2014 Power Broker

Construction

Building Upon Strengths

Craig Graham, CPCU, ARM, CRIS Senior Vice President Alliant Insurance Services, Los Angeles

Craig Graham, CPCU, ARM, CRIS
Senior Vice President
Alliant Insurance Services, Los Angeles

Craig Graham secured an unheard-of deal for a contractor that was building a tunnel underneath a rail yard for a railroad, while simultaneously constructing several high-rise buildings that rested on a platform over the yard, for a real estate developer. An owner-controlled insurance program covered the building project, but it was not economically feasible for Graham to roll the tunneling project into that program, as the railroad’s coverage demands did not give consideration to the world’s “most difficult” New York construction insurance market.

Graham, senior vice president at Alliant Insurance Services, then convinced the OCIP carriers to also participate in a “relatively affordable” contractor-controlled insurance program for the tunnel, by demonstrating how the contractor could enhance safety on both projects, and how claims management could be coordinated.

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“Craig Graham crafted some really creative solutions to the more problematic markets, such as New York State with its challenging labor laws,” said Bill Buchan, vice president, risk management, at Tutor Perini Corp. “Often the coverages can be very expensive and placing them is a challenge, but he’s been very creative structuring a solution to minimize costs and maximize coverages.”

Graham was able to secure a comprehensive OCIP with “very fair pricing” for the Los Angeles Unified School District, by thoroughly explaining the district’s claims and safety services, said Robert Reider, director of risk finance.

Changing the Game

Paul Healy, CPCU National Practice Leader Aon, Boston

Paul Healy, CPCU
National Practice Leader
Aon, Boston

One of Paul Healy’s clients wanted to bid on construction projects on U.S. military bases in Japan, but the bid specifications referenced the Japan Ministry of Finance approved list of surety companies — which didn’t actually exist, making it impossible for non-Japanese companies to bid on the work. Given the U.S. Army Corps of Engineers was the ultimate owner for these projects and a U.S.-based company with a local office in Japan wanted to bid the work, Healy had to get the agency to change the bid specifications.

To accomplish this, Healy, national practice leader, Construction Services Group at Aon, prompted several U.S. surety companies and their industry trade association to lobby for some political pressure on the Corps’ head office in D.C., to prevail upon the agency’s Japan-based representatives to make the bid requirements reasonable. The agency eventually agreed to change the bid specifications to accept surety bonds from companies on the U.S. Treasury list of approved sureties, in addition to the referenced Japan Ministry of Finance list.

“Paul Healy has been very helpful getting us a bond in Japan,” the client said. “He’s also helped us evaluate various prospective joint-venture partners from a financial perspective.”

“Paul Healy is a strong advocate for us,” said Robert Alger, president and chief executive officer of Lane Construction Corp. “He’s been fabulous to work with and really has the clients’ best interests at heart.”

“Paul was very helpful in placing three new, fairly complex surety agreements for us,” another client said.

Collaborative Excellence

Keith Jurss Senior Vice President Willis, Chicago

Keith Jurss
Senior Vice President
Willis, Chicago

Last year, Keith Jurss was hired to help secure a cutting-edge professional liability policy for a Fortune 100 “diversified international family entertainment and media enterprise” that had started to use the integrated project delivery method on its capital improvement projects.

The IPD method, which requires a multiparty contract between the project owner, designer and contractor, incorporates mutual waivers of liability and financial incentives for the parties to work collaboratively to deliver the project on-time and on-budget.

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However, because of select contractual provisions, the corporate professional liability policies of the design and construction team would not respond appropriately, thus requiring a project-specific alternative.

Jurss, senior vice president at Willis, was able to help underwriters understand the contractual incentives built into the program, and to convince them that the IPD team was truly committed to working collaboratively. Jurss then customized the project solution utilizing a variety of coverages from select carriers. The result was a solution that gave the design and construction team protection for rectifying design and construction errors without having to bring suit against each other. The solution also incorporated best-in-class professional liability coverage to protect against potential third-party claims.

“The challenging element of an IPD is the lack of a mature insurance marketplace,” the client said. “Since my organization has a very active creative and design process on some pretty unique projects, we had a short timeline to have something in place by May.”

En Route to Top-Notch Service 

Jamie Pincus, CRIS Vice President Wells Fargo, Washington, D.C.

Jamie Pincus, CRIS
Vice President
Wells Fargo, Washington, D.C.

Jamie Pincus, vice president and account executive commercial at Wells Fargo, goes far beyond the call of duty.

For the Metropolitan Washington Airports Authority — which oversees the Dulles International and Ronald Reagan National airports, the Dulles Toll Road, and Dulles Corridor Metrorail Project in the D.C. area — Pincus helped with the transition of the aviation owner-controlled insurance program and the implementation of a rail OCIP.

On the authority’s projects, Pincus scheduled vendor, contractor and subcontractor information sessions to ensure that “clear, open communication occurs internally and externally.” She has also deployed a Wells Fargo Insurance loss control/safety specialist to ensure protocols are being followed at the authority’s numerous worksites. Pincus and her team provided similar attentive services for the OCIP of the Maryland Transit Administration.

“The scope and size of our projects and the amount of administrative detail is staggering, but Jamie does an excellent job,” a client said. “She’s very adept at coverage analytics and has superior technical abilities.”

For Swire Properties’ Brickell CityCentre construction project in Miami, Pincus advocated for the placement of webcams with 24/7 surveillance and a process to badge contractors for secure worksites. “Jamie Pincus is outstanding — she has been able to put in a very unique insurance program for us and she’s saved us a lot of money,” said David Gross, construction accountant for Swire Properties.

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LBR_ResponsiblityLeaderBLUE_logo-175A Family Effort

Wells Fargo’s Jamie Pincus is a firm believer that the best insurance policy is the one that you might never need.

“In the construction industry, it’s not just about the insurance placement, it’s about the people working on the construction site, providing a safe environment and seeing something develop that others will benefit from and there must be a business understanding of what our client is looking to accomplish,” Pincus said.

Pincus is a big believer in voice-to-voice communication with clients.

“Email is efficient but a lot gets lost in electronic delivery,” she said.

Pincus serves as a mentor to young professionals, not just handing down instructions but giving them the tools to do their jobs better.

“I lead by example. There is nothing I like better than digging into a policy to learn about what coverage is provided and researching a client’s exposure to have a complete understanding about their risk,” she said.

“I’ll do this as a mentor on a daily basis to demonstrate good service.”

In her community, Pincus involves her family in her efforts to help the less fortunate. Her eldest daughter recently joined her and other Wells Fargo team members to deliver groceries and prepared meals to 77 families in the Washington, D.C. area.

She brought all three of her daughters along for a more recent project, painting and repairing the house of a family in need.

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Expertise in Action

Susan Schwartz, CPCU, ARM Director Aon, St. Louis

Susan Schwartz, CPCU, ARM
Director
Aon, St. Louis

One of Susan Schwartz’s clients partnered with two other contractors for a large construction project, but the disparity between the contractors on how to handle insurance for the newly formed limited liability company was holding up finalizing the contract.

To help get the $70 million project started, Schwartz, a director at Aon, discussed the completed operations extension with underwriters, negotiated more favorable coverage and pricing terms, met with the contractors and their brokers to discuss the insurance program, and worked out an equitable broker compensation solution.

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Schwartz met regularly with another client to discuss estimates for coverage and pricing of a contractor-controlled insurance program at various loss ratio levels, and detailed the merits of project-specific coverage for various lines including professional liability, pollution liability, builders risk and contractor default insurance, potentially saving the client more than $500,000.

“With short notice, Sue was able to work with my company and team leaders from other companies and brokerage firms to develop a comprehensive strategy and risk solution for a complex joint venture project,” said Kathy Norris, director of risk management at Fred Weber Inc. “Her clear view and analysis of situations coupled with her can-do attitude, professionalism, and her willingness and ability to listen to the opinions of others and share ideas make her a valuable resource.”

“Sue Schwartz is by far the most knowledgeable when it comes to construction issues and coverage,” said Monica Settle, insurance risk manager at Western Construction Group.

Powerful Platform

Matthew Walsh Managing Director Aon, Chicago

Matthew Walsh
Managing Director
Aon, Chicago

Matthew Walsh was tasked to respond to a significant uptick in large, complex construction projects undertaken by both private and public sector clients throughout the world.

Walsh, managing director, brokerage practice leader, global/complex clients, Construction Services Group at Aon, built a unique analytics and brokerage platform to address the risks in these complex global projects, including rapidly changing laws impacting construction risk, geographic challenges from catastrophe, and increasingly complex project delivery methods that blur the lines of responsibility between project owners, designers and contractors. It can be used to address various unique legal challenges in some of the world’s most challenging construction liability jurisdictions, or structured for global responsiveness to a single owner undertaking projects simultaneously.

“Matt Walsh goes above and beyond to meet his clients’ needs,” said Ted Wickenhauser, vice president, risk management at McCarthy Building Cos. “He does a phenomenal job at being a client advocate as well as liaison between the markets and his clients. He is never afraid to confront any challenging situation head-on, take ownership of it and move it toward resolution.”

“Matt is very knowledgeable on construction management, as well as the insurance industry,” another client said. “I also think he’s extremely talented from a people skills standpoint, and he’s highly regarded at all levels of the insurance industry.”

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LBR_ResponsiblityLeaderBLUE_logo-175A True Team Leader

The global upturn in commercial construction is, on the face of it, good news.

But many of our risk management sources caution that there is great risk in this upturn. Geographic challenges in catastrophe-prone areas and rapid changes in laws governing construction risk are just a few of these factors. Aon’s Matthew Walsh has built a unique analytics and brokerage platform tailored to address the risks of stakeholders in  complex, global undertakings.

Walsh’s base in his 25 years in the business is Chicago, which as a venue ranks as either first or second in construction liability risk from year to year. He feels he’s learned a lot about the business, which is why he is so passionate about passing his knowledge on to a new generation of brokers.

“What has remained constant is that you need a vast team, with vast knowledge and access to vast resources to deliver in these environments,” Walsh said.

“Going it alone was, and never is, an option; it’s all about our team and always will be,” he said.

“At present, I am privileged to have a talented group of young people recruited from our career development program, and young leaders from the construction risk management community, to develop a new generation of construction risk tools delivered through a web portal environment.”

BlackBarFinalists:

Donna Allard-Flett Senior Vice President Aon

Donna Allard-Flett
Senior Vice President
Aon

Gavin Hurd Managing Director Wortham Insurance

Gavin Hurd
Managing Director
Wortham Insurance

Tim McGinnis Senior Vice President Willis

Tim McGinnis
Senior Vice President
Willis

Vincent Zegers Managing Director  Marsh

Vincent Zegers
Managing Director
Marsh

Michael White Senior Managing Director Beecher Carlson

Michael White
Senior Managing Director
Beecher Carlson

More from Risk & Insurance

More from Risk & Insurance

Lead Story

Improving the Claims Experience

Insureds and carriers agree that more communication can address common claims complaints.
By: | January 10, 2018 • 7 min read

Carriers today often argue that buying their insurance product is about much more than financial indemnity and peace of mind.

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Many insurers include a variety of risk management services and resources in their packages to position themselves as true risk partners who help clients build resiliency and prevent losses in the first place.

That’s all well and good. No company wants to experience a loss, after all. But even with the added value of all those services, the core purpose of insurance is to reimburse loss, and policyholders pay premiums because they expect delivery on that promise.

At the end of the day, nothing else matters if your insurer can’t or won’t pay your claim, and the quality of the claims experience is ultimately the barometer by which insureds will judge their insurer.

Why, then, is the process not smoother? Insureds want more transparency and faster claims payment, but claims examiners are often overburdened and disconnected from the original policy. Where does the disconnect come from, and how can it be bridged?

Both sides of the insurer-insured equation may be responsible.

Susan Hiteshew, senior manager of global insurance and risk management, Under Armor Inc.

“One of the difficult things in our industry is that oftentimes insureds don’t call their insurer until they have a claim,” said Susan Hiteshew, senior manager of global insurance and risk management for Under Armour Inc.

“It’s important to leverage all of the other value that insurers offer through mid-term touchpoints and open communication. This can help build the insurer-insured partnership so that when a claim materializes, the relationships are already established and the claim can be resolved quickly and fairly.”

“My experience has been that claims executives are often in the background until there is an issue that needs addressing with the policyholder,” said Dan Holden, manager of corporate risk and insurance for Daimler Trucks North America.

“This is unfortunate because the claims department essentially writes the checks and they should certainly be involved in the day to day operations of the policyholders in designing polices that mitigate claims.

“By being in the shadows they often miss the opportunity to strengthen the relationship with policyholders.”

Communication Breakdown

Communication barriers may stem from internal separation between claims and underwriting teams. Prior to signing a contract and throughout a policy cycle, underwriters are often in contact with insureds to keep tabs on any changes in their risk profile and to help connect clients with risk engineering resources. Claims professionals are often left out of the loop, as if they have no proactive role to play in the insured-insurer relationship.

“Claims operates on their side of the house, ready to jump in, assist and manage when the loss occurs, and underwriting operates in their silo assessing the risk story,” Hiteshew said.
“Claims and underwriting need to be in lock-step to collectively provide maximum value to insureds, whether or not losses occur.”

Both insureds and claims professionals agree that most disputes could be solved faster or avoided completely if claims decision-makers interacted with policyholders early and often — not just when a loss occurs.

“Claims and underwriting need to be in lock-step to collectively provide maximum value to insureds, whether or not losses occur.” – Susan Hiteshew, senior manager of global insurance and risk management for Under Armour Inc.

“Communication is critically important and in my opinion, should take place prior to binding business and well before a claim comes in the door,” said David Crowe, senior vice president, claims, Berkshire Hathaway Specialty Insurance.

“In my experience, the vast majority of disputes boil down to lack of communication and most disputes ultimately are resolved when the claim decision-maker gets involved directly.”

Talent and Resource Shortage

Another contributing factor to fractured communication could be claims adjuster workload and turnover. Claims adjusting is stressful work to begin with.

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Adjusters normally deal with a high volume of cases, and each case can be emotionally draining. The customer on the other side is, after all, dealing with a loss and struggling to return to business as usual. At some TPAs, adjuster turnover can exceed 25 percent.

“This is a difficult time for claims organizations to find talent who want to be in this business long-term, and claims organizations need to invest in their employees if they’re going to have any success in retaining them,” said Patrick Walsh, executive vice president of York Risk Services Group.

The claims field — like the insurance industry as a whole — is also strained by a talent crunch. There may not be enough qualified candidates to take the place of examiners looking to retire in the next ten years.

“One of the biggest challenges facing the claims industry is a growing shortage of talent,” said Scott Rogers, president, National Accounts, Sedgwick. “This shortage is due to a combination of the number of claims professionals expected to retire in the coming years and an underdeveloped pipeline of talent in our marketplace.

“The lack of investment in ensuring a positive work environment, training, and technology for claims professionals is finally catching up to the industry.”

The pool of adjusters gets stretched even thinner in the aftermath of catastrophes — especially when a string of catastrophes occurs, as they did in the U.S in the third quarter of 2017.

“From an industry perspective, Harvey, Irma and Maria reminded us of the limitations on resources available when multiple catastrophes occur in close succession,” said Crowe.

“From independent and/or CAT adjusters to building consultants, restoration companies and contractors, resources became thin once Irma made landfall.”

Is Tech the Solution?

This is where Insurtech may help things. Automation of some processes could free up time for claims professionals, resulting in faster deployment of adjusters where they’re needed most and, ultimately, speedier claims payment.

“There is some really exciting work being done with artificial intelligence and blockchain technologies that could yield a meaningful ROI to both insureds and insurers,” Hiteshew said.

“The claim set-up process and coverage validation on some claims could be automated, which could allow adjusters to focus their work on more complex losses, expedite claim resolution and payment as well.”

Dan Holden, manager, Corporate Risk & Insurance, Daimler Trucks North America

Predictive modeling and analytics can also help claims examiners prioritize tasks and maximize productivity by flagging high-risk claims.

“We use our data to identify claims with the possibility of exceeding a specified high dollar amount in total incurred costs,” Rogers said. “If the model predicts that a claim will become a large loss, the claim is redirected to our complex claims unit. This allows us to focus appropriate resources that impact key areas like return to work.”

“York has implemented a number of models that are focused on helping the claims professional take action when it’s really required and that will have a positive impact on the claim experience,” Walsh said.

“We’ve implemented centers of excellence where our experts provide additional support and direction so claim professionals aren’t getting deluged with a bunch of predictive model alerts that they don’t understand.”

“Technology can certainly expedite the claims process, but that could also lead to even more cases being heaped on examiners.” — Dan Holden, manager, Corporate Risk & Insurance, Daimler Trucks North America

Many technology platforms focused on claims management include client portals meant to improve the customer experience by facilitating claim submission and communication with examiners.

“With convenient, easy-to-use applications, claimants can send important documents and photos to their claims professionals, thereby accelerating the claims process. They can designate their communication preferences, whether it’s email, text message, etc.,” Sedgwick’s Rogers said. “Additionally, rules can be established that direct workflow and send real time notifications when triggered by specific claim events.”

However, many in the industry don’t expect technology to revolutionize claims management any time soon, and are quick to point out its downsides. Those include even less personal interaction and deteriorating customer service.

While they acknowledge that Insurtech has the potential to simplify and speed up the claims workflow, they emphasize that insurance is a “people business” and the key to improving the claims process lies in better, more proactive communication and strengthening of the insurer-insured relationship.

Additionally, automation is often a double-edged sword in terms of making work easier for the claims examiner.

“Technology can certainly expedite the claims process, but that could also lead to even more cases being heaped on examiners,” Holden said.

“So while the intent is to make things more streamlined for claims staff, the byproduct is that management assumes that examiners can now handle more files. If management carries that assumption too far, you risk diminishing returns and examiner burnout.”

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By further taking real people out of the equation and reducing personal interaction, Holden says technology also contributes to deteriorating customer service.

“When I started more than 30 years ago as a claims examiner, I asked a few of the seasoned examiners what they felt had changed since they began their own careers 30 year earlier. Their answer was unanimous: a decline in customer service,” Holden said.

“It fell to the wayside to be replaced by faster, more impersonal methodologies.”

Insurtech may improve customer satisfaction for simpler claims, allowing policyholders to upload images with the click of a button, automating claim valuation and fast-tracking payment. But for complex claims, where the value of an insurance policy really comes into play, tech may do more harm than good.

“Technology is an important tool and allows for more timely payment and processing of claims, but it is not THE answer,” BHSI’s Crowe said. “Behind all of the technology is people.” &

Katie Dwyer is an associate editor at Risk & Insurance®. She can be reached at [email protected]