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2017 Power Broker

Construction

A Skillful Mediator

Joseph Boschee
Director of Claims
Aon, Los Angeles

Aon’s Joseph Boschee wowed clients this past year with his mastery of the arts of diplomacy and mediation.

“We were having trouble communicating with our insurance company,” said an executive vice president. “Joe and I decided that a face-to-face meeting with the carrier [was needed]. … Joe stepped in and took care of everything. He found the key people, arranged a meeting and established our talking points, then traveled with me and [led] the conversation. The best part was the follow-up after the meeting,” he said. “Joe established monthly reporting, which has been invaluable for keeping in touch with our insurer.”

Another client lauded Boschee’s availability in times of crisis and his skillful execution and integrity. “Joe’s counsel contributes to our fiscal year-end, saving our company thousands of dollars,” said the claims manager. “By example, we solicited Joe’s expertise with a claim that had been open for six years. His intervention resulted in a voluntary dismissal with prejudice.

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“He expertly guided us through the litigation, while counseling us through negotiations to maintain our convictions. It was with this guidance and steady confidence we attained the successful outcome, also saving our company thousands of dollars.

“Joe has educated us through his shared experiences, promoting extraordinary results,” said the claims manager. “He equipped his partners with the knowledge to apply complex solutions.”

Diligent and Determined

Mary Grandy
Senior Vice President
EPIC, Sacramento, Calif.

Mary Grandy has a special knack for finding solutions for intractable insurance problems.

“I became acquainted with Mary this year when my company bought a construction and real-estate company,” said one vice president of operations. “Mary single-handedly and effectively straightened out the insurance needs of our new construction subsidiary, and that was no easy feat. She was up against a less-than-sterling safety record. Mary kept the construction insurance program out of state supervision, not once, but twice. Mary has worked diligently with us to improve the safety record at the operator.”

In another situation, Grandy uncovered a significant amount of pending litigation left unresolved. She had to retrace the paper trail while also assisting with the disposition. She suggested new counsel, and participated in the settlement negotiations.

For another client, the answer was successfully executing an idea that the client had percolating for some time, but had never brought to fruition.

“Our costs were very high, and we were trying to get into a captive,” said one controller. “I had talked to our previous broker and they only made a half-hearted effort. I had known Mary, and gave her the chance to make it happen.

“She just ran with it. She saw the advantages to us, including the prospect of dividends. It only took her six to nine months to binding. We got better terms and conditions and were able to save money.”

Focused on Client Needs

Dale Kaprosy
Senior Vice President
Oswald Cos., Cleveland

Most brokers make their living by selling insurance. Only a few are equipped to help their clients buy less insurance.

“Dale was very helpful moving us into self-insurance with a high deductible and large retentions,” said one CFO. “We are a construction company and have a very good handle on risk management. He helped us build our program.

“This is not selling insurance, it is taking care of clients and it is where brokerage needs to be going,” he said. “Larger, more sophisticated clients don’t need a broker who’s trying to sell them dollar one of coverage. What we needed and got was appropriate coverage — which he did get to sell. But mostly he helped us hold on to some of our own cash.”

For clients not in a position to insure themselves, Kaprosy is equally supportive.

“We sold three of our sites during this last policy year and Dale assisted us with adjusting our policies midstream to eliminate unnecessary premiums,” said another CFO.

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“Separately, we had an old claim go to pre-trial hearings. Dale was [copied] on an email just so he was in the loop but he called shortly after the message went out to get more details. He was able to provide his informed perspective on the facts and insurance implications.

“In another instance we added a new offering for installed services and he assisted us with making sure that the standard contract we devised had the appropriate insurance requirements for the nature of the work.”

Offering Peace of Mind

Cormac O’Connor, Dip CII (UK)
Senior Vice President
Marsh, New York

“Cormac was instrumental in placing an excess liability program for what I would consider one of the most challenging contracts and placements in my 30 years in this business,” said one director of risk and insurance management.

“The project was for public works infrastructure in a large city. The complexity of the contract, its participants and contractual arrangements and the onerous insurance requirements made the placement a significant challenge.

“Cormac had to find some $500 million in excess casualty capacity. In the end, that comprised more than 20 different carriers. Each of those had to agree to our aggressive premium targets, to the very specific requirements of the contract, and to issue absolutely identical policies in regard to terms and conditions.”

While to some that may sound routine, the client says it most assuredly wasn’t. “When all was said and done, the project insurance policy documents ran longer than 1,200 pages.”

O’Connor was able to secure agreement from all the carriers to use “clean and simple” follow-form documents from the brokerage. “As a result, he was able to deliver the highest continuity of coverage over the primary policy that could possibly be achieved.

“That provided significant piece of mind, and also contract certainty to the general contractor. It also saved much time and energy in conducting policy-form comparisons.”

A Personal Connection

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

Picture a long, mellow holiday weekend. Two people sitting on a porch chatting away, conversation flows easily from topic to topic. As the day winds down, there are smiles, thanks, hugs even. And new language for insurance coverage.

“Susan sat with me on my porch over a holiday weekend,” said one risk manager. “She helped me manuscript a new builder’s risk policy. That’s just the kind of person she is. She helped with wording, making especially sure we had all of our temporary personnel covered on all of our policies.”

The narrative is quaint, almost endearing. But the back story is serious heavy lifting for any broker. The client had taken the responsible step of having its safety personnel trained as emergency medical technicians. That enhanced safety for all workers as well as extending an umbrella over others at any job site. But no good deed goes unpunished, and the added capabilities also added liabilities.

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“We had to extend our general liability to cover those new exposures,” said the risk manager. Just to add further complication, the client is based in the Midwest with operations in several states; each state has its own regulations about certification and liability for emergency personnel.

The client also has a variety of full-time, part-time and temporary workers. “The onus is on us to be sure all coverages are filled and filed,” said the client. “Susan helped us weed through all that, literally document by document.”

A Responsive Point Person

Ryan Shinkle, CIC
Area Vice President
Arthur J. Gallagher, Lafayette, La.

The market giveth and the market taketh away. Both cases give brokers chances to shine.

“We are a half-billion-dollar newly formed engineering and construction firm comprising several previously existing companies,” said one vice president.

“Ryan was the point person for consolidating so many different liability policies, each with varying deductible levels, coverage limits, terms and conditions. He exhibited incredible knowledge and great quality and attention to detail.”

Shinkle built a single program that saved a considerable amount of money and made the administration of the program more efficient and manageable.

“As a new company that is trying to grow in both existing and new markets, we’ve had many questions about what types of coverage we need,” said the vice president. “Ryan has been very responsive and has helped us ensure that we are properly covered in all areas of our new and existing businesses.”

Another client had the misfortune to have its longtime underwriter pull out of the market. “We were insured for 10 years with the same carrier,” said a director of safety. “When that insurer made a decision to stop writing that type of coverage, Ryan stepped up and worked hard in looking at the market to help us find another carrier.

“He then spent long hours to make sure that everything was covered for our renewal. We even made field visits to companies to make sure that a good match would be selected.”

More from Risk & Insurance

More from Risk & Insurance

Cyber Resilience

No, Seriously. You Need a Comprehensive Cyber Incident Response Plan Before It’s Too Late.

Awareness of cyber risk is increasing, but some companies may be neglecting to prepare adequate response plans that could save them millions. 
By: | June 1, 2018 • 7 min read

To minimize the financial and reputational damage from a cyber attack, it is absolutely critical that businesses have a cyber incident response plan.

“Sadly, not all yet do,” said David Legassick, head of life sciences, tech and cyber, CNA Hardy.

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In the event of a breach, a company must be able to quickly identify and contain the problem, assess the level of impact, communicate internally and externally, recover where possible any lost data or functionality needed to resume business operations and act quickly to manage potential reputational risk.

This can only be achieved with help from the right external experts and the design and practice of a well-honed internal response.

The first step a company must take, said Legassick, is to understand its cyber exposures through asset identification, classification, risk assessment and protection measures, both technological and human.

According to Raf Sanchez, international breach response manager, Beazley, cyber-response plans should be flexible and applicable to a wide range of incidents, “not just a list of consecutive steps.”

They also should bring together key stakeholders and specify end goals.

Jason J. Hogg, CEO, Aon Cyber Solutions

With bad actors becoming increasingly sophisticated and often acting in groups, attack vectors can hit companies from multiple angles simultaneously, meaning a holistic approach is essential, agreed Jason J. Hogg, CEO, Aon Cyber Solutions.

“Collaboration is key — you have to take silos down and work in a cross-functional manner.”

This means assembling a response team including individuals from IT, legal, operations, risk management, HR, finance and the board — each of whom must be well drilled in their responsibilities in the event of a breach.

“You can’t pick your players on the day of the game,” said Hogg. “Response times are critical, so speed and timing are of the essence. You should also have a very clear communication plan to keep the CEO and board of directors informed of recommended courses of action and timing expectations.”

People on the incident response team must have sufficient technical skills and access to critical third parties to be able to make decisions and move to contain incidents fast. Knowledge of the company’s data and network topology is also key, said Legassick.

“Perhaps most important of all,” he added, “is to capture in detail how, when, where and why an incident occurred so there is a feedback loop that ensures each threat makes the cyber defense stronger.”

Cyber insurance can play a key role by providing a range of experts such as forensic analysts to help manage a cyber breach quickly and effectively (as well as PR and legal help). However, the learning process should begin before a breach occurs.

Practice Makes Perfect

“Any incident response plan is only as strong as the practice that goes into it,” explained Mike Peters, vice president, IT, RIMS — who also conducts stress testing through his firm Sentinel Cyber Defense Advisors.

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Unless companies have an ethical hacker or certified information security officer on board who can conduct sophisticated simulated attacks, Peters recommended they hire third-party experts to test their networks for weaknesses, remediate these issues and retest again for vulnerabilities that haven’t been patched or have newly appeared.

“You need to plan for every type of threat that’s out there,” he added.

Hogg agreed that bringing third parties in to conduct tests brings “fresh thinking, best practice and cross-pollination of learnings from testing plans across a multitude of industries and enterprises.”

“Collaboration is key — you have to take silos down and work in a cross-functional manner.” — Jason J. Hogg, CEO, Aon Cyber Solutions

Legassick added that companies should test their plans at least annually, updating procedures whenever there is a significant change in business activity, technology or location.

“As companies expand, cyber security is not always front of mind, but new operations and territories all expose a company to new risks.”

For smaller companies that might not have the resources or the expertise to develop an internal cyber response plan from whole cloth, some carriers offer their own cyber risk resources online.

Evan Fenaroli, an underwriting product manager with the Philadelphia Insurance Companies (PHLY), said his company hosts an eRiskHub, which gives PHLY clients a place to start looking for cyber event response answers.

That includes access to a pool of attorneys who can guide company executives in creating a plan.

“It’s something at the highest level that needs to be a priority,” Fenaroli said. For those just getting started, Fenaroli provided a checklist for consideration:

  • Purchase cyber insurance, read the policy and understand its notice requirements.
  • Work with an attorney to develop a cyber event response plan that you can customize to your business.
  • Identify stakeholders within the company who will own the plan and its execution.
  • Find outside forensics experts that the company can call in an emergency.
  • Identify a public relations expert who can be called in the case of an event that could be leaked to the press or otherwise become newsworthy.

“When all of these things fall into place, the outcome is far better in that there isn’t a panic,” said Fenaroli, who, like others, recommends the plan be tested at least annually.

Cyber’s Physical Threat

With the digital and physical worlds converging due to the rise of the Internet of Things, Hogg reminded companies: “You can’t just test in the virtual world — testing physical end-point security is critical too.”

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How that testing is communicated to underwriters should also be a key focus, said Rich DePiero, head of cyber, North America, Swiss Re Corporate Solutions.

Don’t just report on what went well; it’s far more believable for an underwriter to hear what didn’t go well, he said.

“If I hear a client say it is perfect and then I look at some of the results of the responses to breaches last year, there is a disconnect. Help us understand what you learned and what you worked out. You want things to fail during these incident response tests, because that is how we learn,” he explained.

“Bringing in these outside firms, detailing what they learned and defining roles and responsibilities in the event of an incident is really the best practice, and we are seeing more and more companies do that.”

Support from the Board

Good cyber protection is built around a combination of process, technology, learning and people. While not every cyber incident needs to be reported to the boardroom, senior management has a key role in creating a culture of planning and risk awareness.

David Legassick, head of life sciences, tech and cyber, CNA Hardy

“Cyber is a boardroom risk. If it is not taken seriously at boardroom level, you are more than likely to suffer a network breach,” Legassick said.

However, getting board buy-in or buy-in from the C-suite is not always easy.

“C-suite executives often put off testing crisis plans as they get in the way of the day job. The irony here is obvious given how disruptive an incident can be,” said Sanchez.

“The C-suite must demonstrate its support for incident response planning and that it expects staff at all levels of the organization to play their part in recovering from serious incidents.”

“What these people need from the board is support,” said Jill Salmon, New York-based vice president, head of cyber/tech/MPL, Berkshire Hathaway Specialty Insurance.

“I don’t know that the information security folks are looking for direction from the board as much as they are looking for support from a resources standpoint and a visibility standpoint.

“They’ve got to be aware of what they need and they need to have the money to be able to build it up to that level,” she said.

Without that support, according to Legassick, failure to empower and encourage the IT team to manage cyber threats holistically through integration with the rest of the organization, particularly risk managers, becomes a common mistake.

He also warned that “blame culture” can prevent staff from escalating problems to management in a timely manner.

Collaboration and Communication

Given that cyber incident response truly is a team effort, it is therefore essential that a culture of collaboration, preparation and practice is embedded from the top down.

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One of the biggest tripping points for companies — and an area that has done the most damage from a reputational perspective — is in how quickly and effectively the company communicates to the public in the aftermath of a cyber event.

Salmon said of all the cyber incident response plans she has seen, the companies that have impressed her most are those that have written mock press releases and rehearsed how they are going to respond to the media in the aftermath of an event.

“We have seen so many companies trip up in that regard,” she said. “There have been examples of companies taking too long and then not explaining why it took them so long. It’s like any other crisis — the way that you are communicating it to the public is really important.” &

Antony Ireland is a London-based financial journalist. He can be reached at [email protected] Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at [email protected]