2018 Power Broker

Aviation

Helping Clients Soar

Bryan Holmgren
Vice President
Aon, Chicago

It seems like everywhere you look, businesses are finding more ways to use drones — also known as unmanned aircraft systems. It follows that the insurance industry needs to keep pace. But it wasn’t, as brokers and clients alike observed.

Getting coverage meant a time-consuming process, restrictive policy language, low liability limits and high premiums.

Bryan Holmgren of Aon’s Aviation Practice Group recognized this, and led a team as they developed an insurance solution that provides less restrictive policy wording, more competitive costs at higher coverage limits and a seamless policy placement process.

Aon Aviation’s Unmanned Aircraft Insurance Program now provides clients with a competitively priced way to cover the exposure with a best in class policy.

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One client talked about the challenges they faced and how Holmgren assisted them. “Our drone fleet has been growing faster than expected. Bryan helped us negotiate a policy that covers our fleet on a blanket basis rather than reporting each drone. This has resulted in a much easier process to manage.”

She added, “My favorite ‘Bryan story’ is when our drone carrier insisted on language that was crazy restrictive. We had to have a call with the VP of underwriting, who dug in [his heels]. Fortunately, we had Bryan on the call. He brought his expertise from the aviation world and pushed back on some of the limitations.

“Bryan’s incredible knowledge helped get us a result that made much more sense for the consumer.”

Relationships and Communication 

Drew Love, CIC
Vice President, Account Executive
Aon, Dallas

In every business, relationships matter, but never more than when there is a crisis or problem. Aon’s Drew Love knows and lives this, his clients say, and that helps him help them.

For Jesse Castilleja, insurance manager at H-E-B, storms were brewing — literally and figuratively — as Love helped them with the aftermath of Hurricane Harvey and the ever-growing risks of cyber exposure.

H-E-B did a great job preventing cyber exposure, but the carriers just didn’t recognize it. Love facilitated underwriter meetings with carriers he felt were a good fit.

After the meetings, underwriters recognized all that H-E-B brought to the table. This led to a renewal that allowed the client to purchase higher limits and enhance terms and conditions while decreasing price.

“I can use Drew as a sounding board,” Castilleja said. “He’s very knowledgeable and works hard for us and has a strong team that helps us develop risk solutions.”

Another client said that Drew immediately became an asset to them just hours after coming on board.

“Drew is very responsive to all questions and requests. He is proactive in providing solutions. He understands our business. Most important, he realizes the expectations our risk department has from our C-suite and works in tandem with us to exceed their expectations,” the client added.

Yet another client said he told Aon that he always expects the “A team.”

“Love qualifies as an ‘A team’ member,” the client said. He added that as his business grows, their risks are becoming atypical and Love is helping them navigate the new terrain.

The Knowledge They Depend On

John McCaffrey
Vice President
Aon, Dallas

With a significant suite of risk, including remote international locations and 30,000 employees and contractors who fly there, an aviation client of John McCaffrey’s needed coverage that would protect its interests and satisfy contractors as well.

It was a complex placement. The existing program consisted of six different polices covering exposures related to their worldwide operations for airport liability, products/completed operations, and non-owned liability.

“We wanted to take on more risk, but underwriters were resistant,” the client said. McCaffrey, Aon’s Southwest Region Practice Leader, negotiated with underwriters and ultimately created a restructure of their coverage that saved them 15 percent on premiums while reducing the number of policies to two, and creating clarity and coverage flexibility.

“John is top-notch,” the client said. “He is very aware of our market relative to our unique placement, and he gives us a lot of good advice about markets we can use,” she added.

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Chuck Burn, senior manager of insurance for Union Pacific, said that their aviation risks include flying to plants in the middle of nowhere — sometimes on a customer’s or supplier’s plane. McCaffrey “knows what to ask for, what to get, and how to develop a travel procedure that will help protect them.”

Burn also said that their recent increase in drone usage sparked a need for better coverage for that risk, a greater understanding of it and the ability to communicate it enterprise-wide. “John has been very responsive and helped us understand the drones as an emerging risk,” said Burn. “He’s helped us understand FAA regulations too.”

Protection for Land or Sky

Scott Thomason
Senior Vice President
Regions Insurance, Texarkana, Texas

From down on the farm to the often not-so-friendly skies, Scott Thomason puts his experience to work helping clients protect lives and livelihoods.

Darrin Henry, owner of Henry’s Aerial said. “Scott helped our company with risk solutions for all aspects of our company, from aircraft and commercial auto to workers’ compensation and property.

“Just today, I called him with a question about our pilots using his personal aircraft for travel from jobsite to jobsite. He instantly had a plan to  protect our interests and the employee’s,” Henry said.

Henry is impressed with the time Thomason has invested in his business, started by his father. Thomason is the only broker who has visited their home and field operations, even bringing underwriters to educate them about Henry’s specialized missions and to meet his pilots.

Thomason also guided Henry’s company as it expanded operations to wildland fire suppression. “Not only did Scott know the aviation industry, he was able to obtain coverage for our fire aircraft service vehicles. We had struggled with coverage for the hazmat [jet fuel],” Henry said.

Katherine Williams, owner of Cotesworth Farms Partnership, concurs. “We have a cattle farm and unusual insurance needs. Scott has covered them all.

“We had a major loss just after we switched to him. He and his staff handled things immediately and to our satisfaction. I was impressed with Scott’s knowledge and thoroughness,” she added.

Ahead of the Curve

Lou Timpanaro
Senior Managing Director
Crystal & Company, New York

Lou Timpanaro knows the insurance industry so well that he can spot trends far over the horizon — while there’s still time to help prepare clients.

Christine Zalar, president/founding partner of Emprize Group/Life Flight Eagle, can attest to that. “Lou has endless knowledge and an absolutely unique ability to get ahead of industry trends. It’s a very powerful capability.”

Timpanaro recently resolved a situation for Emprize. It required that one of their aircrafts be stored at a fixed-base operator (FBO).

“The FBO was putting everything on us,” Zalar said. “They wanted us to assume all the risk.” They were at an impasse until Timpanaro stepped in. He negotiated acceptable terms that protected his client. “Lou knew what we could do to protect our exposure,” Zalar said. “He’s king of the road.”

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Another client, an aircraft charter company, wanted to use their insurance program as a marketing tool to attract high net worth individuals — while reducing premiums and increasing protection. Not easy, but for Timpanaro, it was achievable. He reduced costs while increasing liability limits by 33 percent.

But there is one thing even Timpanaro couldn’t predict. An aircraft cleaning company accidentally set off the foam suppression system in an aircraft hangar causing a 30-foot wall of fire retardant.

Cool under pressure, Timpanaro initiated the emergency response protocol: a claims adjustor assessed damage, coverage assurances were communicated and clean up was immediate. The facility, the aircraft and operations were back to normal in four days and payments were made shortly thereafter to close out the claim.

The complete list of 2018 Power Broker® winners can be found here.

More from Risk & Insurance

More from Risk & Insurance

Risk Scenario

A Recall Nightmare: Food Product Contamination Kills Three Unborn Children

A failure to purchase product contamination insurance results in a crushing blow, not just in dollars but in lives.
By: | October 15, 2018 • 9 min read
Risk Scenarios are created by Risk & Insurance editors along with leading industry partners. The hypothetical, yet realistic stories, showcase emerging risks that can result in significant losses if not properly addressed.

Disclaimer: The events depicted in this scenario are fictitious. Any similarity to any corporation or person, living or dead, is merely coincidental.

PART ONE: THE HEAT IS ON

Reilly Sheehan, the Bethlehem, Pa., plant manager for Shamrock Foods, looks up in annoyance when he hears a tap on his office window.

Reilly has nothing against him, but seeing the face of his assistant plant operator Peter Soto right then is just a case of bad timing.

Sheehan, whose company manufactures ice cream treats for convenience stores and ice cream trucks, just got through digesting an email from his CFO, pushing for more cost cutting, when Soto knocked.

Sheehan gestures impatiently, and Soto steps in with a degree of caution.

“What?” Sheehan says.

“I’m not sure how much of an issue this will be, but I just got some safety reports back and we got a positive swipe for Listeria in one of the Market Streetside refrigeration units.”

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Sheehan gestures again, and Soto shuts the office door.

“How much of a positive?” Sheehan says more quietly.

Soto shrugs.

“I mean it’s not a big hit and that’s the only place we saw it, so, hard to know what to make of it.”

Sheehan looks out to the production floor, more as a way to focus his thoughts than for any other reason.

Sheehan is jammed. It’s April, the time of year when Shamrock begins to ramp up production for the summer season. Shamrock, which operates three plants in the Middle Atlantic, is holding its own at around $240 million in annual sales.

But the pressure is building on Sheehan. In previous cost-cutting measures, Shamrock cut risk management and safety staff.

Now there is this email from the CFO and a possible safety issue. Not much time to think; too much going on.

Sheehan takes just another moment to deliberate: It’s not a heavy hit, and Shamrock hasn’t had a product recall in more than 15 years.

“Okay, thanks for letting me know,” Sheehan says to Soto.

“Do another swipe next week and tell me what you pick up. I bet you twenty bucks there’s nothing in the product. That swipe was nowhere near the production line.”

Soto departs, closing the office door gingerly.

Then Sheehan lingers over his keyboard. He waits. So much pressure; what to do?

“Very well then,” he says to himself, and gets to work crafting an email.

His subject line to the chief risk officer and the company vice president: “Possible safety issue: Positive test for Listeria in one of the refrigeration units.”

That night, Sheehan can’t sleep. Part of Shamrock’s cost-cutting meant that Sheehan has responsibility for environmental, health and safety in addition to his operations responsibilities.

Every possible thing that could bring harmful bacteria into the plant runs through his mind.

Trucks carrying raw eggs, milk and sugar into the plant. The hoses used to shoot the main ingredients into Shamrock’s metal storage vats. On and on it goes…

In his mind’s eye, Sheehan can picture the inside of a refrigeration unit. Ice cream is chilled, never really frozen. He can almost feel the dank chill. Salmonella and Listeria love that kind of environment.

Sheehan tosses and turns. Then another thought occurs to him. He recalls a conversation, just one question at a meeting really, when one of the departed risk management staff brought up the issue of contaminated product insurance.

Sheehan’s memory is hazy, stress shortened, but he can’t remember it being mentioned again. He pushes his memory again, but nothing.

“I don’t need this,” he says to himself through clenched teeth. He punches up his pillow in an effort to find a path to sleep.

PART TWO: STRICKEN FAMILIES

“Toot toot, tuuuuurrrrreeeeeeeeettt!”

The whistles of the three lifeguards at the Bradford Community Pool in Allentown, Pa., go off in unison, two staccato notes, then a dip in pitch, then ratcheting back up together.

For Cheryl Brick, 34, the mother of two and six-months pregnant with a third, that signal for the kids to clear the pool for the adult swim is just part of a typical summer day. Right on cue, her son Henry, 8, and his sister Siobhan, 5, come running back to where she’s set up the family pool camp.

Henry, wet and shivering and reaching for a towel, eyes that big bag.

“Mom, can I?”

And Cheryl knows exactly where he’s going.

“Yes. But this time, can you please bring your mother a mint-chip ice cream bar along with whatever you get for you and Siobhan?”

Henry grabs the money, drops his towel and tears off; Siobhan drops hers just as quickly, not wanting to be left behind.

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“Wait for me!” Siobhan yells as Henry sprints for the ice cream truck parked just outside of the pool entrance.

It’s the dead of night, 3 am, two weeks later when Cheryl, slumbering deeply beside her husband Danny, is pulled from her rest by the sound of Siobhan crying in their bedroom doorway.

“Mom, dad!” says Henry, who is standing, pale and stricken, in the hallway behind Siobhan.

“What?” says Danny, sitting up in bed, but Cheryl’s pregnancy sharpened sense of smell knows the answer.

Siobhan, wailing and shivering, has soiled her pajamas, the victim of a severe case of diarrhea.

“I just barfed is what,” says Henry, who has to turn and run right back to the bathroom.

Cheryl steps out of bed to help Siobhan, but the room spins as she does so.

“Oh God,” she says, feeling the impact of her own attack of nausea.

A quick, grim cleanup and the entire family is off to a walk-up urgent care center.

A bolt of fear runs through Cheryl as the nurse gives her the horrible news.

“Listeriosis,” says the nurse. Sickening for children and adults but potentially fatal for the weak, especially the unborn.

And very sadly, Cheryl loses her third child. Two other mothers in the Middle Atlantic suffer the same fate and dozens more are sickened.

Product recall notices from state regulators and the FDA go out immediately.

Ice cream bars and sandwiches disappear from store coolers and vending machines on corporate campuses. The tinkly sound of “Pop Goes the Weasel” emanating from mobile ice cream vendor trucks falls silent.

Notices of intent to sue hit every link in the supply chain, from dairy cooperatives in New York State to the corporate offices of grocery store chains in Atlanta, Philadelphia and Baltimore.

The three major contract manufacturers that make ice cream bars distributed in the eight states where residents were sickened are shut down, pending a further investigation.

FDA inspectors eventually tie the outbreak to Shamrock.

Evidence exists that a good faith effort was underway internally to determine if any of Shamrock’s products were contaminated. Shamrock had still not produced a positive hit on any of its products when the summer tragedy struck. They just weren’t looking in the right place.

PART THREE: AN INSURANCE TANGLE

Banking on rock-solid relationships with its carrier and brokers, Shamrock, through its attorneys, is able to salvage indemnification on its general liability policy that affords it $20 million to defray the business losses of its retail customers.

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But that one comment from a risk manager that went unheeded many months ago comes back to haunt the company.

All three of Shamrock’s plants were shuttered from August 2017 until March 2018, until the source of the contamination could be run down and the federal and state inspectors were assured the company put into place the necessary protocols to avoid a repeat of the disaster that killed 3 unborn children and sickened dozens more.

Shamrock carried no contaminated product coverage, which is known as product recall coverage outside of the food business. The production shutdown of all three of its plants cost Shamrock $120 million. As a result of the shutdown, Shamrock also lost customers.

The $20 million payout from Shamrock’s general liability policy is welcome and was well-earned by a good history with its carrier and brokers. Without the backstop of contaminated products insurance, though, Shamrock blew a hole in its bottom line that forces the company to change, perhaps forever, the way it does business.

Management has a gun to its head. Two of Shamrock’s plants, including Bethlehem, are permanently shuttered, as the company shrinks in an effort to stave off bankruptcy.

Reilly Sheehan is among those terminated. In the end, he was the wrong person in the wrong place at the wrong time.

Burdened by the guilt, rational or not, over the fatalities and the horrendous damage to Shamrock’s business. Reilly Sheehan is a broken man. Leaning on the compassion of a cousin, he takes a job as a maintenance worker at the Bethlehem sewage treatment plant.

“Maybe I can keep this place clean,” he mutters to himself one night, as he swabs a sewage overflow with a mop in the early morning hours of a dark, cold February.

Bar-Lessons-Learned---Partner's-Content-V1b

Risk & Insurance® partnered with Swiss Re Corporate Solutions to produce this scenario. Below are their recommendations on how to prevent the losses presented in the scenario. This perspective is not an editorial opinion of Risk & Insurance.®.

Shamrock Food’s story is not an isolated incident. Contaminations happen, and when they do they can cause a domino effect of loss and disruption for vendors and suppliers. Without Product Recall Insurance, Shamrock sustained large monetary losses, lost customers and ultimately two of their facilities. While the company’s liability coverage helped with the business losses of their retail customers, the lack of Product Recall and Contamination Insurance left them exposed to a litany of risks.

Risk Managers in the Food & Beverage industry should consider Product Recall Insurance because it can protect your company from:

  • Accidental contamination
  • Malicious product tampering
  • Government recall
  • Product extortion
  • Adverse publicity
  • Intentionally impaired ingredients
  • Product refusal
  • First and third party recall costs

Ultimately, choosing the right partner is key. Finding an insurer who offers comprehensive coverage and claims support will be of the utmost importance should disaster strike. Not only is cover needed to provide balance sheet protection for lost revenues, extra expense, cleaning, disposal, storage and replacing the contaminated products, but coverage should go even further in providing the following additional services:

  • Pre-incident risk mitigation advocacy
  • Incident investigation
  • Brand rehabilitation
  • Third party advisory services

A strong contamination insurance program can fill gaps between other P&C lines, but more importantly it can provide needed risk management resources when companies need them most: during a crisis.



Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at [email protected]