2018 Power Broker

Fine Arts

The Right Words

Kristina Marcigliano
Senior Account Executive
Risk Strategies/DeWitt Stern, New York

A great broker is not only well-versed in finding the right insurance but can also eloquently explain various coverages and solutions to clients outside the field — no easy task, to be sure.

Such is the case of Kristina Marcigliano.

“Kristina makes the complicated world of insurance easy to understand when she explains it to us lay people,” said Juan Angulo, controller, Bunny Williams Inc., an interior design company.

Earlier this year, Marcigliano sat down with Angulo to review the company’s insurance policies. She pointed out where they had gaps, where they could increase limits and answered questions as they arose.

Gerald Peters Gallery’s registrar Lindsey Lutz, who usually handles the gallery’s renewal process, was out of the office during renewal time this year. One of her colleagues stepped in — but she didn’t typically work with insurance and the jargon that comes with it.

Advertisement




“Kristina walked my colleague through it and was extremely helpful and informative during the entire process,” Lutz said.

In another instance, another one of Marcigliano’s clients decided to begin a site renovation, turning its studio area into a place for art exhibitions.

“Kristina is there to see if there are any flags that come up that might impact our fine arts insurance,” said Susan Reynolds, director, The Milton Resnick and Pat Passlof Foundation. Her guidance provides peace of mind in the high-value world of fine art.

A Good Teacher Keeps Learning

Mary Pontillo
Senior Vice President
Risk Strategies/DeWitt Stern, Charlottesville, Va.

Mary Pontillo, DeWitt Stern’s national fine art practice leader, places value in educating her clients on the different types of insurance coverages available to them.

The Joan Mitchell Foundation was debating whether it should change its collection’s storage to a different facility. Pontillo listed the pros and cons of the possible move and was “proactive around brainstorming,” said Christa Blatchford, the foundation’s CEO.

Pontillo also took the time to build a loan and insurance rubric for the foundation, keeping the registrar, executive director, board members and lawyers on the same page during the art lending process.

“It makes the insurance conversation front-end instead of after the fact,” said Blatchford.

And like all good teachers, Pontillo never stops learning: “I was with her at a registrars’ conference,” said Thomas Burns, chief operating officer, The Fortress, which provides storage and transportation for fine art in Boston, Miami and New York. “Mary went to every possible session she could to learn as much as she could.”

One artist who was a client of The Fortress passed away last year, and his children needed to store his work. Burns planned the entire move, but the day before, he found that the family didn’t have insurance for transportation. He called Pontillo.

“Mary didn’t worry about what they didn’t do or what they didn’t have; she focused on the positives,” got the right insurance and had the art transported as planned, he said.

A Passion for Art

Adrienne Reid, CIC
Vice President
Aon/Huntington T. Block, Houston

“Adrienne Reid has a genuine interest in the pieces we have,” said Anne Breckenridge Barrett, director of collections and exhibitions, Museum of Contemporary Art Chicago.

It’s this dedication that convinced the museum to switch to Reid from their previous broker.

And this year, it proved to be the right choice. The museum held a 50-year anniversary celebration while also hosting a temporary Takashi Murakami exhibition at the same time. They had on display some of their most valuable pieces, including an original Andy Warhol.

To have both exhibitions under one roof, the museum needed to increase its policy limits and temporary policy limits. Reid got to work and kept the museum well under budget, negotiating lower premium rates with the underwriter.

Advertisement




Ricardo Mazal, artist and owner of Ricardo Mazal Inc., had an exhibit in Mexico City. To cross the border, customs agents had to inspect the truck first, which meant they would need to handle the art and repackage it.

“Because of the logistics of the customs agents, it was a short time to work,” Mazal said.

Altogether, $1 million worth of paintings were handled and transported over the border. Few underwriters wanted to cover this high-risk load as it traveled through Mexico.

But Reid persevered.

“Adrienne [was] incredibly helpful; [she] was 24/7. At the end, she was able to have everything in place for us. I can count on her wherever I am with whatever we have.”

Queen of Conservation

Ever Song
Account Executive
Aon/Huntington T. Block, Washington, D.C

To prevent artwork from showing signs of the wear-and-tear of age, art conservationists take the lead in preserving and maintaining these valuable relics from the past.

And behind these conservators is Ever Song.

“I have been working with Ever for many years and couldn’t run my business without her,” said Leslie Gat, president and founder, the Art Conservation Group/Ransick Gat Fine Art Services Inc.

In 2016, she had several large projects moving in and out of the studio, which needed anywhere from $1 million to $3 million in waiver or policy coverage at different moments.

“Ever got me to bump up to half a million dollars in cost of coverage,” said Gat. “She lessened the stress and the cost didn’t go up as much as I thought it would.”

Deborah La Camera and Lorraine Bigrigg, both partners and senior conservators at Studio TKM Associates Inc., run a paper conservation studio where clients often need art procured and stored on the same day.

For instance, a collector of high-value drawings had a water issue in their storage facility and needed the art picked up and brought to the studio immediately. La Camera and Bigrigg called Song, who had to get the coverage in place while the art was transferred and stored at the studio.

“Ever streamlined the process and writes each contract to custom fit that art’s needs as well, showing clients their coverage is custom to their needs,” said La Camera.

Front and Center

Emily Weiss
Senior Account Executive
Risk Strategies/DeWitt Stern, New York

Emily Weiss likes the hands-on approach to insuring art.

When one of her clients needed to store artwork in its basement, Weiss visited with an underwriter to assess the area and any risks it posed to the safety of the pieces, and to come up with some risk mitigation strategies.

The policy in place had a basement flood exclusion, so Weiss suggested where to add water sensors and advised the client how to respond to a flood event. She also got them flood insurance, going above and beyond to secure them additional coverages for tidal waves or drain backups.

After Superstorm Sandy hit the East Coast, new insurance regulations regarding flood, wind and storm surge were implemented. Weiss’s client, Vito Schnabel Projects, wanted to review these regulations and work towards finding the best plan possible for their needs. Weiss took the reins.

Advertisement




“Emily’s consultations have expanded my understanding of insurance procedures and requirements, which in turn has significantly improved our company’s coverage,” said Jenna Schneider, registrar.

She noted that, as she works with so many vendors daily, “Emily’s advice and prompt turnaround of information have allowed me to provide the best coverage to our vendors.”

“Everything she does is hands on,” said Edward Mishan, a private art dealer who sells around the world. “She’s efficient. She knows all the details.”

Problem Solver

Casey Wigglesworth
Account Executive
Aon/Huntington T. Block, Washington, D.C

The last call a museum registrar wants to receive is that a drunk driver ran into an outdoor sculpture.

Leah Reeder, registrar, Fort Wayne Museum of Art, unfortunately received that call, learning that a truck was wedged underneath an outdoor piece. Emergency officials were able to pull the truck out, but the sculpture collapsed.

Casey Wigglesworth was immediately brought on board.

“The sculpture was dismantled and sent to California for a little over a year for restoration,” said Reeder. “Casey took the time to work with me to get the piece back to us.”
Now the large sculpture sits in its Indiana home once again.

Another client, Michelle Moskal, assistant registrar, Museum of the American Revolution, detailed a recent move of facilities.

“We couldn’t transport everything all at once,” said Moskal. Their insurance covered up to a certain amount during transport, so Wigglesworth worked out what could be sent via truck together.

“We’re in the midst of an active construction site while remaining operational,” said Mark Ryan, assistant director for collections & exhibitions, the Mildred Lane Kemper Art Museum.

He said Wigglesworth provided critical insight into how to store art and keep staff and visitors safe during construction, communicating with the university and museum partners and providing information to their underwriters while the museum remained in operation.

Finalist:

Blair Wunderlich
Account Executive
Aon/Huntington T. Block
Washington, D.C.

More from Risk & Insurance

More from Risk & Insurance

Risk Scenario

A Recall Nightmare: Food Product Contamination Kills Three Unborn Children

A failure to purchase product contamination insurance results in a crushing blow, not just in dollars but in lives.
By: | October 15, 2018 • 9 min read
Risk Scenarios are created by Risk & Insurance editors along with leading industry partners. The hypothetical, yet realistic stories, showcase emerging risks that can result in significant losses if not properly addressed.

Disclaimer: The events depicted in this scenario are fictitious. Any similarity to any corporation or person, living or dead, is merely coincidental.

PART ONE: THE HEAT IS ON

Reilly Sheehan, the Bethlehem, Pa., plant manager for Shamrock Foods, looks up in annoyance when he hears a tap on his office window.

Reilly has nothing against him, but seeing the face of his assistant plant operator Peter Soto right then is just a case of bad timing.

Sheehan, whose company manufactures ice cream treats for convenience stores and ice cream trucks, just got through digesting an email from his CFO, pushing for more cost cutting, when Soto knocked.

Sheehan gestures impatiently, and Soto steps in with a degree of caution.

“What?” Sheehan says.

“I’m not sure how much of an issue this will be, but I just got some safety reports back and we got a positive swipe for Listeria in one of the Market Streetside refrigeration units.”

Partner

Partner

Sheehan gestures again, and Soto shuts the office door.

“How much of a positive?” Sheehan says more quietly.

Soto shrugs.

“I mean it’s not a big hit and that’s the only place we saw it, so, hard to know what to make of it.”

Sheehan looks out to the production floor, more as a way to focus his thoughts than for any other reason.

Sheehan is jammed. It’s April, the time of year when Shamrock begins to ramp up production for the summer season. Shamrock, which operates three plants in the Middle Atlantic, is holding its own at around $240 million in annual sales.

But the pressure is building on Sheehan. In previous cost-cutting measures, Shamrock cut risk management and safety staff.

Now there is this email from the CFO and a possible safety issue. Not much time to think; too much going on.

Sheehan takes just another moment to deliberate: It’s not a heavy hit, and Shamrock hasn’t had a product recall in more than 15 years.

“Okay, thanks for letting me know,” Sheehan says to Soto.

“Do another swipe next week and tell me what you pick up. I bet you twenty bucks there’s nothing in the product. That swipe was nowhere near the production line.”

Soto departs, closing the office door gingerly.

Then Sheehan lingers over his keyboard. He waits. So much pressure; what to do?

“Very well then,” he says to himself, and gets to work crafting an email.

His subject line to the chief risk officer and the company vice president: “Possible safety issue: Positive test for Listeria in one of the refrigeration units.”

That night, Sheehan can’t sleep. Part of Shamrock’s cost-cutting meant that Sheehan has responsibility for environmental, health and safety in addition to his operations responsibilities.

Every possible thing that could bring harmful bacteria into the plant runs through his mind.

Trucks carrying raw eggs, milk and sugar into the plant. The hoses used to shoot the main ingredients into Shamrock’s metal storage vats. On and on it goes…

In his mind’s eye, Sheehan can picture the inside of a refrigeration unit. Ice cream is chilled, never really frozen. He can almost feel the dank chill. Salmonella and Listeria love that kind of environment.

Sheehan tosses and turns. Then another thought occurs to him. He recalls a conversation, just one question at a meeting really, when one of the departed risk management staff brought up the issue of contaminated product insurance.

Sheehan’s memory is hazy, stress shortened, but he can’t remember it being mentioned again. He pushes his memory again, but nothing.

“I don’t need this,” he says to himself through clenched teeth. He punches up his pillow in an effort to find a path to sleep.

PART TWO: STRICKEN FAMILIES

“Toot toot, tuuuuurrrrreeeeeeeeettt!”

The whistles of the three lifeguards at the Bradford Community Pool in Allentown, Pa., go off in unison, two staccato notes, then a dip in pitch, then ratcheting back up together.

For Cheryl Brick, 34, the mother of two and six-months pregnant with a third, that signal for the kids to clear the pool for the adult swim is just part of a typical summer day. Right on cue, her son Henry, 8, and his sister Siobhan, 5, come running back to where she’s set up the family pool camp.

Henry, wet and shivering and reaching for a towel, eyes that big bag.

“Mom, can I?”

And Cheryl knows exactly where he’s going.

“Yes. But this time, can you please bring your mother a mint-chip ice cream bar along with whatever you get for you and Siobhan?”

Henry grabs the money, drops his towel and tears off; Siobhan drops hers just as quickly, not wanting to be left behind.

Advertisement




“Wait for me!” Siobhan yells as Henry sprints for the ice cream truck parked just outside of the pool entrance.

It’s the dead of night, 3 am, two weeks later when Cheryl, slumbering deeply beside her husband Danny, is pulled from her rest by the sound of Siobhan crying in their bedroom doorway.

“Mom, dad!” says Henry, who is standing, pale and stricken, in the hallway behind Siobhan.

“What?” says Danny, sitting up in bed, but Cheryl’s pregnancy sharpened sense of smell knows the answer.

Siobhan, wailing and shivering, has soiled her pajamas, the victim of a severe case of diarrhea.

“I just barfed is what,” says Henry, who has to turn and run right back to the bathroom.

Cheryl steps out of bed to help Siobhan, but the room spins as she does so.

“Oh God,” she says, feeling the impact of her own attack of nausea.

A quick, grim cleanup and the entire family is off to a walk-up urgent care center.

A bolt of fear runs through Cheryl as the nurse gives her the horrible news.

“Listeriosis,” says the nurse. Sickening for children and adults but potentially fatal for the weak, especially the unborn.

And very sadly, Cheryl loses her third child. Two other mothers in the Middle Atlantic suffer the same fate and dozens more are sickened.

Product recall notices from state regulators and the FDA go out immediately.

Ice cream bars and sandwiches disappear from store coolers and vending machines on corporate campuses. The tinkly sound of “Pop Goes the Weasel” emanating from mobile ice cream vendor trucks falls silent.

Notices of intent to sue hit every link in the supply chain, from dairy cooperatives in New York State to the corporate offices of grocery store chains in Atlanta, Philadelphia and Baltimore.

The three major contract manufacturers that make ice cream bars distributed in the eight states where residents were sickened are shut down, pending a further investigation.

FDA inspectors eventually tie the outbreak to Shamrock.

Evidence exists that a good faith effort was underway internally to determine if any of Shamrock’s products were contaminated. Shamrock had still not produced a positive hit on any of its products when the summer tragedy struck. They just weren’t looking in the right place.

PART THREE: AN INSURANCE TANGLE

Banking on rock-solid relationships with its carrier and brokers, Shamrock, through its attorneys, is able to salvage indemnification on its general liability policy that affords it $20 million to defray the business losses of its retail customers.

Advertisement




But that one comment from a risk manager that went unheeded many months ago comes back to haunt the company.

All three of Shamrock’s plants were shuttered from August 2017 until March 2018, until the source of the contamination could be run down and the federal and state inspectors were assured the company put into place the necessary protocols to avoid a repeat of the disaster that killed 3 unborn children and sickened dozens more.

Shamrock carried no contaminated product coverage, which is known as product recall coverage outside of the food business. The production shutdown of all three of its plants cost Shamrock $120 million. As a result of the shutdown, Shamrock also lost customers.

The $20 million payout from Shamrock’s general liability policy is welcome and was well-earned by a good history with its carrier and brokers. Without the backstop of contaminated products insurance, though, Shamrock blew a hole in its bottom line that forces the company to change, perhaps forever, the way it does business.

Management has a gun to its head. Two of Shamrock’s plants, including Bethlehem, are permanently shuttered, as the company shrinks in an effort to stave off bankruptcy.

Reilly Sheehan is among those terminated. In the end, he was the wrong person in the wrong place at the wrong time.

Burdened by the guilt, rational or not, over the fatalities and the horrendous damage to Shamrock’s business. Reilly Sheehan is a broken man. Leaning on the compassion of a cousin, he takes a job as a maintenance worker at the Bethlehem sewage treatment plant.

“Maybe I can keep this place clean,” he mutters to himself one night, as he swabs a sewage overflow with a mop in the early morning hours of a dark, cold February.

Bar-Lessons-Learned---Partner's-Content-V1b

Risk & Insurance® partnered with Swiss Re Corporate Solutions to produce this scenario. Below are their recommendations on how to prevent the losses presented in the scenario. This perspective is not an editorial opinion of Risk & Insurance.®.

Shamrock Food’s story is not an isolated incident. Contaminations happen, and when they do they can cause a domino effect of loss and disruption for vendors and suppliers. Without Product Recall Insurance, Shamrock sustained large monetary losses, lost customers and ultimately two of their facilities. While the company’s liability coverage helped with the business losses of their retail customers, the lack of Product Recall and Contamination Insurance left them exposed to a litany of risks.

Risk Managers in the Food & Beverage industry should consider Product Recall Insurance because it can protect your company from:

  • Accidental contamination
  • Malicious product tampering
  • Government recall
  • Product extortion
  • Adverse publicity
  • Intentionally impaired ingredients
  • Product refusal
  • First and third party recall costs

Ultimately, choosing the right partner is key. Finding an insurer who offers comprehensive coverage and claims support will be of the utmost importance should disaster strike. Not only is cover needed to provide balance sheet protection for lost revenues, extra expense, cleaning, disposal, storage and replacing the contaminated products, but coverage should go even further in providing the following additional services:

  • Pre-incident risk mitigation advocacy
  • Incident investigation
  • Brand rehabilitation
  • Third party advisory services

A strong contamination insurance program can fill gaps between other P&C lines, but more importantly it can provide needed risk management resources when companies need them most: during a crisis.



Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at dreynolds@lrp.com.