2017 Power Broker

Energy, Traditional

Improving Coverage and Rates

William Barnett
Managing Director
Marsh, Philadelphia

William Barnett was instrumental in several significant positive developments to one client’s insurance program this year, said its global director of risk management. For starters, he was able to engineer an 8 percent premium decrease on a program that was already reduced by 12 percent the prior year.

“As our program premiums are in the multimillions, this was a considerable savings again this year,” the client said.

Significant policy improvements were also achieved, including the implementation of product recall coverage as well as a newly obtained cyber policy.

“Considering the size of our company and the already broad coverage prior to this renewal year, he still delivered these savings and improvements,” the client said.

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Another client was in the process of evaluating its business model after a spin-out from a larger company. The company had significant legacy pollution liability risks to be managed, particularly as the company looked to convert some non-core assets to cash.

It is often the case in the energy and process industries that undesirable situations, either financial or physical liabilities, are fobbed off onto a spin-out entity.

To protect the balance sheet and satisfy creditors, Barnett and his team developed a surety bond program to encompass all environmental liabilities. During the process of divesting certain assets, the client developed a portfolio environmental program to cover certain environmental risks. That adaptation in turn made divestitures easier.

Making Spin-Outs Smoother

Bobby Bierley
Senior Vice President
Lockton, Houston

During the course of a complex spin-out for one of Bobby Bierley’s clients, “the decision was made that we needed to switch to occurrence cover for each company,” said the company’s manager of risk and insurance.

The budget was set at $1 million.

Bierley suggested splitting the program in two and having two occurrence-based towers. To cover each company’s historical liability, there was a sunrise endorsement covering all occurrences from 1986 until the present, making this first year of coverage very important.

“We liked that because run-off policies have a limited reporting period,” said the client.

Bierley was able to negotiate this for no additional premium.

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In another situation, a client spun off about half of its business and drastically changed the company’s risk profile.

“We faced challenges with our casualty-fronting carrier, which sets the table for the entire excess-liability program,” said the chief risk officer. “Bobby quarterbacked the effort with his London colleagues to broker a brand new market for us.”

He did so while improving the terms, conditions and price. That effort was following up another great effort during the company’s spin-out in 2015 where they converted the GL/XS program to occurrence from claims-made without losing any historical coverage and for minimal price.

A Better Bankruptcy

Michele Cowen
Vice President
Aon, Los Angeles

A client of Michele Cowen’s was going through difficult times, eventually filing Chapter 11. That created significantly higher risk in the D&O and fiduciary coverage lines. Cowen not only renewed the existing program, but put together a “tail policy” for when the company emerges from bankruptcy.

“Even in better times, Michele never ceased to surprise us with excellent results on our executive risk programs,” said the company’s director of insurance and ERM. His wasn’t the only company Cowen helped through tough times.

“We made the difficult decision to file Chapter 11,” said one director of risk management. “Michele was able to pre-negotiate a run-off for the program in place, and get the carriers to commit to an extension even though no one knew at that time the date of the filing.”

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It all worked smoothly, and the feedback the client got from outside coverage counsel was that it was the best coverage they had ever seen. The client added that once the smaller company emerged from bankruptcy with an all-new board, Cowen was able to keep all the major incumbent underwriters in the program.

“Until we switched our business to Michele, our D&O program had been managed by another broker for over a dozen years,” said one CFO. “She was able to deliver significant improvements to our endorsements, which was our primary objective.”

In addition, Cowen took a policy “that was already priced in the top quartile relative to our peers and reduced our cost by more than 25 percent.”

Serious About Finding Savings

Paul Finnett
Managing Director
Aon, Houston

Paul Finnett helped one client achieve a $1 million savings in their 2016 renewal during difficult times in the oil and gas industry.

“The renewal was further complicated by significant reductions in insured values, which underwriters were not happy about,” said the director of risk management. “Nevertheless, Paul was able to help obtain coverage enhancements to our program.”

That kind of a home run seems to have been par for the course for Finnett.

“Paul has been a value-driver for us,” said a CFO. “Paul has helped us reduce our brokerage fees and our insurance premiums, both important as we reduce costs in a down market.”

Specifically, the client was able to eliminate a dual system with an administrative broker in Houston, where it is based, and a market broker in London and consolidate with Finnett.

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Notably, Finnett helped the client revise its cyber coverage, “becoming the first in our industry to achieve some asset coverage where it has historically been excluded,” said the CFO.

For another client, pollution liability was a serious concern. There were issues with wording in a very gray area in the policy, said the risk and insurance manager.

“Paul was able to get new wording, not just a clarification, but a full amendment at the first layer.”

He then got the rest of the tower to accept the same wording as in the primary layer.

“That sounds like common sense but it was something we didn’t have for eight years,” the client said.

Foresight and Fortitude

Jeremy Gayser, OTA
Senior Vice President
Aon, Houston

The struggles of companies in the energy sector have caused some underwriters to reduce their exposure. Jeremy Gayser saw the writing on the wall and advised one of his clients that the lead carrier on its tower was likely to pull back. In the end, it happened sooner than expected. But fortunately the groundwork had already been laid for securing a new lead.

“The replacement of our international lead required good relationships with a lot of markets and extra effort,” said the company’s director of risk management.

A new lead was secured, at terms favorable to the client. Gayser also negotiated policy form provisions that were important to the client into the lead’s forms.

At the other end of the scale, it can be a steep challenge to secure savings or improvements in terms for clients without precipitating departures.

“This year, our property renewal was quite complicated,” said a director of insurance.

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The company went into the renewal with a very aggressive pricing structure. Many of the underwriters pushed back on the pricing originally, but Gayser was able to fight for his client and ended up with premium savings greater than expected.

“His negotiation skills and knowledge of our industry enabled him to produce an excellent outcome for my company,” the director said.

With all the shuffling around, Gayser was also able to land a big new client, with more than $3 billion in project values, by winning a good, old-fashioned request for proposal.

Directing the Pipeline Business

Brian Tanner, CIC
Principal
EPIC, Birmingham, Ala.

Take all the dangers of the oil and gas industry — the hydrocarbons, the extremes of temperature and pressure, the heavy equipment and the constant motion — and put them out in the field many miles from any resources or help, and that is the pipeline business.

“We had a serious, life-threatening injury at a location where we were working,” said the safety manager of one client. “The person eventually had a full recovery, but Brian was instrumental in making sure that a situation that could have been a huge problem for us, even could have cost us a major client, was handled smoothly and without fuss.”

Tanner had experts on site the next day and helped create a comprehensive report. His attention to detail helped establish that it was not, in fact, a workplace injury, the client said.

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Another client suffered a different kind of loss, the sudden death of a senior executive. As family, friends and colleagues grappled with the loss, management relied upon Tanner to support other executives through an urgent succession, including a renewal complicated by underwriters reducing exposures in the energy business.

Those declines also imperiled the very existence of another client.

“Brian and his team helped us significantly by working with the carriers on what seemed like a daily basis, helping us work through the cash flow and other issues,” said the CFO.

“That allowed us to remain in business and continue working our contracts,” he said.

Finalists:

Heidi Bauermeister
Managing Director
Marsh, New York

Logan Couch
Vice President
Aon Risk Solutions, Houston

Cara McGrath
Account Manager
Alliant Insurance Services, Boston

Christina Murphy
Vice President
Marsh, Houston

David Robinson
Managing Director
Aon Risk Solutions, Houston

More from Risk & Insurance

More from Risk & Insurance

Risk Management

The Profession

This senior risk manager values his role in helping Varian Medical Systems support research and technologies in the fight against cancer.
By: | September 12, 2017 • 5 min read

R&I: What was your first job?

When I was 15 years old I had a summer job working for the city of Plentywood, mowing grass in the parks and ballfields, emptying garbage cans, hauling waste to the dump, painting crosswalk lines.  A great job for a teenager but I thought getting a college degree and working in an air-conditioned office would be a good plan long term.

R&I: How did you come to work in risk management?

I was enrolled in the University of Montana as a general business student, and I wanted to declare a more specialized major during my sophomore year. I was working for my dad at his insurance agency over the summer, and taking new agent training coursework on property/casualty risks in my spare time, so I had an appreciation for insurance. My dad suggested I research risk management for a career, and I transferred sight unseen to the University of Georgia to enroll in their risk management program. I did an internship as a senior with the risk management department at Sulzer Medica, and they offered me a full time job.

R&I: What could the risk management community be doing a better job of?

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We need to do a better job of saying yes. We tend to want to say no to many risks, but there are upside benefits to some risks. If we initiate a collaborative exercise with the risk owners — people who may have unique knowledge about that particular risk — and include a cross section of people from other corporate functions, you can do an effective job of taking the risk apart to analyze it, figure out a way to manage that exposure, and then reap the upside benefits while reducing the downside exposure. That can be done with new products and new service offerings, when there isn’t coverage available for a risk. It’s asking, is there anything we can do to reduce the risk without transferring it?

R&I: What emerging commercial risk most concerns you?

Cyber liability. There’s so much at stake and the bad guys are getting more resourceful every day. At Varian, our first approach is to try to make our systems and products more resilient, so we’re trying to direct resources to preventing it from happening in the first place. It’s a huge reputation risk if one of our products or systems were compromised, so we want to avoid that at all costs.

We need to do a better job of saying yes. We tend to want to say no to many risks, but there are upside benefits to some risks.

R&I: What insurance carrier do you have the highest opinion of?

I’ve worked with a number of great ones over the years. We’ve enjoyed a great property insurance relationship with Zurich. Their loss control services are very valuable to us. On the umbrella liability side, it’s been great partnering with companies like Swiss Re and Berkley Life Sciences because they’ve put in the time and effort to understand our unique risk exposures.

R&I: How much business do you do direct versus going through a broker?

One hundred percent through a broker. I view our broker as an extension of our risk management team. We benefit from each team member’s respective area of expertise and experience.

R&I: Is the contingent commission controversy overblown?

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I think so. The brokers were kind of villainized by Spitzer. I think it’s fair for brokers and insurers to make a reasonable profit, and if a portion of their profit came from contingent commissions, I’m fine with that. But I do appreciate the transparency and disclosure that came out as a result of the fiasco.

R&I: Are you optimistic about the US economy or pessimistic and why?

David Collins, Senior Manager, Risk Management, Varian Medical Systems Inc.

While we might be doing fine here in the U.S. from an economic perspective, the Middle East is a mess, and we’re living with nuclear threat from North Korea. But hope springs eternal, so I’m cautiously optimistic. I’m hoping saner minds prevail and our leaders throughout the world work together to make things better.

R&I: Who is your mentor and why?

My Dad got me started down the insurance and risk path. I’ve also been fortunate to work for or with a number of University of Georgia alumni who’ve been mentors for me. I’ve worked side by side with Karen Epermanis, Michael Rousseau, and Elisha Finney. And I’ve worked with Daniel Dean in his capacity as a broker.

R&I: What have you accomplished that you are proudest of?

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Raising my kids. I have a 15-year-old and 12-year-old, and they’re making mom and dad proud of the people they’re turning into.

On a professional level, a recent one would be the creation and implementation of our global travel risk program, which was a combined effort between security, travel and risk functions.

We have a huge team of service personnel around the world, traveling to customer sites to do maintenance and repair. We needed a way to track, monitor and communicate with them. We may need to make security arrangements or vet their lodging in some circumstances.

R&I: What do your friends and family think you do?

My 12-year-old son thought my job responsibilities could be summed up as a “professional worrier.” And that’s not too far off.

R&I: What about this work do you find the most fulfilling or rewarding?

Varian’s mission is to focus energy on saving lives. Proper administration of the risk function puts the company in a better position to financially support research that improves products and capabilities, helps to educate health care providers and support cancer care in general. It means more lives saved from a terrible disease. I’m proud to contribute toward that.

When you meet someone whose cancer has been successfully treated with one of our products, it’s a powerful reward.




Katie Siegel is an associate editor at Risk & Insurance®. She can be reached at [email protected]