Committee for uniformity of treatment of Participants under the Plan.

     b)   Nothing in the Plan shall interfere with or limit in any way the right
          of the Company to terminate any Participant's  employment at any time,
          nor confer upon any Participant any right to continue in the employ of
          the Company.

11.  Rights on Termination of Employment

     a)   If a  Participant  in this Plan shall  terminate  employment  with the
          Company on account of death,  Retirement  or  Disability  or otherwise
          terminates  employment with the written consent of the Committee prior
          to the end of any Plan Year in respect of which such  Participant  may
          be eligible for an Award,  the amount of the award, if any, payable to
          the  Participant  or his or her  beneficiary,  shall be prorated based
          upon the number of full and partial  months of employment  within such
          Plan Year.

     b)   A Participant whose employment terminates by dismissal with or without
          cause,  or who  voluntarily  terminates his or her employment  without
          consent prior to the  expiration of a Plan Year,  will not be entitled
          to receive an award under the Plan.  Notwithstanding the foregoing,  a
          Participant  whose employment  terminates within two years following a
          Change  in  Control  and  prior to the end of any Plan  Year  shall be
          entitled to receive an Award as though such  termination  was with the
          written consent of the Committee.

     c)   In no event shall an Award or a portion thereof,  the payment of which
          has been deferred pursuant to Section 8 be subject to forfeiture.


12.  Designation of Beneficiary

     A  Participant  may file  with the  Corporate  Secretary  of the  Company a
     designation  of a beneficiary or  beneficiaries  on the  appropriate  form,
     which  designation  may be changed or  revoked  by the  Participant's  sole
     action,  provided that the change or revocation is filed with the Corporate
     Secretary.  In  case of the  death  of the  Participant,  before  or  after
     termination of employment, any Award to which he or she is entitled and any
     deferred portions of a deceased  Participant's  Award shall be delivered to
     the  beneficiary or  beneficiaries  so designated or, if no beneficiary has
     been designated or survives such  Participant,  will be delivered to, or in
     accordance  with the directions of, the executor or  administrator  of such
     Participant's estate.


13.  Change in Control

     a)   In the event of a Change in  Control of the  Company,  this Plan shall
          continue to be binding upon the Company,  any successor in interest to
          the Company and all persons in control of the Company or any successor
          thereto and no  transaction or series of  transactions  shall have the
          effect of reducing or canceling  the Award of a  Participant  that has
          been  declared  but not paid  unless  consented  to in writing by such
          affected Participant.

     b)   As soon as  practicable  following a Change in Control,  a Participant
          shall be paid a lump sum  amount  in cash  equal to the  Target  Award
          payable  to the  Participant  (in  lieu  of any  other  award  payable
          hereunder for the Plan Year within which the Change in Control occurs)
          and any  Awards  previously  deferred  in  accordance  with  Section 8
          hereof, plus interest accrued thereon up until the date of payment.

     c)   Upon a Change in Control the restrictions and deferral limitations and
          other  conditions  applicable  to any Stock  Grant  made  pursuant  to
          Section 7 shall lapse as of the date of such Change in Control.


14.  Unfunded Obligations; Trust Agreement

     a)   The  Company  will pay from its  general  assets all awards to be made
          hereunder.  However,  the  Company may in its  discretion  establish a
          trust,  escrow  agreement or similar  arrangement  in order to aid the
          Company in meeting its obligations hereunder.

     b)   Any assets  transferred by the Company into any such arrangement shall
          remain at all times assets of the Company and subject to the claims of
          the  Company's  general  creditors  in  the  event  of  bankruptcy  or
          insolvency of the Company.  No security  interest in such assets shall
          be created in a Participant's  favor and a Participant's  rights under
          this Plan and under any such  arrangement  shall be those of a general
          unsecured creditor of the Company.


15.  Assignment and Alienation

     Benefits under this Plan may not be anticipated, assigned (either at law or
     in equity),  alienated,  or subjected  to  attachment,  garnishment,  levy,
     execution  or other  legal or  equitable  process.  If any  Participant  or
     beneficiary  under this Plan  becomes  bankrupt or attempts to  anticipate,
     alienate,  sell, transfer,  assign, pledge,  encumber or charge any benefit
     under this Plan,  such benefit  shall,  in the discretion of the Committee,
     cease and  terminate,  in which event the  Committee  may hold or apply the
     same or any part  thereof for the benefit of such  Participant,  his or her
     beneficiary, spouse, children, other dependents or any of such individuals,
     in such proportion as the Committee may deem proper.


16.  Modification or Termination of the Plan

     a)   The Committee may at any time terminate or from time to time modify or
          suspend, and if suspended,  may reinstate any or all of the provisions
          of this Plan,  subject to any  requirement  for  shareholder  approval
          imposed by applicable  law,  except that no  modification of this Plan
          may be made which will adversely affect any rights or obligations with
          respect to any awards theretofore made under the Plan.

     b)   The  Corporate  Secretary of the Company  shall be  authorized to make
          minor or administrative  changes in the Plan or changes required by or
          made desirable by law or government regulation.


17.  Other Plans and Special Awards

     a)   Nothing  contained in this Plan shall  prohibit  the  Committee or the
          Board from  granting  other  awards or  establishing  other  incentive
          compensation plans providing for the payment of incentive compensation
          to employees, including Participants.

     b)   Notwithstanding  Section  6 and  the  intention  of the  Committee  to
          maintain  tax  deductibility  of awards  granted  hereunder to Covered
          Employees  pursuant  to  Section  162(m)  of the Code,  the  Committee
          reserves the right to grant awards which do not meet the  requirements
          of Section 162(m) as to  deductibility  (for example,  awards based on
          measures  other  than Net  Income  or  otherwise  not  established  in
          accordance  with  Section  6 ) in  order  to  recognize  unanticipated
          business  conditions  or events which have, or are expected to have, a
          significant effect on the Company.



18.  Shares Subject to the Plan

     a)   Subject to Section 18 ( b), the  maximum  number of Shares that may be
          delivered to Participants and their beneficiaries under the Plan shall
          be 250,000. Any Shares covered by a Stock Grant which are subsequently
          forfeited,  withheld to cover tax withholding or settled in cash shall
          be deemed to have not been delivered for purposes of  determining  the
          maximum number of Shares available for delivery under the Plan.

     b)   In the event of any change in the  Shares of the  Company by reason of
          any stock  dividend,  stock split,  recapitalization,  reorganization,
          merger, consolidation,  split-up,  combination, or exchange of shares,
          or rights offering to purchase Shares at a price  substantially  below
          Fair Market Value, or of any similar change affecting the Shares,  the
          number  of  Shares  covered  by a Stock  Grant  which  have  not  been
          delivered,  and the number of Shares which may be delivered hereunder,
          shall be  appropriately  adjusted  consistent with such change in such
          manner as the Board in its  discretion  may deem  equitable to prevent
          substantial  dilution or  enlargement of the awards and rights granted
          or made available to  Participants  hereunder.  Any fractional  Shares
          resulting from such adjustments shall be eliminated.


19.  Effective Date

     This Plan as amended and restated shall be effective as of January 1, 1998,
     subject to approval by  shareholders  at their annual  meeting in 1998, and
     shall  remain in effect  until such time as it shall be  terminated  by the
     Committee.