6 Risks for the Construction Industry
In the space where large property brokers play, it’s important to use capital responsibly.
For instance, consider all of the components of a state operation. This can include buildings, agencies, officials and boards along with universities, parks, airports, and in some cases, sports arenas, as part of the package. Another example is a multi-media organization. Risks involve network and distribution, and also entertainment and film/video production exposures. A major retail chain, with tens of thousands of locations from coast to coast and all of the stock and cash flow exposures that are critical business assets, is a third type of a complex operation.
And all of these require coverage.
“Brokers need a stable partner with the ability to offer larger property lines. As part of Nationwide, we have a competitive edge to offer significantly more in-house limit capacity than many other carriers,” said Tom Jurgens, senior vice president, Brokerage at Nationwide.
Though Nationwide has the capital to handle high limits, it is very strategic in its approach to writing these risks. For John Brunette, senior director, Brokerage Property, this means thinking outside a very big box to come up with solutions that provide the perfect balance of protection and profitability.
“The key is leveraging capacity deployment throughout the risk,” he said. “When we deploy capacity in lower layers, we’re also looking to deploy additional capacity in the excess layers. Understanding the concentration and knowing where you can add more –that’s what thoughtful deployment of capacity is really about.”
Brunette also emphasized the importance of taking a mindful, measured approach to risk, especially in today’s insurance and financial landscape.
“The economy has improved, and there is capital coming off the sidelines,” he said. “There are lots of deals being made, but many of these investors are not insurance people, and as such, often don’t fully understand the exposure involved.”
For Brunette, this starts with adequately accounting for the catastrophe footprint of the risk and also looking at the design of a building.
“When you look at building design, you want to make sure developers are not skimping on materials and know the building will survive if a catastrophe event should occur,” he said. “You also want to look at ongoing site maintenance.”
But building design and structure are just the beginning of a good risk. Other factors Brunette takes into consideration include behind-the-scenes operations, such as electronic surveillance and other protection like sprinklers and alarms. Also, understanding the exposure and matching that with layer structure is critical.
“If I’m insuring a risk in Missouri, I don’t want to be in a position where the totality of the exposure is tornado driven,” he said. “The key to that is spread of risk and attachment point.”
Brunette, who employs a philosophy that includes “managing, measuring and monitoring” when it comes to effective catastrophe underwriting, believes in constantly staying on top of trends and patterns to make sure the solutions he provides are appropriate.
“Insurance is never a ‘one and done’ kind of thing,” he said. “If you’re going to responsibly write a risk, you need to make sure you are not just on top of the game, but ahead of it.”
An expert in large, complex property accounts, Nationwide writes primary and excess layers for business conglomerates with a multitude of components and diverse requirements though its excess and surplus Brokerage Property division.
Products underwritten by Nationwide Mutual Insurance Company and Affiliated Companies. Not all Nationwide affiliated companies are mutual companies, and not all Nationwide members are insured by a mutual company. Subject to underwriting guidelines, review, and approval. Products and discounts not available to all persons in all states. Home Office: One Nationwide Plaza, Columbus, OH. Nationwide, the Nationwide N and Eagle, and other marks displayed on this page are service marks of Nationwide Mutual Insurance Company, unless otherwise disclosed. © 2017 Nationwide Mutual Insurance Company.
This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Nationwide. The editorial staff of Risk & Insurance had no role in its preparation.
R&I: What was your first job?
Bus boy at a fine dining restaurant.
R&I: How did you come to work in this industry?
I sent a résumé to Harrah’s Entertainment on a whim. It took over 30 hours of interviewing to get that job, but it was well worth it.
R&I: If the world has a modern hero, who is it and why?
The Chinese citizen (never positively identified) who stood in front of a column of tanks in Tiananmen Square on June 5, 1989. That kind of courage is undeniable, and that image is unforgettable. I hope we can all be that passionate about something at least once in our lives.
R&I: What emerging commercial risk most concerns you?
Cyber risk, but more narrowly, cyber-extortion. I think state sponsored bad actors are getting more and more sophisticated, and the risk is that they find a way to control entire systems.
R&I: What is the riskiest activity you ever engaged in?
Training and breaking horses. When I was in high school, I worked on a lot of farms. I did everything from building fences to putting up hay. It was during this time that I found I had a knack for horses. They would tolerate me getting real close, so it was natural I started working more and more with them.
Eventually, I was putting a saddle on a few and before I knew it I was in that saddle riding a horse that had never been ridden before.
I admit I had some nervous moments, but I was never thrown off. It taught me that developing genuine trust early is very important and is needed by all involved. Nothing of any real value happens without it.
R&I: What about this work do you find the most fulfilling or rewarding?
Setting very aggressive goals and then meeting and exceeding those goals with a team. Sharing team victories is the ultimate reward.
R&I: What is the most unusual/interesting place you have ever visited?
Disney World. The sheer size of the place is awe inspiring. And everything works like a finely tuned clock.
There is a reason that hospitality companies send their people there to be trained on guest service. Disney World does it better than anyone else.
As a hospitality executive, I always learn something new whenever I am there.
The risks that Disney World faces are very similar to mine — on a much larger scale. They are complex and across the board. From liability for the millions of people they host as their guests each year, to the physical location of the park, to their vendor partnerships; their approach to risk management has been and continues to be innovative and a model that I learn from and I think there are lessons there for everybody.
R&I: What is the risk management community doing right?
We are doing a much better job of getting involved in a meaningful way in our daily operations and demonstrating genuine value to our organizations.
R&I: What could the risk management community be doing a better job of?
Educating and promoting the career with young people.
R&I: What have you accomplished that you are proudest of?
Being able to tell the Pinnacle story. It’s a great one and it wasn’t being told. I believe that the insurance markets now understand who we are and what we stand for.
R&I: Who is your mentor and why?
John Matthews, who is now retired, formerly with Aon and Caesar’s Palace. John is an exceptional leader who demonstrated the value of putting a top-shelf team together and then letting them do their best work. I model my management style after him.
R&I: What is your favorite book or movie?
I read mostly biographies and autobiographies. I like to read how successful people became successful by overcoming their own obstacles. Jay Leno, Jack Welch, Bill Harrah, etc. I also enjoyed the book and movie “Money Ball.”
R&I: What is your favorite drink?
Ice water when it’s hot, coffee when it’s cold, and an adult beverage when it’s called for.
R&I: What does your family think you do?
In my family, I’m the “Safety Geek.”
R&I: What’s your favorite restaurant?
Vegas is a world-class restaurant town. No matter what you are hungry for, you can find it here. I have a few favorites that are my “go-to’s,” depending on the mood and who I am with.
If you’re in town, you should try to have at least one meal off the strip. For that, I would suggest you get reservations (you’ll need them) at Herbs and Rye. It’s a great little restaurant that is always lively. The food is tremendous, and the service is always on point. They make hand-crafted cocktails that are amazing.
My favorite Mexican restaurant is Lindo Michoacan. There are three in town, and I prefer the one in Henderson as it has the best view of the valley. For seafood, you can never go wrong with Joe’s in Caesar’s Palace.