2018 Power Broker

Finance

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.

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“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.

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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.”

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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.

Finalists:

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

Insurtech

Kiss Your Annual Renewal Goodbye; On-Demand Insurance Challenges the Traditional Policy

Gig workers' unique insurance needs drive delivery of on-demand coverage.
By: | September 14, 2018 • 6 min read

The gig economy is growing. Nearly six million Americans, or 3.8 percent of the U.S. workforce, now have “contingent” work arrangements, with a further 10.6 million in categories such as independent contractors, on-call workers or temporary help agency staff and for-contract firms, often with well-known names such as Uber, Lyft and Airbnb.

Scott Walchek, founding chairman and CEO, Trōv

The number of Americans owning a drone is also increasing — one recent survey suggested as much as one in 12 of the population — sparking vigorous debate on how regulation should apply to where and when the devices operate.

Add to this other 21st century societal changes, such as consumers’ appetite for other electronic gadgets and the advent of autonomous vehicles. It’s clear that the cover offered by the annually renewable traditional insurance policy is often not fit for purpose. Helped by the sophistication of insurance technology, the response has been an expanding range of ‘on-demand’ covers.

The term ‘on-demand’ is open to various interpretations. For Scott Walchek, founding chairman and CEO of pioneering on-demand insurance platform Trōv, it’s about “giving people agency over the items they own and enabling them to turn on insurance cover whenever they want for whatever they want — often for just a single item.”

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“On-demand represents a whole new behavior and attitude towards insurance, which for years has very much been a case of ‘get it and forget it,’ ” said Walchek.

Trōv’s mobile app enables users to insure just a single item, such as a laptop, whenever they wish and to also select the period of cover required. When ready to buy insurance, they then snap a picture of the sales receipt or product code of the item they want covered.

Welcoming Trōv: A New On-Demand Arrival

While Walchek, who set up Trōv in 2012, stressed it’s a technology company and not an insurance company, it has attracted industry giants such as AXA and Munich Re as partners. Trōv began the U.S. roll-out of its on-demand personal property products this summer by launching in Arizona, having already established itself in Australia and the United Kingdom.

“Australia and the UK were great testing grounds, thanks to their single regulatory authorities,” said Walchek. “Trōv is already approved in 45 states, and we expect to complete the process in all by November.

“On-demand products have a particular appeal to millennials who love the idea of having control via their smart devices and have embraced the concept of an unbundling of experiences: 75 percent of our users are in the 18 to 35 age group.” – Scott Walchek, founding chairman and CEO, Trōv

“On-demand products have a particular appeal to millennials who love the idea of having control via their smart devices and have embraced the concept of an unbundling of experiences: 75 percent of our users are in the 18 to 35 age group,” he added.

“But a mass of tectonic societal shifts is also impacting older generations — on-demand cover fits the new ways in which they work, particularly the ‘untethered’ who aren’t always in the same workplace or using the same device. So we see on-demand going into societal lifestyle changes.”

Wooing Baby Boomers

In addition to its backing for Trōv, across the Atlantic, AXA has partnered with Insurtech start-up By Miles, launching a pay-as-you-go car insurance policy in the UK. The product is promoted as low-cost car insurance for drivers who travel no more than 140 miles per week, or 7,000 miles annually.

“Due to the growing need for these products, companies such as Marmalade — cover for learner drivers — and Cuvva — cover for part-time drivers — have also increased in popularity, and we expect to see more enter the market in the near future,” said AXA UK’s head of telematics, Katy Simpson.

Simpson confirmed that the new products’ initial appeal is to younger motorists, who are more regular users of new technology, while older drivers are warier about sharing too much personal information. However, she expects this to change as on-demand products become more prevalent.

“Looking at mileage-based insurance, such as By Miles specifically, it’s actually older generations who are most likely to save money, as the use of their vehicles tends to decline. Our job is therefore to not only create more customer-centric products but also highlight their benefits to everyone.”

Another Insurtech ready to partner with long-established names is New York-based Slice Labs, which in the UK is working with Legal & General to enter the homeshare insurance market, recently announcing that XL Catlin will use its insurance cloud services platform to create the world’s first on-demand cyber insurance solution.

“For our cyber product, we were looking for a partner on the fintech side, which dovetailed perfectly with what Slice was trying to do,” said John Coletti, head of XL Catlin’s cyber insurance team.

“The premise of selling cyber insurance to small businesses needs a platform such as that provided by Slice — we can get to customers in a discrete, seamless manner, and the partnership offers potential to open up other products.”

Slice Labs’ CEO Tim Attia added: “You can roll up on-demand cover in many different areas, ranging from contract workers to vacation rentals.

“The next leap forward will be provided by the new economy, which will create a range of new risks for on-demand insurance to respond to. McKinsey forecasts that by 2025, ecosystems will account for 30 percent of global premium revenue.

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“When you’re a start-up, you can innovate and question long-held assumptions, but you don’t have the scale that an insurer can provide,” said Attia. “Our platform works well in getting new products out to the market and is scalable.”

Slice Labs is now reviewing the emerging markets, which aren’t hampered by “old, outdated infrastructures,” and plans to test the water via a hackathon in southeast Asia.

Collaboration Vs Competition

Insurtech-insurer collaborations suggest that the industry noted the banking sector’s experience, which names the tech disruptors before deciding partnerships, made greater sense commercially.

“It’s an interesting correlation,” said Slice’s managing director for marketing, Emily Kosick.

“I believe the trend worth calling out is that the window for insurers to innovate is much shorter, thanks to the banking sector’s efforts to offer omni-channel banking, incorporating mobile devices and, more recently, intelligent assistants like Alexa for personal banking.

“Banks have bought into the value of these technology partnerships but had the benefit of consumer expectations changing slowly with them. This compares to insurers who are in an ever-increasing on-demand world where the risk is high for laggards to be left behind.”

As with fintechs in banking, Insurtechs initially focused on the retail segment, with 75 percent of business in personal lines and the remainder in the commercial segment.

“Banks have bought into the value of these technology partnerships but had the benefit of consumer expectations changing slowly with them. This compares to insurers who are in an ever-increasing on-demand world where the risk is high for laggards to be left behind.” — Emily Kosick, managing director, marketing, Slice

Those proportions may be set to change, with innovations such as digital commercial insurance brokerage Embroker’s recent launch of the first digital D&O liability insurance policy, designed for venture capital-backed tech start-ups and reinsured by Munich Re.

Embroker said coverage that formerly took weeks to obtain is now available instantly.

“We focus on three main issues in developing new digital business — what is the customer’s pain point, what is the expense ratio and does it lend itself to algorithmic underwriting?” said CEO Matt Miller. “Workers’ compensation is another obvious class of insurance that can benefit from this approach.”

Jason Griswold, co-founder and chief operating officer of Insurtech REIN, highlighted further opportunities: “I’d add a third category to personal and business lines and that’s business-to-business-to-consumer. It’s there we see the biggest opportunities for partnering with major ecosystems generating large numbers of insureds and also big volumes of data.”

For now, insurers are accommodating Insurtech disruption. Will that change?

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“Insurtechs have focused on products that regulators can understand easily and for which there is clear existing legislation, with consumer protection and insurer solvency the two issues of paramount importance,” noted Shawn Hanson, litigation partner at law firm Akin Gump.

“In time, we could see the disruptors partner with reinsurers rather than primary carriers. Another possibility is the likes of Amazon, Alphabet, Facebook and Apple, with their massive balance sheets, deciding to link up with a reinsurer,” he said.

“You can imagine one of them finding a good Insurtech and buying it, much as Amazon’s purchase of Whole Foods gave it entry into the retail sector.” &

Graham Buck is a UK-based writer and has contributed to Risk & Insurance® since 1998. He can be reached at riskletters.com.