2018 Power Broker


A True Captive Adviser

Kathryn Christensen
Senior Consultant
Aon, Los Angeles

Some brokers simply sell products; others also help their clients understand their insurance needs. Kathryn Christensen excels at the latter.

Christensen advised Katie Smart, assistant vice president, risk management, Macerich, on the process of setting up a captive as it involves big capital commitments.

“Kathryn focused on our business and what we were looking for and did not try to fit our business into a captive model,” Smart said.

“The information was very detailed and accurate. She took a complex concept and did a good job at dialing it down to a straightforward one that was very useful for us when we needed to translate it upwards in the company.”

Having access to high-quality information led to a well-made decision. In Macerich’s case, Christensen helped the client assess that the time had not come to take a step ahead after all.


“The changes modified our return on the captive, so in the end we decided not to set it up,” Smart said. “But the analysis and support that Kathryn provided was really instrumental to help us make the right decision.”

The reward, in this case, comes in the form of trust. Smart noted that, some years ago, the company already considered creating a captive but suffered at the hands of its then broker. If the topic comes up again, Christensen will be the go-to person.

Valuing a Hands-On Approach

Carmela Inneo
Managing Director
Marsh, New York

Not all brokers are able to make full use the services available to the benefit of risk managers. Carmela Inneo is the noticeable exception.

She is praised by risk managers for her ability to leverage the resources of a large organization and for her willingness to deploy those resources into the service of clients whenever the necessity arises.

“I know that, no matter if it is a small or large issue, I can talk to Carmela, and she will get it done,” said the risk manager of a large reinsurance and insurance company. Inneo helped them set up a D&O and professional insurance program.

“Carmela goes way above and beyond what anyone can expect from a broker,” agreed the vice president of a life insurance firm. “She is a pleasure to work with and she is always available, no matter if it is a weekend or holiday.”

She said that Inneo’s quick action proved vital, for example, when some of the company’s facilities were affected by the hurricanes that hit large swaths of the country.

“During the hurricanes, I received a call from our CEO’s chief of staff asking about our coverages,” the VP recalled.

“It was not exactly in my area of responsibility, but I decided that I should come up with an answer. The first person I contacted was Carmela, and she provided me with ideas and information to deliver an answer to queries from the higher levels of the company.”

Client Is King

Scott Kegler
Family Office Practice Leader
Aon, Philadelphia

Sure insurance brokers like to say the client is king. But how many act on those words?

Insurance buyers can testify that not all do. Pam Paladino, VP of HR, U.S. Fence Solutions Company, endured some frustrating experiences with brokers before working with Scott Kegler.

“Scott has been a godsend,” she said.

Her company is the kind of company that sometimes does not receive the best treatment from its insurance intermediaries. In Paladino’s words, it’s not a huge firm but it’s a complicated one — with a portfolio of companies with high needs in terms of HR coverages and employee benefits.

But Kegler managed to stand out from the broking crowd by doing the basics.

“He pays attention, which maybe does not sound an incredible thing, but, these days, it surely is. It is great when someone stops and listens to what your needs are,” Paladino said.


By listening, she added, Kegler gained enough knowledge to set up a team of brokers to meet their different needs. In 2017, he and his team helped the firm to consolidate its employee benefits program.

He also negotiated an expansion of the firm’s existing policies in order to make them valid for a recently acquired company that operates in a sector where they did not have previous experience and which included government procurement.

Paladino also praised the way that Kegler educates himself about the business and goes the extra mile to help its development.

Expert on Acquisitions

Ammad Mahmood
Senior Vice President
Aon, Glen Oaks, N.Y.

Ammad Mahmood helped a client tackle the intricacies of evaluating risks and existing coverages of an acquired company.

Ian Fitzgerald is principal and associate general counsel for the client, Ares Management. Fitzgerald said Mahmood was a key player in the optimization of insurance programs and the evaluation of potential liability legacy issues.

“Ammad helped us to go through what the appropriate go-forward policy would be, given all the ramifications of the acquisition and our growth in size. He also enabled us to negotiate the best prices, fitting the new, expanded coverages into the budget of the company,” Fitzgerald said.

For his part, Brian Smith, vice president, corporate insurance, Prudential Financial, stressed how knowledgeable Mahmood is when structuring D&O and E&O programs.

“In the last two renewal cycles, as team lead, Ammad has exceeded our service expectations related to coverage, price and insurer selection,” he said. “He used that knowledge to construct and negotiate manuscript policy terms on D&O and E&O, plus fiduciary and EPLI.”

Also, importantly, Mahmood delivers results in a timely manner — a feature that risk managers in financial companies tend to show a particular degree of appreciation for.

“Ammad is very accommodating when it comes to turning things around, be it market information or even some historical data related to our own company,” Fitzgerald said.

E&O and D&O Master

Shawn Walsh
Senior Vice President
Aon, New York

Asset management is a globalized business where complex, multinational financial structures can provide a decisive advantage for companies in a very competitive environment. It also creates risks for executives who are exposed to different kinds of legislation and sometimes aggressive regulators.

Setting up D&O and E&O coverages in such circumstances is a tricky job, and Shawn Walsh aids his clients in dealing with that challenge.

Such was the case of Neal Wilson, chief operating officer, EJF Capital, who called Walsh to arrange professional coverages related to a new closed-end fund. It was the first time that the company employed this fund structure for one of its investment vehicles.

“We had to think through how the D&O and E&O coverages would be different from our other funds, and Shawn handled that in a quick, impeccable and professional way.”


With Walsh’s help, EJF also revamped its general D&O and E&O programs in 2017, obtaining better coverages and similar rates, even though the company had grown.

Walsh was also praised by the chief risk officer of a U.S.-listed, Bermuda-based reinsurer for supporting the company as it looked for directors’ coverages in the market. He said the company employs a strategy similar to a hedge fund and, as such, presents some particularities regarding their D&O and E&O needs.

“Shawn helped us to find the coverages we needed, and rates and conditions were better than expected,” the CRO said.

Music to an Investors’ Ears

Barry Weiner
Managing Director
Aon, Philadelphia

In the world of private equity, any dollar saved by the companies in an investment portfolio matters. Barry Weiner helped one of the titans achieve significant savings by bringing together the cyber insurance programs of several of its companies.

For Thomas Kim, director and global risk manager, KKR, this is how a broker can leverage resources to the benefit of clients.

“Barry was directly responsible for bringing innovative cyber insurance solutions into the company,” he said. “He single-handedly leveraged a team of a dozen Aon experts that ultimately won the business.”

Weiner also implemented cyber risk solutions and other improvements to the risk management program at health care company Avalon, according to CFO Anne Stuart.

“We did not have cyber insurance, even though we are an IT-centric company,” Stuart said. “Barry and his team helped us to look at different kinds of exposure, and we are underwriting the policy right now.”

Other solutions Weiner helped implement at Avalon include a system to monitor and analyze workers’ comp losses and updated insurance accounting procedures to optimize the risk management structure.

With a focus on the private equity market, Weiner claims that the efficient insurance programs help not only to improve the company’s bottom line but also increase its market value, which sounds like music to investors’ ears.


Bryan Pritchet, ARM, CIC
Senior Broker
Aon, Clayton, Mo.

Graig Vicidomino
Associate Director
Crystal & Company, New York

More from Risk & Insurance

More from Risk & Insurance

Risk Focus: Cyber

Expanding Cyber BI

Cyber business interruption insurance is a thriving market, but growth carries the threat of a mega-loss. 
By: | March 5, 2018 • 7 min read

Lingering hopes that large-scale cyber attack might be a once-in-a-lifetime event were dashed last year. The four-day WannaCry ransomware strike in May across 150 countries targeted more than 300,000 computers running Microsoft Windows. A month later, NotPetya hit multinationals ranging from Danish shipping firm Maersk to pharmaceutical giant Merck.


Maersk’s chairman, Jim Hagemann Snabe, revealed at this year’s Davos summit that NotPetya shut down most of the group’s network. While it was replacing 45,000 PCs and 4,000 servers, freight transactions had to be completed manually. The combined cost of business interruption and rebuilding the system was up to $300 million.

Merck’s CFO Robert Davis told investors that its NotPetya bill included $135 million in lost sales plus $175 million in additional costs. Fellow victims FedEx and French construction group Saint Gobain reported similar financial hits from lost business and clean-up costs.

The fast-expanding world of cryptocurrencies is also increasingly targeted. Echoes of the 2014 hack that triggered the collapse of Bitcoin exchange Mt. Gox emerged this January when Japanese cryptocurrency exchange Coincheck pledged to repay customers $500 million stolen by hackers in a cyber heist.

The size and scope of last summer’s attacks accelerated discussions on both sides of the Atlantic, between risk managers and brokers seeking more comprehensive cyber business interruption insurance products.

It also recently persuaded Pool Re, the UK’s terrorism reinsurance pool set up 25 years ago after bomb attacks in London’s financial quarter, to announce that from April its cover will extend to include material damage and direct BI resulting from acts of terrorism using a cyber trigger.

“The threat from a cyber attack is evident, and businesses have become increasingly concerned about the extensive repercussions these types of attacks could have on them,” said Pool Re’s chief, Julian Enoizi. “This was a clear gap in our coverage which left businesses potentially exposed.”

Shifting Focus

Development of cyber BI insurance to date reveals something of a transatlantic divide, said Hans Allnutt, head of cyber and data risk at international law firm DAC Beachcroft. The first U.S. mainstream cyber insurance products were a response to California’s data security and breach notification legislation in 2003.

Jimaan Sané, technology underwriter, Beazley

Of more recent vintage, Europe’s first cyber policies’ wordings initially reflected U.S. wordings, with the focus on data breaches. “So underwriters had to innovate and push hard on other areas of cyber cover, particularly BI and cyber crimes such as ransomware demands and distributed denial of service attacks,” said Allnut.

“Europe now has regulation coming up this May in the form of the General Data Protection Regulation across the EU, so the focus has essentially come full circle.”

Cyber insurance policies also provide a degree of cover for BI resulting from one of three main triggers, said Jimaan Sané, technology underwriter for specialist insurer Beazley. “First is the malicious-type trigger, where the system goes down or an outage results directly from a hack.

“Second is any incident involving negligence — the so-called ‘fat finger’ — where human or operational error causes a loss or there has been failure to upgrade or maintain the system. Third is any broader unplanned outage that hits either the company or anyone on which it relies, such as a service provider.”

The importance of cyber BI covering negligent acts in addition to phishing and social engineering attacks was underlined by last May’s IT meltdown suffered by airline BA.

This was triggered by a technician who switched off and then reconnected the power supply to BA’s data center, physically damaging servers and distribution panels.

Compensating delayed passengers cost the company around $80 million, although the bill fell short of the $461 million operational error loss suffered by Knight Capital in 2012, which pushed it close to bankruptcy and decimated its share price.

Mistaken Assumption

Awareness of potentially huge BI losses resulting from cyber attack was heightened by well-publicized hacks suffered by retailers such as Target and Home Depot in late 2013 and 2014, said Matt Kletzli, SVP and head of management liability at Victor O. Schinnerer & Company.


However, the incidents didn’t initially alarm smaller, less high-profile businesses, which assumed they wouldn’t be similarly targeted.

“But perpetrators employing bots and ransomware set out to expose any firms with weaknesses in their system,” he added.

“Suddenly, smaller firms found that even when they weren’t themselves targeted, many of those around them had fallen victim to attacks. Awareness started to lift, as the focus moved from large, headline-grabbing attacks to more everyday incidents.”

Publications such as the Director’s Handbook of Cyber-Risk Oversight, issued by the National Association of Corporate Directors and the Internet Security Alliance fixed the issue firmly on boardroom agendas.

“What’s possibly of greater concern is the sheer number of different businesses that can be affected by a single cyber attack and the cost of getting them up and running again quickly.” — Jimaan Sané, technology underwriter, Beazley

Reformed ex-hackers were recruited to offer board members their insights into the most vulnerable points across the company’s systems — in much the same way as forger-turned-security-expert Frank Abagnale Jr., subject of the Spielberg biopic “Catch Me If You Can.”

There also has been an increasing focus on systemic risk related to cyber attacks. Allnutt cites “Business Blackout,” a July 2015 study by Lloyd’s of London and the Cambridge University’s Centre for Risk Studies.

This detailed analysis of what could result from a major cyber attack on America’s power grid predicted a cost to the U.S. economy of hundreds of billions and claims to the insurance industry totalling upwards of $21.4 billion.

Lloyd’s described the scenario as both “technologically possible” and “improbable.” Three years on, however, it appears less fanciful.

In January, the head of the UK’s National Cyber Security Centre, Ciaran Martin, said the UK had been fortunate in so far averting a ‘category one’ attack. A C1 would shut down the financial services sector on which the country relies heavily and other vital infrastructure. It was a case of “when, not if” such an assault would be launched, he warned.

AI: Friend or Foe?

Despite daunting potential financial losses, pioneers of cyber BI insurance such as Beazley, Zurich, AIG and Chubb now see new competitors in the market. Capacity is growing steadily, said Allnutt.

“Not only is cyber insurance a new product, it also offers a new source of premium revenue so there is considerable appetite for taking it on,” he added. “However, whilst most insurers are comfortable with the liability aspects of cyber risk; not all insurers are covering loss of income.”

Matt Kletzli, SVP and head of management liability, Victor O. Schinnerer & Company

Kletzli added that available products include several well-written, broad cyber coverages that take into account all types of potential cyber attack and don’t attempt to limit cover by applying a narrow definition of BI loss.

“It’s a rapidly-evolving coverage — and needs to be — in order to keep up with changing circumstances,” he said.

The good news, according to a Fitch report, is that the cyber loss ratio has been reduced to 45 percent as more companies buy cover and the market continues to expand, bringing down the size of the average loss.

“The bad news is that at cyber events, talk is regularly turning to ‘what will be the Hurricane Katrina-type event’ for the cyber market?” said Kletzli.

“What’s worse is that with hurricane losses, underwriters know which regions are most at risk, whereas cyber is a global risk and insurers potentially face huge aggregation.”


Nor is the advent of robotics and artificial intelligence (AI) necessarily cause for optimism. As Allnutt noted, while AI can potentially be used to decode malware, by the same token sophisticated criminals can employ it to develop new malware and escalate the ‘computer versus computer’ battle.

“The trend towards greater automation of business means that we can expect more incidents involving loss of income,” said Sané. “What’s possibly of greater concern is the sheer number of different businesses that can be affected by a single cyber attack and the cost of getting them up and running again quickly.

“We’re likely to see a growing number of attacks where the aim is to cause disruption, rather than demand a ransom.

“The paradox of cyber BI is that the more sophisticated your organization and the more it embraces automation, the bigger the potential impact when an outage does occur. Those old-fashioned businesses still reliant on traditional processes generally aren’t affected as much and incur smaller losses.” &

Graham Buck is editor of gtnews.com. He can be reached at riskletters.com.