Fine Arts

Eight Questions for 2017 Power Broker Mary Pontillo

2017 Power Broker Mary Pontillo talks to R&I about her love of the Fine Arts business.
By: | February 22, 2017 • 8 min read

Intrigued by the unique world of risk she handles, Risk & Insurance® asked (Risk Strategies Company subsidiary) DeWitt Stern Vice President and 2017 Power Broker® winner Mary Pontillo to tell us more about her love for fine art and why helping to cover risk in the art world means so much to her.

R&I:  Mary we know you’ve got a background in art history. It must be very fulfilling then for you to work in the business of insuring art. Tell us more about your connection with art and artists and what it means to you.

MP: The only way I would be happy in the insurance industry is by doing what I’m doing; insuring artwork. It’s often the case that people in the art world don’t come from a business background. I feel I can help art-oriented people understand something both very esoteric and important. I speak their language and essentially become a translator of insurance jargon into something an art-oriented person can understand.

For instance, when I sat down for the first time with a well-known artist to discuss what he wanted out of an insurance payment, it was deeply gratifying.  He had never really thought about how he’d use his insurance or what he expected from a claim. Being able to counsel one of the most famous living artists on something like this was quite special for me.

R&I: Who are some of your favorite artists, past and present?

MP: I dedicated a great deal of time to studying early 20th Century American art so I love artists like Marsden Hartley and Guy Pene du Bois.

Janine Antoni’s work always makes me think. Her “Lick and Lather” work consisting of self-portrait busts – half made of chocolate and half made of soap, the soap lathered and chocolate licked — always makes me think in a circular way. What if she licked the soap? I love artwork that gives me a visceral response like hers.

Gerard Richter’s technical abilities stop me in my tracks.

I own a Ghada Amer screen print and dream of the day I will own one of her prints with vellum and embroidery.

R&I: Tell us about a devastating art loss and how you helped the insured to recover.

MP: Nothing compares to the days, weeks and months after Superstorm Sandy. Beginning at midnight, when Sandy hit NYC, claims reports poured in. The first was from a museum client via text as I was trying to get a few hours of sleep during the intense storm. A colleague and I both lived in Queens and the few days following Sandy we were the only people on our team with electricity. We were able to log on and set everyone’s out of office messages to forward to our cell phones and email addresses.

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Clients that I’ve known for years — some of the most stoic people — were facing the worst situations their businesses had ever seen. I’ll never forget one of the most well respected dealers in the industry calling me and saying: “I am not exaggerating when I say that this is absolute devastation.”

Knowing that I was the voice of calm and direction made me feel like all of the policies I’ve sold and serviced over the years came to life. We walked clients through triage steps over the phone and connected them with claims adjusters. Those first 72 hours were some of the most intense and stressful while helping claims adjusters, my colleagues on the ground in Chelsea and Brooklyn, and my clients through the recovery process.

I would speak to a frantic client on day one after Sandy, try to calm them down and tell them when to expect the claims adjuster. I’d then speak to them on day two after they met with the claims adjuster — the best thing was to hear: “After meeting with my claims adjuster this morning, I felt so much better.”

Clients that I’ve known for years — some of the most stoic people — were facing the worst situations their businesses had ever seen. I’ll never forget one of the most well respected dealers in the industry calling me and saying: “I am not exaggerating when I say that this is absolute devastation.”

R&I: From what we gather, the shipping of art and art collections is one of the thornier risk management and risk transfer challenges.  What “tales of the road” can you tell us about art shipment risk management challenges you have faced and overcome?

MP: I handle many art warehouses, packers and shippers, as well as dealers, collectors, museums, foundations, etc. so I understand both sides of these transactions very well. Some of the most common issues that come up involve the documentation shippers require which severely limits their liability. It’s important to understand these technicalities of the shipping process in order to give art clients proper advice.

One of the most interesting situations I’ve found myself in was a client moving into an upper floor in a building in Manhattan. Due to the size of many of the artworks, they had to have the works rigged via crane through a window in the apartment. We had to get the insurance company on board, approving each and every work that was going to be rigged. The job was delayed a number of times due to high winds. On the final day permits were available from the city, the insurance company and I were there and watched the whole process. Little did we know, an earthquake struck NYC at the same time the works were suspended 30 floors in the air. We felt nothing on the ground but the workers in the apartment felt it. Luckily it had no effect on the artwork, but it’s a good story!

R&I: “Event Cancellation Expense” coverage has got to be an area of interest for art exhibitors these days, given the interruptions we have due to terrorist acts and instances of political upheaval. Can you give us your take on this coverage and the appetite for it given the state of the world today?

MP: There have been two instances that had some broad effect on the art world: the volcanic activity in Iceland back in 2010 which canceled flights around the same time as the London Print Show and the Paris Photo show closing early due to the Paris terror attacks.

Directly after the Paris incident, we went to our London broker to develop a program for Event Cancellation coverage. We were able to set up a policy that would cover lost business due to artworks or key employees not arriving (as in the case of air traffic affected by the Volcano) due to things outside of their control as well as part of the event being cancelled. We can add this onto a Lloyd’s Dealer policy or issue as a stand-alone policy. As time passes from these events, people feel less inclined to purchase these kinds of coverage. In 2017 this is a product we are re-emphasizing as it is unique, pragmatic and reasonably priced.

R&I: High net worth insurance is a sector the carriers are devoting a lot of resources to.  Without naming names tell us what you can about some of the private collections you insured and the challenges you faced?

MP: We have some private collectors whose collections are relatively stable with few loans and the occasional purchase but on the flip side, we have private collectors who loan, buy, sell, consign, and collateralize artwork with great frequency. There are some collectors who send us updates every single day about such transactions.

A few of the more challenging, but also very interesting, aspects of these transactions are negotiating complex loans and ensuring proper insurance is in place for loans using the art collection as collateral.  When lending their artwork, different collectors have different requirements for museums and galleries. Sometimes these requirements are quite rigorous and require a good deal of negotiation before the loan terms are agreed upon. These transactions require a nuanced approach — understanding the attitude of the collector toward the loan and ensuring we adequately protect the client while ensuring insurance is not the reason the loan negotiations stall.

R&I: What are some current, pressing risk management issues for museums? We’d imagine cyber threats such as spear-phishing have got to be among them.

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MP: Museums, dealers, and foundations are all being affected by social-engineering threats, wire funds transfer fraud and the like. Almost every week we get notification from a client of a hacking attempt or, unfortunately, a few successful wire transfer frauds where clients have lost money. The Art Dealers Association of America warned their member-dealers of these problems a few times. We have also been emphasizing these attacks with our clients and highlighting the coverages that can help protect them from such attacks (cyber, crime including social engineering, etc.). Unfortunately, while the coverage begins at a very reasonable premium, very few policies have been purchased.

R&I: Do you know how many times you’ve won the Power Broker® designation as a Fine Arts broker, or is it a case of “who’s counting?”

MP:  I honestly don’t know. I took a year off when I had a baby and encouraged my entire team to apply especially since they were the ones who took such great care of my clients while I was on maternity leave. Being in a field dominated by female Power Brokers is very satisfying. As a manager of a team of seven women, I love seeing them grow (some from beginning as our departmental assistants) and receive these kinds of awards. Advocating for the women around me and seeing them succeed is the most rewarding aspect of my job.

For the record, Mary’s Power Broker® win in 2017 was her sixth.-eds

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

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]