Brokers

Decades Spent Serving Clients

With a lifetime of accomplishments under his belt, Woodrow Cross wants to keep going.
By: | January 17, 2017 • 4 min read
Topics: Brokerage

At the age of 100, Woodrow Cross has no plans to retire.

The founder and chairman an of Cross Insurance – the Bangor, Maine-based independent insurance provider that employs 800 people at 40 locations in five states – still goes to work a few days per week to schmooze with his staff, service his insurance clients and grow the business.

He won’t retire, Cross said, because running his insurance dynasty is more fun than anything else.

“I like the challenge,” he said. “I like growing the business. I like the people.”

A Sociable Man

Cross has made a few concessions to age, such as moving to an assisted living facility, employing a driver and using a wheelchair. His hearing isn’t what it used to be. When he walks, or rolls, into his office, he makes the rounds of hellos and well wishes from the staff, which include his son Royce, president and CEO; grandson Jonathan, executive vice president; and grandson Woodrow, commercial lines account executive. His late son Brent served as executive vice president.

The Cross family, from left, Jonathan Cross (grandson); Royce Cross (son); the late Brent Cross (son); Woodrow Cross; and grandson Woodrow Cross. Photo taken in 2014.

“It’s exhilarating,” he said to see his family thriving and contributing. It makes his heart swell with pride and joy.

He is a sociable man. When Cross was proprietor of a country store in the tiny hamlet of Bradford, Maine, during the Depression, the store’s wood stove served as the town’s meeting spot.

There was no television and few radios, said his son Royce. No alcohol because of Prohibition, although a few men occasionally bought large quantities of vanilla extract, putatively to bake a cake.

“The entertainment was visiting with each other in the store,” Royce Cross said, “and Woodrow was at the center.”

His personality continues to bring in business. At a recent event recognizing his business and civic accomplishments, Woodrow Cross and another honoree made their acquaintance – in whispers – at the rear of the stage as a speaker delivered his speech at the podium.

“They really hit it off,” Royce Cross said.

The new acquaintance, it turned out, was part of a large national organization, and he was so impressed that he moved the company’s sizable insurance accounts to Cross Insurance.

“Sales is what I love,” Woodrow Cross said. “I haven’t lost the excitement. I hope I’m improving.”

Servicing Clients

Cross also takes pleasure in doing right by his clients, Royce said. For example, when a client’s property burned one Christmas Eve after the office had closed early for the holiday, Cross took Royce to the property to work on the claim, delaying their own festivities.

“That was a good Christmas. When you help someone, that’s rewarding,” Royce said.

“We were brought up to help,” he said.

Without resorting to intimidation, despotism or tyranny, Cross is a perfectionist when it comes to service, Royce said. “He taught us, ‘There’s a limited amount you can do for your clients on pricing, so come back on service.’ ”

Woodrow Cross in a University of Maine Hockey jersey.

When banks and real estate agencies need binders for closing, Cross taught his sons to “move quickly. Close the deal before they can go to the competition,” Royce said.

Woodrow Cross built the largest independent insurance provider in the Northeast, acquired more than 100 agencies, has buildings in Bangor and Portland bearing his name, was awarded an honorary doctorate and is generally considered a bastion of Bangor’s economy.

But it’s also important to him that he remembers his first business of selling seed door to door at age 6, and his teenage entrepreneurial venture of raising baby chickens and selling them at a profit.

“He doesn’t see himself as a big important guy, and he doesn’t permit grandiosity in his children,” Royce said. “I speak to him every day of my life, and I can’t recall a conversation when we talked about ourselves as pretty special. He wouldn’t like it.”

The combination of ambition for future accomplishments and modesty about past ones is the mainspring behind the company’s growth.

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The company that Cross started in 1954 at his kitchen table now sells and services personal and commercial insurance lines, employee benefits, surety bonds, comprehensive risk management advice and counsel, and specialized products focused on higher education and high net worth needs.

Cross’ extroversion, ambition, love of family and community, resourcefulness and honesty is a perfect fit for his profession, said Royce, who joined the company in the 1970s.

Indeed, Woodrow Cross said, no pleasure associated with retirement would deliver the shot of joy, pride and adrenaline that he gets from his work.

Does he have any regrets for trips not taken or golf not played?

“No regrets,” Cross said. “No bucket list.” &

Susannah Levine writes about health care, education and technology. She can be reached at riskletters@lrp.com.

More from Risk & Insurance

More from Risk & Insurance

Alternative Energy

A Shift in the Wind

As warranties run out on wind turbines, underwriters gain insight into their long-term costs.
By: | September 12, 2017 • 6 min read

Wind energy is all grown up. It is no longer an alternative, but in some wholesale markets has set the incremental cost of generation.

As the industry has grown, turbine towers have as well. And as the older ones roll out of their warranty periods, there are more claims.

This is a bit of a pinch in a soft market, but it gives underwriters new insight into performance over time — insight not available while manufacturers were repairing or replacing components.

Charles Long, area SVP, renewable energy, Arthur J. Gallagher

“There is a lot of capacity in the wind market,” said Charles Long, area senior vice president for renewable energy at broker Arthur J. Gallagher.

“The segment is still very soft. What we are not seeing is any major change in forms from the major underwriters. They still have 280-page forms. The specialty underwriters have a 48-page form. The larger carriers need to get away from a standard form with multiple endorsements and move to a form designed for wind, or solar, or storage. It is starting to become apparent to the clients that the firms have not kept up with construction or operations,” at renewable energy facilities, he said.

Third-party liability also remains competitive, Long noted.

“The traditional markets are doing liability very well. There are opportunities for us to market to multiple carriers. There is a lot of generation out there, but the bulk of the writing is by a handful of insurers.”

Broadly the market is “still softish,” said Jatin Sharma, head of business development for specialty underwriter G-Cube.

“There has been an increase in some distressed areas, but there has also been some regional firming. Our focus is very much on the technical underwriting. We are also emphasizing standardization, clean contracts. That extends to business interruption, marine transit, and other covers.”

The Blade Problem

“Gear-box maintenance has been a significant issue for a long time, and now with bigger and bigger blades, leading-edge erosion has become a big topic,” said Sharma. “Others include cracking and lightning and even catastrophic blade loss.”

Long, at Gallagher, noted that operationally, gear boxes have been getting significantly better. “Now it is blades that have become a concern,” he said. “Problems include cracking, fraying, splitting.

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“In response, operators are using more sophisticated inspection techniques, including flying drones. Those reduce the amount of climbing necessary, reducing risk to personnel as well.”

Underwriters certainly like that, and it is a huge cost saver to the owners, however, “we are not yet seeing that credited in the underwriting,” said Long.

He added that insurance is playing an important role in the development of renewable energy beyond the traditional property, casualty, and liability coverages.

“Most projects operate at lower capacity than anticipated. But they can purchase coverage for when the wind won’t blow or the sun won’t shine. Weather risk coverage can be done in multiple ways, or there can be an actual put, up to a fixed portion of capacity, plus or minus 20 percent, like a collar; a straight over/under.”

As useful as those financial instruments are, the first priority is to get power into the grid. And for that, Long anticipates “aggressive forward moves around storage. Spikes into the system are not good. Grid storage is not just a way of providing power when the wind is not blowing; it also acts as a shock absorber for times when the wind blows too hard. There are ebbs and flows in wind and solar so we really need that surge capacity.”

Long noted that there are some companies that are storage only.

“That is really what the utilities are seeking. The storage company becomes, in effect, just another generator. It has its own [power purchase agreement] and its own interconnect.”

“Most projects operate at lower capacity than anticipated. But they can purchase coverage for when the wind won’t blow or the sun won’t shine.”  —Charles Long, area senior vice president for renewable energy, Arthur J. Gallagher

Another trend is co-location, with wind and solar, as well as grid-storage or auxiliary generation, on the same site.

“Investors like it because it boosts internal rates of return on the equity side,” said Sharma. “But while it increases revenue, it also increases exposure. … You may have a $400 million wind farm, plus a $150 million solar array on the same substation.”

In the beginning, wind turbines did not generate much power, explained Rob Battenfield, senior vice president and head of downstream at JLT Specialty USA.

“As turbines developed, they got higher and higher, with bigger blades. They became more economically viable. There are still subsidies, and at present those subsidies drive the investment decisions.”

For example, some non-tax paying utilities are not eligible for the tax credits, so they don’t invest in new wind power. But once smaller companies or private investors have made use of the credits, the big utilities are likely to provide a ready secondary market for the builders to recoup their capital.

That structure also affects insurance. More PPAs mandate grid storage for intermittent generators such as wind and solar. State of the art for such storage is lithium-ion batteries, which have been prone to fires if damaged or if they malfunction.

“Grid storage is getting larger,” said Battenfield. “If you have variable generation you need to balance that. Most underwriters insure generation and storage together. Project leaders may need to have that because of non-recourse debt financing. On the other side, insurers may be syndicating the battery risk, but to the insured it is all together.”

“Grid storage is getting larger. If you have variable generation you need to balance that.” — Rob Battenfield, senior vice president, head of downstream, JLT Specialty USA

There has also been a mechanical and maintenance evolution along the way. “The early-generation short turbines were throwing gears all the time,” said Battenfield.

But now, he said, with fewer manufacturers in play, “the blades, gears, nacelles, and generators are much more mechanically sound and much more standardized. Carriers are more willing to write that risk.”

There is also more operational and maintenance data now as warranties roll off. Battenfield suggested that the door started to open on that data three or four years ago, but it won’t stay open forever.

“When the equipment was under warranty, it would just be repaired or replaced by the manufacturer,” he said.

“Now there’s more equipment out of warranty, there are more claims. However, if the big utilities start to aggregate wind farms, claims are likely to drop again. That is because the utilities have large retentions, often about $5 million. Claims and premiums are likely to go down for wind equipment.”

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Repair costs are also dropping, said Battenfield.

“An out-of-warranty blade set replacement can cost $300,000. But if it is repairable by a third party, it could cost as little as $30,000 to have a specialist in fiberglass do it in a few days.”

As that approach becomes more prevalent, business interruption (BI) coverage comes to the fore. Battenfield stressed that it is important for owners to understand their PPA obligations, as well as BI triggers and waiting periods.

“The BI challenge can be bigger than the property loss,” said Battenfield. “It is important that coverage dovetails into the operator’s contractual obligations.” &

Gregory DL Morris is an independent business journalist based in New York with 25 years’ experience in industry, energy, finance and transportation. He can be reached at riskletters@lrp.com.