2017 Power Broker

Aviation

The ‘Go-To’ Broker

Michael Calhoun
Managing Director
Aon, Chicago

Michael Calhoun is my “go-to guy for aerospace-related business,” said the vice president of administration of an aircraft manufacturer. Calhoun’s work, he said, is “extraordinarily creative” and the broker is always available whenever “a peculiar or unusual” issue might arise.

Calhoun, who is also Midwest region manager, took a lead role in negotiating and placing an aviation firm’s comprehensive insurance program after an acquisition by private equity. He also worked closely with an aircraft manufacturer through the development, testing and certification of a new airplane. And he helped a start-up drone manufacturer with a program that satisfied the demands of the company’s key vendor.

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“For me, it’s a one-man show,” said Tracy Seabaugh, director of insurance at StandardAero. “I rely on brokers a lot and he has exceeded my expectations. Our last renewal was rather complex and there were some decisions we had to make. There were some tough conversations Mike had to have with underwriters.”

“With Mike,” said Ken Ross, president of One Aviation, “you get much more personalized service than the cookie-cutter approach that many brokers take. He’s very good at creating solutions to save premium dollars and broadening the coverage we originally had.

“As a customer, I am fairly demanding,” Ross said.

“I won’t support somebody who doesn’t really deserve it. Mike really does care about his customers.”

Going Above and Beyond

Bradley Meinhardt
Area President
Arthur J. Gallagher, Las Vegas

“There’s an old saying: People can move mountains with their attitudes. Brad always has a tremendous attitude,” said Joseph Seitz, president of Chandelle Investment Corp., speaking about Bradley Meinhardt, who is also managing director of aviation.

Last year, Chandelle contracted to acquire a brand new aircraft, requiring a “substantial amount of coordination,” he said.

“There were so many parties involved. Brad did a yeoman’s job. Even at the last minute there were calls from attorneys associated with the lenders. He just handled it.”

Mike Quinn, CEO of Asia Pacific Airlines Inc. until his recent retirement, said that Meinhardt “has always been particularly attentive to our business even though I think we are probably on the smaller side of his clients. We’ve had any number of insurance issues over the years that he’s been deeply involved with to our benefit. We like him — a lot.”

When the airline recently added a 757 freighter, it required a substantial increase in coverage, and policy changes to comply with the requirements of various airports and agencies, Quinn said. Meinhardt handled the challenges with persistence and poise.

“He is always going above and beyond,” said John Buch, president, Maverick Aviation Group, “and that’s why we have stuck with him and not looked at anyone else.”

Whether it’s familiarizing underwriters with the company, finding gaps in coverage, simplifying the renewal process, attention to detail or being available for questions, Meinhardt “is always there,” Buch said.

Part of the Team

Nicholas Pooley, ACII (UK)
Senior Vice President
Marsh, New York

Whether it’s helping with contract negotiations or devising innovative solutions for cutting-edge aerospace applications, Nicholas Pooley gets the job done.

Clients applaud his talent for designing creative risk transfer solutions — even for risks that are still largely experimental.

Armed with considerable aerospace expertise, he works with forward-thinking underwriters that are open to the potential of the projects and agree to provide flexible and competitive coverage solutions.

“To me, the perfect broker is someone who takes time to know your company, to understand it and how we do business, has a great relationship with the markets and is responsive to our risks,” said the senior risk manager of a major technology company.

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“As we explore new and innovative technology, it’s incredibly important to have a broker who is engaged and understanding of privacy concerns,” she said.

Karen Kraus, global risk manager of Moog Inc., said Pooley “has been a great support.” Pooley aided her team and the company’s legal department on “some very contentious contract negotiations” as the components company dealt with contract demands from its much-larger customers.

“I view Nick as an extension of our small risk management department. It’s as if he is an employee with us. He pays attention to our company news. Sometimes, he brings things to my attention before anyone else does,” Kraus said.

Taking the Lead

Richard Terlecki, CPCU, ARM, ARe
Area Senior Vice President
Arthur J. Gallagher, Orlando, Fla.

Clients depend on Rich Terlecki to protect their interests.

“He never tries to sell insurance,” said Stephen Duarte, director of fiscal services for Kent County, Mich. “He lays out what the problems are and some things you want to consider. If issues come up, he’s there to give you an honest answer.”

In 2016, the Gerald R. Ford Aviation Authority split off from its prior owner, Kent County, Mich. In a win-win situation, Terlecki kept the authority and county on the same insurance program.

That allowed the authority to secure the coverage it needed, which would have been impossible on a stand-alone basis. In the same stroke, the county took advantage of a highly protected property rate, which it stood to lose if the authority was not part of the program.

For Harold Blattie, executive director of Montana Association of Counties, Terlecki ensured a large claim got paid even though the property schedule listed the wrong address.

“Rich was all over that before we even knew that had happened,” said Blattie.

Terlecki also figured out how to cost-effectively procure builder’s risk and owner’s professional indemnity coverage for two successive billion-dollar capital improvement plans for an aviation authority.

“These were very complicated procurements with lots of coverage issues,” said an authority official.

“Rich took the lead and simplified it from our end.”

A Valuable Colleague

Lou Timpanaro
Senior Managing Director
Crystal & Company, New York

“You don’t get a chance to brag about the good people that often,” said Jim Tolzien, CEO of Eastern Air Lines.

But for Lou Timpanaro, he was more than willing.

“Even though Eastern Air Lines is an old brand, it was only resurrected 18 months ago. As a startup, Lou Timpanaro and Crystal & Company got the insurance markets to embrace us almost from the beginning. He has proven to be as valuable to us as anyone I can think of,” Tolzien said.

More recently, Timpanaro broached the idea of doing an early cancellation and a longer policy term to get ahead of a market that was expected to tighten, he said.

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“He was successful reducing premium almost 25 percent and renewing for an 18-month period of time,” Tolzien said. “I could not be happier.”

The CFO of a large private jet operator said Timpanaro “has earned his stripes with us,” noting that the company owns and operates 40-plus aircraft, has a fleet portfolio of nearly 1,000 aircraft and more than 5,000 clients.

Managing the insurance certifications and the required standards and qualifications is “very manually intensive,” he said.

“We are ultra-competitive,” the CFO said. “His peers are constantly trying to convince us to shift our business. The fact that he has retained us for 10 years or longer is a testament to his capabilities.”

Creative and Proactive

Ed Wagner
Senior Vice President
Marsh, Chicago

Ed Wagner “takes a super creative and proactive approach,” said the vice president of risk management at a national casino operation that operates multiple airplanes as well as drones.

“He took multiple policies, removed some gaps and condensed them into one aviation policy,” she said. “That improved coverage consistency, contract certainty and actually reduced cost in the process and increased my limits.”

“When I have an urgent request, like we have done twice this year, he’s left in the middle of his dinner to go back to his hotel room, pull up the policy and help us out,” she said.

Sally Buxman, senior manager, insurance, corporate, at AECOM, relies on Wagner’s guidance for her engineering company’s “weird aviation-related projects.”

“We use drones to go to remote places in Northwest Canada Territory and even subway tunnels in New York,” she said. “Ed knows the nuances of which carriers and markets and programs are best suited so we can get the broadest coverage at the best price.”

AECOM used to be challenged when allocating insurance premium costs for refurbishing or maintaining aircraft for federal projects, but Wagner created a spreadsheet that gave the company insight into the costs, Buxman said.

Wagner shines, she said, in getting the company the capacity and coverage AECOM needs. He was also able to put together a master program that put many of the company’s projects under one policy.

Finalist:

John Geisen
Senior Vice President, Aviation Practice Group
Aon Risk Solutions, Minneapolis

 

More from Risk & Insurance

More from Risk & Insurance

Risk Manager Focus

Better Together

Risk managers reveal what they value in their brokers.
By: | June 1, 2017 • 11 min read

Michael K. Sheehan, (left) Managing Director, Marsh and Grant Barkey, Director of Risk Management, Motivate International Inc.

Ask a broker what they can do for you and they will tell you. But let’s ask the risk manager.

What do risk managers really need in a broker? And what do the best brokers do to help risk managers succeed in their jobs?

Chet Porembski, system vice president and deputy general counsel, OhioHealth Corp.

Risk managers say it’s a broker who helps them look knowledgeable and prepared to their bosses. It’s someone who sweeps in like a superhero with an ingenious solution to a difficult problem.

Risk managers want to see brokers bring forth better products year after year. They want a broker who shows up at renewal time with new ideas, not just a rubber stamp.

Great brokers embed with the risk management team and learn everything they can about the company and its leaders. They help risk managers prepare and keep tabs throughout the year on changes at the organization with an eye towards planning the future.

“There’s the broker that sees themselves as just a hired ‘vendor,’ or I should say, somebody that basically just does the job at hand,” said Chet Porembski, system vice president and deputy general counsel at OhioHealth Corp.

“And then there’s the broker that views themselves very much as a business partner.  They truly bring added value to the relationship.”

These brokers look at the tough issues the risk manager is facing and bring in the resources to try to help their client in ways even the client might not have thought about yet. They also do advanced planning that makes the risk manager’s job easier when a problem arises.

“That’s the kind of broker I want.” Porembski said.

And that’s the kind of broker many risk managers need more than ever.

“The only way that the relationship is going to be successful is if you build a tremendous amount of trust.” — Frances Clark, director of risk management and insurance, Sentara Healthcare

That’s because risk managers are under increasing pressure these days. They carry more weight as corporations shrink their departments to cut costs.

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Climate change, cyber threats and geopolitical shifts are turning what were once unthinkable losses into risks that are almost commonplace. And this is all happening in an under-insured risk environment, according a study by PwC entitled Broking 2020: Leading from the Front in a New Era of Risk.

Thankfully there are good brokers out there, risk managers say, who can bring more value to a client today than ever before and help ease that fear.

Brokers — the traditional intermediary in the risk transfer chain — do in fact have a tangible and growing role in developing viable and innovative solutions for the risk manager, according to PwC’s study.

They are the “global risk facilitation leaders.”

“[Whatever] organizations are doing in the short term — be this dealing with market instability or just going about day to-day business — they need to be looking at how to keep pace with the sweeping social, technological, economic, environmental and political (STEEP) developments that are transforming the world,” PwC said in the report.

Advisors That Are Getting It Done

Cyber risks are just one growing challenge that all organizations grapple with.

Frances Clark, director of risk management and insurance at Sentara Healthcare, remembers when her broker first suggested that she hold a leadership tabletop cyber drill.

Clark said her broker kept saying, “I know this is going to be a painful experience, but you are going to come out so much better in the long run.”

Frances Clark, director of risk management and insurance, Sentara Healthcare

Her broker was right, and went so far as to help arrange a system-wide drill that included representatives from the legal, finance, security, communications, marketing and medical teams.

They reviewed the many ways a cyber attack can happen and then practiced a response.

“We benefitted greatly from that exercise,” Clark said.

When Doctors on Demand developed a telemedicine app to offer mental health services through mobile devices, the company ran up against insurance limitations across state lines. All states require that the physician giving the advice be licensed in the same state where the patient is located.

The concern was for patient encounters where the patient actually crossed state boundaries during the encounter, due to the utilization of a mobile phone. The patient may have started with a properly licensed physician in the original state, but then crossed into a neighboring state where the physician was not licensed.

Larry Hansard, a regional managing director at Arthur J. Gallagher & Co., and a 2017 Power Broker®, worked to secure medical professional liability coverage without the traditional licensure exclusions placed on medical professionals by insurance carriers.

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The initiative he helped develop actually changes how health care can be delivered to patients. It allows the emerging telemedicine sector to now offer services around the world.

Two-thirds of the risk managers in the PwC Broker 2020 survey labeled their brokers as “trusted advisors.” But the same survey found that some participants see their broker as more of a straightforward service provider rather than as a source for solutions.

The survey results indicate there is plenty of room for brokers to bring more value to clients.

OhioHealth’s brokers meet each year with OhioHealth’s risk management team to review insurance coverages.  And when the health system holds quarterly risk management retreats, the brokers attend. They bring with them education and insights on a broad range of topics, from property insurance markets to cyber solutions.

Porembski’s brokers also collaborate with the risk managers when there’s an upcoming presentation on risk issues to senior management. Sometimes the brokers help prepare the presentation, he said.

“We end up looking exceptionally good to our senior leaders and our board,” he said.

Involving the broker in interactions with leaders outside the traditional risk management team has benefits beyond selling products, he said. It extends the relationship circle.

Clark tries not to think of her brokers as outside vendors just providing a service. She wants them to be as committed and knowledgeable about the organization as she is.

“The only way that the relationship is going to be successful is if you build a tremendous amount of trust,” Clark said.

“You have to be completely open and honest about everything, no matter how bad it is, or how bad it may look to the market or underwriters.”

“Once you establish that trusting relationship, I think everything else falls into place,” she adds.

Sentara underwent significant growth recently, acquiring five hospitals in about six years. The expansion required a vast amount of integration on insurance programs and a merger of risk management departments and claims.

Clark said her brokers rolled up their sleeves and expertly navigated her through the consolidation.

“I can’t reiterate enough how most risk managers don’t know how to deal with an M&A unless you’ve gone through it.”

She said she wouldn’t have been able to manage the risk of the mergers without her broker’s counsel.

Grading the Broker

Mike Lubben, director of global risk management at Henry Crown & Co. in Chicago, sets standard expectations of his insurance brokers: know the exposures, understand how a risk manager has to sell ideas internally and understand the urgency of requests.

He lets his brokers know his expectations with regular report cards, complete with letter grades. And he isn’t shy about giving out Fs.

  • How did the broker service the EPLI coverage?
  • Did the broker provide expertise and coverage analysis?
  • Was there anything creative?
  • Did the broker recommend new endorsements based on the previous exposure?
  • Did the broker recommend any risk mitigation programs?
  • How well did he communicate and help with presentations?

“A good broker will think this is fantastic,” Lubben said.

This method starts the conversation. It helps Lubben establish long relationships with some stellar brokers.  But if the broker misses the mark, Lubben can have a talk with them about ways to do better in the future. Some brokers he has sent away.

Recently a broker failed on what Lubben calls “blocking and tackling,” the basics like returning phone calls within one day and responding promptly to emails.

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Lubben gave him an “F” on those subjects and told him why. The broker still didn’t improve his game and was eventually replaced.

For many people, insurance can seem very routine from renewal to renewal. But a really good broker will break from routine and come back with some kind of enhancement or improvement.

If the renewal is flat with no change in premium, then Clark says she’ll ask, “What are you going to do for me this year?”

The best brokers are always striving for better, she said.

“Without the brokering community, you would be hard pressed to do your job. I really appreciate what the brokers do, they bring a level of expertise that we can’t possibly have on all lines of coverage.” — Mike Lubben, director of global risk management at Henry Crown & Co.

Motivate International Inc., which operates more than half of the bike share fleets in North America, went through a recent renewal.

Their broker, Marsh, explored more than 10 options with different strategies and programs. In the end, after all of that, they decided the expiring coverage was the best fit.

“Those exercises are very valuable for risk managers,” said Grant Barkey, Motivate’s director of risk management.

“As an innovative company committed to delivering best-in-class services, we believe thorough exploration leads to informed decision-making.”

A good broker understands that a company’s day-to-day operations and a highly effective risk management program have implications for what type of policy should be procured, he said.

Brokers need to partner with risk managers to figure out what those options are, and what the markets are saying and then succinctly relay the information to management.
They also need to have the tact and curiosity to inquire about future plans and figure out what resources might be needed to better serve their client.

When PwC surveyed risk managers, most put their insurance carriers and industry groups ahead of their brokers as the primary source of cyber and supply chain risk solutions; yet these areas are still cited as risk managers’ top concerns.

“Becoming the go-to partners for developing and coordinating innovative and effective solutions in these priority risk areas is at the heart of the commercial opportunity for brokers.” PwC said in its report.

“Yet, our survey suggests that these are important areas where brokers are falling short of the market’s demands and therefore need to adapt.

For example, less than a third of respondents are very satisfied with brokers’ analytical and modelling services across a range of areas.”

When participants were asked how their brokers could be more efficient, respondents put risk analysis at the top of PwC’s survey list. Significantly, more than a third also cited ‘big data’ analysis.

Finding the Right Fit

Paul Kim, Co-CBO of U.S. Retail at Aon Risk Solutions, helps match brokers to risk managers. He keeps in mind that insurance companies tend to sell product, while the clients are looking to manage risks. The right broker assists in mapping risks to existing products and also customizing broad solutions, he said.

“The risk manager’s job has become more complex in the current environment, but there are so many tools available for those individuals to make better informed decisions that truly help protect the overall risk profile of their companies,” Kim said.

Paul Kim, Co-CBO of U.S. Retail, Aon Risk Solutions

That’s why finding the right broker should be first and foremost, he said. Look for an individual with strong industry knowledge, product expertise and market relationships. A strong broker is able to effectively communicate what the risk manager’s goals are to the marketplace to be able to execute and achieve those goals.

“Not every broker can do that,” Kim said.

“Not every broker is the right broker.”

PwC said those brokers who quickly master the art and science of identifying ambiguous threats and then mobilize a broad private/public stakeholder pool to economically manage those risks over time will pull ahead of their competition.

“We’re really generalist,” Lubben said.

“Without the brokering community, you would be hard pressed to do your job. I really appreciate what the brokers do, they bring a level of expertise that we can’t possibly have on all lines of coverage.”

When selecting a broker, the risk manager should also take into account the entire organization behind the broker. Ask about the additional support systems that are available to the broker’s clients.

The company should have a deep bench so when the primary broker is out of the office there’s someone else to rely on who is almost as knowledgeable. The broker organization should also be able to assist you with your budgeting and forecasting from a financial risk perspective.

In PwC’s survey of risk managers, nearly three-quarters want analytics from their broker to help inform their decisionmaking, with concerns over new and emerging risks being a strong driver for this demand.

Clark also thinks it is vitally important for a broker to offer a claims advocate, somebody on the outside, when you are dealing with a carrier on a complicated claim.

“Otherwise you are vulnerable to what the carrier says,” Clark said.

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To lead in this new era of risk, it’s also important that brokers forge close relationships with a broader set of stakeholders that includes governments, academia, specialist risk consultancies and even their industry peers, PwC said in the report.

It’s also going to be important to develop shared databases and research capabilities.

In turn, brokers need to assure this diverse stakeholder group that they are the right party to lead.

Clark, at Sentara Healthcare, said she knows what her risk exposures are today, but she’d like her brokers to anticipate her needs before she does.

“It’s kind of crazy, but amazingly some of them do it,” Clark said.

The broker will also use past experience and industry knowledge to anticipate where policy terms and conditions can be tweaked and improved upon.

“They will, say, advise us that we need to change this policy language, and then a year later you have a claim on that and you thank your lucky stars that they changed it,” Clark said.

“It is amazing to me every time it happens.”  &

Juliann Walsh is a staff writer at Risk & Insurance. She can be reached at [email protected]