2018 Power Broker


Dedicated to Creating Coverage

Cristin Bullen
Senior Vice President
Marsh, New York

Clients applaud Cristin Bullen for improving their environmental coverages and designing protection for singularly difficult risks.

“Cristin was an invaluable resource in underwriting a custom and comprehensive PLL policy,” which covered a recent acquisition that involved spinning off a contaminated site to a third party, one client noted.

The client needed an affordable pollution legal liability policy that would cover all site risks. Bullen “made a market for our policy where there really wasn’t one,” the client said.

In its purchase of a large paper company, another client spun off the acquisition’s paper mills to a third party that was not purchasing environmental impairment liability coverage excess of a fund the original seller established. The third party also structured its acquisition to limit its environmental exposure.


Therefore, Bullen’s client needed an excess EIL policy providing tens of millions of dollars of coverage. Bullen developed an extensive underwriting submission delineating the three parties’ assumed liabilities.

At sludge processor Synagro Technologies Inc., market conditions had long meant inadequate coverage. But Bullen immediately improved the company’s contractor’s pollution liability coverage for a lower premium.

That helped bolster Synagro’s earnings before interest, taxes, depreciation and amortization, noted Michael J. Miltenberger, director of compliance and risk management.

A Man of Many Words

Steve Manz
Senior Vice President
Marsh, Southfield, Mich.

“Steve Manz has the very unique ability to speak two languages,” a client observed.

“One language enables Steve to talk in ‘geotechnical’ terms with folks on our side and translate what he’s understood into ‘insurance lingo’ so underwriters gain sufficient knowledge of the risk.”

That ability allowed the client to resurrect an acquisition deal that had died because of site contamination. A consultant previously remediated a site contaminant, but the treatment triggered an inactive chemical in the soil.

A city well located off the property complicated the issue; the site owner attempted but failed to purchase environmental coverage, so the client pulled out of the deal.

In revisiting the deal, the client developed its own remediation plan and engaged Manz to find coverage to hedge its exposure.

The client said: “[We] bought the business, implemented our remediation plan, saved dozens of high-paying jobs in a rural community and protected residential water supplies in the process … all because we were able to acquire insurance, thanks to Steve!”

Another large client faced an unfavorable renewal of its manuscripted pollution liability coverage, despite a good loss history. The client tapped Manz to negotiate with the insurer.

Manz persuaded the carrier to accept 90 percent of the client’s requested terms and conditions — with a 17 percent premium reduction.

No Stone Unturned

Ed Morales
Senior Vice President
Marsh, San Francisco

Environmental insurance broker Ed Morales is a master at finding solutions — including some that clients thought were not possible.

EVRAZ North America retained Morales to make sure it had the most appropriate coverage by strong insurers at competitive prices.

Beforehand, EVRAZ, which has U.S. and Canadian facilities, believed it could afford environmental coverage only for its U.S. facilities, explained Edwin Koopmans, vice president and treasurer.

He found “the right insurers and made sure that they had a good understanding of our risk profile,” Koopmans said. Morales educated him about the need for coverage in Canada.

“We now have coverage for all of our locations at a premium that is approximately 20 percent less than the prior cost.”

Another client, which represents real estate investors with widely varying environmental risks, faced the loss of its blanket pollution legal liability insurer at renewal.


“With Ed’s hard work, I was able to pull the plug on the blanket a year in advance, broaden coverage, clarify certain critically important language and pay lower rates,” the client noted.

For EnergySolutions, which decommissions nuclear power plants, Morales replaced its PLL coverage in 2016 — with a 35 percent cost decrease — after the incumbent insurer pulled out of the market, noted Scott D. Michelsen, director, credit, collections & insurance.

Morales also secured advantageous terms and pricing for the 2017 renewal.

Problem Solver

Pete Pantalone, CPCU
Aon, Philadelphia

Clients count on Pete Pantalone to resolve problems.

Delaware agency Diamond State Port Corp. needed to rapidly expand the Port of Wilmington, a leader in banana imports.

DSPC officials found a suitable waterfront parcel, but there were many other motivated bidders and inadequate time for environmental reviews, noted Parul Shukla, director, finance & administration. Officials decided to bid and purchase insurance to limit the DSPC’s financial exposure.

The agency retained Pantalone, who placed a $25 million, 10-year policy.

“With the quick placing of the coverage, DSPC was successful in acquiring the site for development into a state-of-the-art container facility that will double the jobs and improve economic impact for the Delaware citizens.”

For another client, the reputation of the risk management department has been burnished because of Pantalone’s assistance in finding an insurance solution for a corporate divestiture with an environmental obligation, the client noted.

“The benefit to the insurance risk management program has been that I am now getting contacted to design an insurance solution for M&A deals, since this was a successful placement at a relative small cost.”

Another client, whose three-year pollution liability program covering global risks was expiring in a tough market, praised Pantalone for replacing the program with expanded coverage at a 20 percent premium reduction.

Taking Proactive Measures

Tony Sandfrey, CRM
Environmental Practice Leader
Integro, Atlanta

Fixing problems before they turn disastrous is one value proposition Tony Sandfrey offers clients.

Sandfrey unilaterally analyzed a client’s existing coverage. He identified non-concurrent wording issues in the client’s tower, as well as some “shaving-of-limits endorsements,” the client noted.

Without addressing those problems with the client’s insurers, “there could be a case where an excess layer would not drop down after exhaustion of lower limits,” jeopardizing coverage in higher layers, the client explained.

Sandfrey “worked long and hard to educate” the insurers on why the wording was problematic.

Sandfrey also recognized a potential coverage gap if the client ever divested any U.S. operations where contamination was later discovered.


For Banner Health, which has inherited “many strange insurance policies” through acquisitions, Sandfrey streamlined coverage, said Heather M. Wielenga, commercial insurance risk finance director.

One example was an environmental policy for a medical center Banner acquired.

Policy terms precluded a premium reimbursement if Banner cancelled the coverage, but Sandfrey negotiated a deal that allowed Banner to cancel the policy and receive a $28,000 premium reimbursement in exchange for moving Banner’s entire environmental portfolio to the insurer — for expanded coverage at a lower cost, Wielenga said.

“We did not believe our problem could be fixed.”

Seals the Deal

Max West
Senior Vice President
Aon, Chicago

A client’s planned acquisition was complicated. The target’s previous owner had indemnified only some of the target’s assets for contamination, noted attorney John H. Johnson Jr., a partner at Troutman Sanders, LLP, who also represented the client.

Johnson explained that broker Max West assembled an insurance product that would fully cover the environmental liabilities of the indemnified assets if the previous owner failed to honor its commitment. The policy also covered the non-indemnified assets, with limited exclusions.

“Absent Mr. West’s involvement, the transaction likely would not have been completed,” Johnson observed.

Another client company was looking for a buyer but encountered a major roadblock: federal regulators said it was potentially responsible for a Superfund site.

The client’s own analysis, however, indicated it was not responsible for any pollution.

“We could convince ourselves of anything we wanted to, however the biggest issue remained on dealing with the future unknown liability,” the client said. The client did not believe insurance would be affordable, but West secured two viable options.

As a result, the client said, the company “was sold with all parties satisfied. The seller does not have a long-term liability/escrow. The buyer has a 10-year policy to protect the company against any future claims related to the site. The deal would not have been done without this type of solution.”


Ana Zalles Moore
Senior Vice President
Aon, New York

More from Risk & Insurance

More from Risk & Insurance

Pharma Under Fire

Opioids Give Rise to Liability Epidemic

Opioids were supposed to help. Instead, their addictive power harmed many, and calls for accountability are broadening.
By: | May 1, 2018 • 8 min read

The opioid epidemic devastated families and flattened entire communities.

The Yale School of Medicine estimates that deaths are nearly doubling annually: “Between 2015 and 2016, drug overdose deaths went from 33,095 to 59,000, the largest annual jump ever recorded in the United States. That number is expected to continue unabated for the next   several years.”


That’s roughly 160 deaths every day — and it’s a count that’s increasing daily.

In addition to deaths, the number of Americans struggling with an opioid disorder disease (the official name for opioid addiction) is staggering.

The National Institute on Drug Abuse (NIDA) estimates that 2 million people in the United States suffer from substance use disorders related to prescription opioid pain relievers, and roughly one-third of those people will “graduate” to heroin addiction.

Conversely, 80 percent of heroin addicts became addicted to opioids after being prescribed opioids.

As if the human toll wasn’t devastating enough, NIDA estimates that addiction costs reach “$78.5 billion a year, including the costs of health care, lost productivity, addiction treatment, and criminal justice involvement.”

Shep Tapasak, managing principal, Integro Insurance Brokers

With numbers like that, families are not the only ones left picking up the pieces. Municipalities, states, and the federal government are strained with heavy demand for social services and crushing expenditures related to opioid addiction.

Despite the amount of money being spent, services are inadequate and too short in duration. Wait times are so long that some people literally die waiting.

Public sector leaders saw firsthand the range and potency of the epidemic, and were among the first to seek a legal reckoning with the manufacturers of  synthetic painkillers.

Seeking redress for their financial burden, some municipalities, states and the federal government filed lawsuits against big pharmaceutical companies and manufacturers. To date, there are more than 100 lawsuits on court dockets.

States such as Ohio, West Virginia, New Jersey, Pennsylvania and Arkansas have been hit hard by the epidemic. In Arkansas alone, 72 counties, 15 cities, and the state filed suit, naming 65 defendants. In Pennsylvania, 16 counties, Philadelphia, and Commonwealth officials have filed lawsuits.

Forty one states also have banded together to subpoena information from some drug manufacturers.

Pennsylvania’s Attorney General, Josh Shapiro, recently told reporters that the banded effort seeks to “change corporate behavior, so that the industry can no longer do what I think it’s been doing, which is turning a blind eye to the effects of dumping these drugs in the communities.”

The volume of legal actions is growing, and some of the Federal cases have been bound together in what is called multidistrict litigation (MDL). These cases will be heard by a judge in Ohio. Plaintiffs hope for a settlement that will provide funding to be used to help thwart the opioid epidemic.

“From a societal perspective, this is obviously a big and impactful issue,”  said Jim George,  a managing director and global claims head with Swiss Re Corporate Solutions. “A lot of people are suffering in connection with this, and it won’t go away anytime soon.

“Insurance, especially those in liability, will be addressing this for a long time. This has been building over five or six years, and we are just now seeing the beginning stages of liability suits.” 

Basis for Lawsuits

The lawsuits filed to date are based on allegations concerning: What pharma knew or didn’t know; what it should have known; failure to monitor size and frequency of opioid orders, misrepresentation in marketing about the addictive nature of opioids; and false financial disclosures.

Opioid manufacturers, distributors and large drugstore chains together represent a $13 billion-a-year industry, meaning the stakes are high, and the pockets deep. Many have compared these lawsuits to the tobacco suits of the ’90s.


But even that comparison may pale. As difficult as it is to quit smoking, that process is less arduous than the excruciating and often impossible-to-overcome opioid addiction.

Francis Collins, a physician-geneticist who heads the National Institutes of Health, said in a recorded session with the Washington Post: “One really needs to understand the diabolical way that this particular set of compounds rewires the brain in order to appreciate how those who become addicted really are in a circumstance where they can no more [by their own free will] get rid of the addiction than they can get free of needing to eat or drink.”

“Pharma and its supply chain need to know that this is here now. It’s not emerging, it’s here, and it’s being tried. It is a present risk.” — Nancy Bewlay, global chief underwriting officer for casualty, XL Catlin

The addiction creates an absolutely compelling drive that will cause people to do things against any measure of good judgment, said Collins, but the need to do them is “overwhelming.”

Documented knowledge of that chemistry could be devastating to insureds.

“It’s about what big pharma knew — or should have known.  A key allegation is that opioids were aggressively marketed as the clear answer or miracle cure for pain,” said Shep Tapasak, managing principal, Integro Insurance Brokers.

These cases, Tapasak said, have the potential to be severe. “This type of litigation boils down to a “profits over people” strategy, which historically has resonated with juries.”

Broadening Liability

As suits progress, all sides will be waiting and watching to see what case law stems from them. In the meantime, insurance watchers are predicting that the scope of these suits will broaden to include other players in the supply chain including manufacturers, distribution services, retail pharmacies, hospitals, physician practices, clinics, clinical laboratories and marketing agencies.

Litigation is, to some extent, about who can pay. In these cases, there are several places along the distribution chain where plaintiffs will seek relief.

Nancy Bewlay, global chief underwriting officer for casualty, XL Catlin

Nancy Bewlay, XL Catlin’s global chief underwriting officer for casualty, said that insurers and their insureds need to pay close attention to this trend.

“Pharma and its supply chain need to know that this is here now. It’s not emerging, it’s here, and it’s being tried. It is a present risk,” she said.

“We, as insurers who identify emerging risks, have to communicate to clients. We like to be on the forefront and, if we can, positively influence the outcome for our clients in terms of getting ahead of their risks.”

In addition to all aspects of the distribution chain, plaintiffs could launch suits against directors and officers based on allegations that they are ultimately responsible for what the company knew or should have known, or that they misrepresented their products or signed off on misleading financial statements.


Shareholders, too, could take aim at directors and officers for loss of profits or misleading statements related to litigation.

Civil litigation could pave the way, in some specific instances, for criminal charges. Mississippi Attorney General Jim Hood, who in 2015 became the first state attorney general to file suit against a prescription drug maker, has been quoted as saying that if evidence in civil suits points to criminal behavior, he won’t hesitate to file those charges as well.

Governing, a publication for municipalities and states, quoted Hood in late 2017 as saying, “If we get into those emails, and executives are in the chain knowing what they’ve unleashed on the American public, I’m going to kick it over to a criminal lawsuit. I’ve been to too many funerals.”

Insurers and insureds can act now to get ahead of this rising wave of liability.

It may be appropriate to conduct a review of policy underwriting and pricing. XL Catlin’s Bewlay said, “We are not writing as if everyone is a pharma manufacturer. Our perception of what is happening is that everyone is being held accountable as if they are the manufacturer.

“The reality is that when insurers look at the pharma industry and each part of the supply chain, including the pharma companies, those in the chain of distribution, transportation, sales, marketing and retail, there are different considerations and different liabilities for each. This could change the underwriting and affect pricing.”

Bewlay also suggests focusing on communications between claims teams and underwriters and keeping a strong line of communication open with insureds, too.

“We are here to partner with insureds, and we talk to them and advise them about this crisis. We encourage them to talk about it with their risk managers.”

Tapasak from Integro encourages insureds to educate themselves and be a part of the solution. “The laws are evolving,” he said. “Make absolutely certain you know your respective state laws. It’s not enough to know about the crisis, you must know the trends. Be part of the solution and get as much education as possible.

“Most states have ASHRM chapters that are helping their members to stay current on both passed and pending legislation. Health care facilities and providers want to do the right thing and get educated. And at the same time, there will likely be an uptick in frivolous claims, so it’s important to defend the claims that are defensible.”

Social Service Risk

In addition to supply chain concerns, insurers and insureds are concerned that even those whose mission it is to help could be at risk.

Hailed as a lifesaver, and approved by the Food and Drug Administration (FDA), the drug Naloxone, can be administered to someone who is overdosing on opioids.  Naloxone prevents overdose by blocking opioid receptor sites and reversing the effects of the overdose.


Some industry experts are concerned that police and emergency responders could incur liability after administering Naloxone.

But according to the U.S. Department of Justice, “From a legal standpoint, it would be extremely difficult to win a lawsuit against an officer who administers Naloxone in good faith and in the course of employment. … Such immunity applies to … other professional responders.”

Especially hard hit are foster care agencies, both by increased child placements and stretched budgets. More details in our related coverage.

While the number of suits is growing and their aim broadening, experts think that some good will come of the litigation. Settlements will fund services for the addicted and opioid risk awareness is higher than ever. &

Mercedes Ott is managing editor of Risk & Insurance. She can be reached at [email protected]