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

Insurance Executive

A Leader for Turbulent Times

Lloyd’s CEO Inga Beale is tasked with guiding the venerable insurance market through Brexit and the demands of the fiercely competitive global specialty business.
By: | July 6, 2017 • 12 min read

Underwriters at Lloyd’s are accustomed to taking on complex, even daunting, risks. The company’s leader looks at the world today and sees plenty of opportunity, but also much to be concerned about.

“Political instability is something that troubles me more than anything else because I think there is now more uncertainty across the world than there has ever been,” said Inga Beale, CEO of Lloyd’s of London.

“It feels that all of the norms that I grew up with are being challenged — openness, globalization, acceptance, inclusion — on a global scale.”

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Appropriately, we’re sitting around a table in Beale’s modern glass-fronted office at the top of the Lloyd’s Building — itself a vision from the future — to talk about Brexit and Lloyd’s newly announced Brussels subsidiary.

Add to the mix Donald Trump and the threat of nuclear attack from North Korea, the bombing of Syria and a spate of terrorist attacks across Europe, and it’s clear we are living in the most dangerous period certainly since the Cold War, or possibly ever, believes Beale.

That belief received even more chilling reinforcement when terrorists detonated a bomb at an Ariana Grande performance in Manchester, England on May 22.  Twenty two people, some of them children, were killed and more than 50 wounded in that attack.

Three years ago, it was Beale herself making world headlines with her appointment as the first female CEO in Lloyd’s 329-year history. But now Brexit and other seismic disruptions to world order have taken center stage.

Lloyd’s announced at the end of March that it would establish a new European subsidiary in Brussels in time for January 1, 2019 renewals so it can continue writing risks for all 27 European Union (EU) and three European Economic Area states after the UK exits the EU.

Currently, it uses its passporting rights to serve EU customers from London, but the expected loss of those rights after Brexit necessitated the establishment of a new subsidiary.

For now though, it’s business as usual, said Beale, with the UK remaining a full EU member for at least two more years. She added, with a reassuring smile, that there will be no immediate impact on existing policies, renewals or new policies written during that time.

“We were campaigning very much to remain in the EU before the referendum because we knew what the likely impact [of leaving the EU] would be on Lloyd’s,” said Beale, whose impressive resume includes stints with GE Insurance Solutions, Zurich and Canopius.

“We rely very much on our licensing network, and being part of the EU means that from London we can write insurance and reinsurance for all of the EU countries with our passporting authority.

“But with the UK exiting the EU, it now means that we lose those licensing powers to offer insurance with immediate effect. To counteract this, we have determined to set up a subsidiary within the EU, meaning that about five percent of our global revenues will have to go through this subsidiary because it is insurance business offered to our EU-based clients.”

Beale and her team also negotiated that most of Lloyd’s underwriting business will remain in London, as will the majority of the transactions and decision-making powers. Meanwhile, the manpower needed to run the new Brussels operation will be in the “tens rather than hundreds,” she is quick to point out.

“It’s not a huge raft of people having to move over,” she said.

“Lloyd’s will continue to do 95 percent of its business as it has always done — it’s only the other five percent that will have to go through a separate legal entity, and we’re not anticipating any further changes to our business model as a result.”

Beale, whose dual role is both supervisor and advocate for the market’s 100-something member underwriting syndicates, says that the franchise board chose Brussels over other locations including Luxembourg, Dublin and Malta because of its “robust and quality” regulatory regime.

“At the time, I didn’t even know that reinsurance existed, but once I discovered it I absolutely loved it.” — Inga Beale, CEO, Lloyd’s of London

It also provides access to a multilingual talent pool, is near to London, and, most importantly she stresses, is located in a member state with a “very high certainty of staying in the EU.”

“We want people who reflect our customers,” she said.

“The London insurance market is littered with people from all over the world because London is such a global insurance hub, so we need experts here who speak the language and understand the different cultures.”

North American Footprint

Despite its large European market, it’s the other side of the pond where Lloyd’s really thrives. Approximately 46 percent of its business comes from the U.S., mainly California earthquake and East Coast hurricane risks, she said.

Lloyd’s also remains the No.1 excess and surplus lines insurer in the U.S. and the largest non-U.S. domiciled insurer, she added.

“We have done really well in terms of growing our E&S market share over there,” she said.

“That’s our sweet spot; those non-standard risks that are hard to place.”

By contrast, Beale said that reinsurance has become a much more competitive market with new entrants offering alternative types of reinsurance putting a squeeze on prices. As a consequence, Lloyd’s has focused more on insurance, she said.

“We have also done well in Canada and with our delegated authority through our Managing General Underwriters and Managing General Agents,” she said.

“It’s this very local and specialist distribution channel that has been our success story across North America.”

In January, Beale was made a Dame Commander of the Order of the British Empire — the female equivalent of being knighted — and is also the Association of Professional Insurance Women’s Insurance Woman of the Year for 2017.

“What concerns us most is not individual risks such as earthquakes and hurricanes, but rather assessing the aggregation of our exposures to financial and liability-type risks with no geographical boundaries.” — Inga Beale, CEO, Lloyd’s of London

As the person directing Lloyd’s, she is also acutely aware of the shift in power towards emerging economies, with McKinsey recently reporting that 67 percent of commercial insurance growth will come from those markets by 2020.

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In response, Lloyd’s has focused its efforts on Asia and Latin America, transferring more than half of its managing agents to its Shanghai and Beijing platforms; and it was recently granted final approval to open a reinsurance office in Mumbai, she said.

“That’s where the future’s going to be,” she said.

“We know that a lot of the business is no longer coming to London in the traditional way, hence we have set up a Singapore platform and platforms in China, and opened up an office in Dubai as well as in India to be closer to our clients and brokers there.”

Lloyd’s profits last year were flat at $2.7 billion, while GWP was up $3.9 billion.

The market made a profit despite taking a $2.7 billion hit for major claims — the fifth highest such total since the turn of the century — primarily due to Hurricane Matthew and the Fort McMurray Wildfire in Canada.

Although natural disasters are Lloyd’s bread and butter, its real strength is in insuring complex risks, from cargo ships and satellites to political and terrorism risks.

Lloyd’s Role in Cyber

It’s the aggregation of those harder-to-quantify risks such as cyber security that concerns Beale most. Expected to grow to $7.5 billion in global premiums business by 2020, cyber is a big focus for Lloyd’s. It has a 25 percent market share and aggregate limits of approximately $650 million per risk, she said.

“What concerns us most is not individual risks such as earthquakes and hurricanes, but rather assessing the aggregation of our exposures to financial and liability-type risks with no geographical boundaries,” she said.

“We saw that with the financial crisis and the collapse of Fanny and Freddie, and its impact on Greece, but now it’s cyber.

“We have interviewed numerous risk managers and they are telling us that they are only insured against less than 10 percent of the risks that their businesses face on a daily basis. Our challenge is to make sure that we are continuing to adapt as fast as their businesses do and that we are delivering the relevant products that they need.”

Another area where Lloyd’s has seen an uptick is political and terrorism risk, said Beale.

The U.S. standoff with North Korea, Brexit and a swath of ISIS terrorist attacks across Europe have only exacerbated the problem, heightening fears among those countries’ citizens and tearing whole communities apart.

“We would love to get to a stage where a client can track something being quoted or a claim being paid, just like you do with a package being delivered [to your home].” — Inga Beale, CEO, Lloyd’s of London

Just witness the anguish of the victims and families in the Manchester concert bombing.

“We have seen a dramatic increase in demand for these types of products because of the political instability everywhere at the moment, particularly for companies that are trading cross border with countries where governments can suddenly intervene at a moment’s notice,” she said.

“Similarly, businesses are looking to protect themselves against the ever-growing threat of terrorism, which is where Lloyd’s can step in to give them the confidence to keep on trading.”

Reforming Lloyd’s

Within Lloyd’s itself, Beale has been at the forefront of trying to modernize the aging institution. Despite its modern metallic and glass exterior, inside Lloyd’s there’s still very much what some might term a stuffy “old boys’ club” culture.

Men are required to wear a tie and women weren’t allowed into the underwriting room until 1972. Brokers still walk around with leather slipcases crammed full of paper.

The Lloyd’s headquarters on Lime Street.

Beale’s predecessor, Richard Ward, tried to modernize Lloyd’s but left plenty for Beale to address in that respect.

Beale committed $700 million over the next five years to upgrade Lloyd’s aging computer and IT systems, with the end goal of achieving one-touch data capture to speed up the premiums and claims process.

“It’s about following that data all the way through the process from the client to the intermediary and the underwriter, and the processing of the premiums and claims,” she said.

“We would love to get to a stage where a client can track something being quoted or a claim being paid, just like you do with a package being delivered [to your home].”

Another area Beale is keen to shake up is diversity within Lloyd’s itself. Currently the market is two-thirds male, while only 11 percent of the whole London insurance market are non-UK nationals — a damning statistic that Beale is all too aware of.

“The Lloyd’s market doesn’t reflect the demographics of the whole of London and we are very conscious that we’re not tapping into all of the available talent that’s out there,” she said.

“We need to cut out the old ideas, try to challenge the unconscious bias and create an environment that is welcoming for people who are a bit different.”

Beale has also been pushing the [email protected] initiative, currently in its third year, and in September Lloyd’s will host the third annual Dive In festival to promote diversity and inclusion in the insurance industry.

In addition, 95 percent of the Lloyd’s market has already signed up to its Diversity & Inclusion charter to improve diversity, she said.

“To attract the best talent we need to modernize and look at how we can change our working practices and hiring decisions for the better,” she said.

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“There’s a vast amount of work that we are actively doing to encourage people to be more open and seek more diverse talent.”

On a personal level, Beale readily admits that she was late to the leadership game, and it was only her mentor, Annette Sadolin at GE, who convinced her to take her first promotion.

That lack of confidence is something that, as a leader, Beale has witnessed in her own team and she is keen to help overcome.

“Annette became very much a mentor for me throughout my career, so whenever I have had to make key decisions I would always ask her view,” she said.

“The key lesson that I have learnt from her is that things move so quickly and you need to take opportunities when they come along that give you exposure to something new, even if they don’t seem like a natural career path at the time.

“For me, being a leader is all about inclusion and being passionate about the people you work with because you need to inspire and motivate them. But there is also nothing more rewarding than watching people progress their careers.”

A Truly Global Journey

Beale, who initially harbored ambitions of being an architect, admits that she “fell into reinsurance,” starting as a trainee international treaty reinsurance underwriter at Prudential Assurance Company in London in 1982. But once she had a taste there was no turning back.

“At the time, I didn’t even know that reinsurance existed, but once I discovered it I absolutely loved it,” she said.

“I fell in love with the global nature of the risks that came to London; one day you could be looking at a piece of business from Chile, the next from Australia.”

But, back then, working in a male-dominated industry where she was the only woman among 35 men, Beale struggled to fit in. So she quit and went travelling for 10 months.

It was during her time as a receptionist at the BBC in Sydney, Australia that Beale worked under her first female boss, a formidable woman, she said.

Inspired by her boss’s strong work ethic, Beale decided to return to the insurance business.

She soon landed a job with GE Insurance Solutions in Kansas City, where she held various underwriting management roles, before being appointed president of GE Frankona and head of continental Europe, Middle East and Africa for GE Insurance Solutions in Germany.

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After 14 years at GE, Beale moved to Switzerland with Converium as group CEO in 2006.

Two years later, she joined Zurich Insurance Group as a member of the group management board in Zurich before being appointed global chief underwriting officer, prior to her appointment as group CEO at Canopius in 2012.

The breadth and depth of her experience makes Beale a natural fit for the demands of the Lloyd’s top job.

There’s no doubt she’ll be drawing upon every ounce of that expertise and experience to keep Lloyd’s at the cutting edge of this harrowing new world we live in.

Alex Wright is a U.K.-based business journalist, who previously was deputy business editor at The Royal Gazette in Bermuda. You can reach him at [email protected]