2016 Power Broker

Fine Arts

Expert Stamp of Approval

Sandra Berlin Senior Vice President Willis Towers Watson, Chicago

Sandra Berlin
Senior Vice President
Willis Towers Watson, Chicago

Sandra Berlin is known for her vast knowledge of fine arts insurance and her high energy.

In the past year alone Berlin helped negotiate insurance for about 45 different loans of artwork to museums so the individual collectors had the best coverage possible while the pieces were out of their control.

Analyzing individual museum policies is an important component of loaning and making sure a collector’s own carrier is aware that this change in exposure is prudent.

“In Chicago, Sandra has the reputation of being if not the most knowledgeable art broker, then one of the top two or three specializing in art insurance,” observed Scott Hodes, senior counsel at Bryan Cave law firm in Chicago and a fine art expert.

Chicago-based Lela Hersh, art adviser at her own Museum and Fine Arts Consulting LLC, observed that since forming her own company in 2003 she has referred many of her private and corporate clients to Berlin.

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“She is always available, friendly and makes difficult information crystal clear for clients,” said Hersh.

“She’s not pushy at all and has a nice way of working with her high-end clientele.”

Recently Hersh referred a private client to Berlin who is moving their home and artwork to Colorado.

“I can trust that she will take care of them,” Hersh said.

Building Credibility

Sarah Johnson Court, Cert CII Director Aon, Miami

Sarah Johnson Court, Cert CII
Director
Aon, Miami

Clients of Sarah Johnson Court invariably cite her trustworthiness as the cornerstone of a healthy relationship with her.

“She knows her product and she really tries to help her customers as opposed to selling insurance just to get a commission,” said Laurans A. Mendelson, chairman and chief executive officer of Hollywood, Fla.-based HEICO, an aerospace and electronics products manufacturer.

“I’ve had situations in which she’s told me her policy is really not as good as a competing policy, so she said she wouldn’t recommend that I take hers,” Mendelson added. “She builds up great credibility that way.”

Mendelson also noted that Johnson Court does an excellent job of fighting with the insurance company to get better rates.

Anthony Tamer, founder and co-CEO of Miami-based HIG Capital, a worldwide private equity firm, said of Johnson Court: “Sarah has helped me specifically in getting our art insured in Florida, which, because of the flood and tropical weather conditions, is an expensive place to insure art. She worked very hard to get quotes from several insurance companies and was creative in finding reliable coverage that ended up being close to 30 percent more extensive, yet at a lower cost than most other providers.

“Most importantly, Sarah inspires trust, which is critical in a broker-client relationship,” Tamer added.

The Team Leader

Diane Jackson COO/Director of Finance Aon, Washington, D.C.

Diane Jackson
COO/Director of Finance
Aon, Washington, D.C.

Whether you are a large or smaller client of Diane Jackson, you are going to get the keen, comprehensive attention for which she is widely known.

In the past year, Jackson put together a proposal to help the Detroit Institute of Art conduct an international exhibition of some of its most precious paintings, to appear on two continents.

“Diane put together an excellent proposal that allowed us to slightly increase in-transit limits for shipments, which allowed us to send fewer conveyances, saving our museum and the borrowers’ staff time and money,” said Kimberly Dziurman, director of registration at the museum.

On another call-to-action for Jackson, Erika Franek, registrar of exhibition and loans, art insurance and risk management,at the Los Angeles County Museum of Art, suddenly found herself in a demanding position when her predecessor left with little notice.

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“Diane was immediately on the phone with me, walking me through the details of the policy and helping me understand the nuances,” said Franek.

“She set up weekly phone calls for me as well. Those phone calls were essential to my first year as a risk manager.”

In addition to handling 75 accounts on her own, Jackson has seven senior-level  brokers who report to her. These individuals handle the largest clients of Aon’s art division. When there are any issues on those accounts, Jackson is called upon to help resolve them.

Pacifying the Lenders

Lynn Marcin Senior Vice President Aon, Washington, D.C.

Lynn Marcin
Senior Vice President
Aon, Washington, D.C.

Lynn Marcin’s decades of experience in the fine arts insurance world came to bear in  helping the Denver Art Museum open a very large “Wyeth: Andrew and Jamie in the Studio” exhibition last November with 40-plus vendors and complicated insurance arrangements incorporating federal indemnity coverage, special exhibition policies and the museum’s own blanket policy.

“One lender in particular had very specific and challenging insurance requirements outlined in their loan agreement,” said Sarah Cucinella-McDaniel, chief registrar at the museum. “Lynn spent nearly six months and dozens of emails working with us to understand the requests from this lender, negotiate terms and prepare the policy.”

Marcin smoothed over another testy loan negotiation for the Tacoma Art Museum involving insurance for a Georgia O’Keeffe exhibition.

“The for-profit organizer insisted on using his legal language for the certificates of insurance and endorsements,” said Rock Huska, chief curator of the museum. “His involvement included convoluted and, oftentimes, contradictory instructions outside our existing coverage. Lynn worked closely with our underwriters to approve his archaic language.”

At New York-based American Federation of Arts, registrar Elizabeth Abbarno noted, “In early 2015, we had sort of a snafu and Lynn was in constant contact with me. She really saved my bacon. She is a lovely person to work with.”

Covering Picasso

Anne Rappa Senior Vice President Aon, New York

Anne Rappa
Senior Vice President
Aon, New York

Anne Rappa stands out as an exceptionally creative problem solver, her clients agree.

“Anne was extremely helpful as part of us putting together a major defining exhibition we had: a huge, huge Picasso show we had worked on for several years,” said Catherine Davis, director of arts administration at The Pace Gallery in New York.

“There was a billion dollars’ worth of art from around the world we had to provide insurance for.

“We were afraid there would not be enough capacity in the market, but Anne worked it out for us,” Davis added.

“We had some issues with the wording of specific exclusions in our fine arts policy which seemed contradictory to me,” noted K.C. Mauer, chief financial officer of the Andy Warhol Foundation for the Arts in New York.

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“Anne spent a lot of time reviewing the policy language with me and she made sure that these language issues were addressed to my satisfaction so that I, as a non-insurance expert, understood them,” Mauer added.

She also doesn’t sugar-coat things, which Mauer appreciates.

“Anne helped us renegotiate the terms of our fine arts policy so that we were insured for all occurrences that we tell consignors we are liable for,” said  Christopher Reimann, director of finance at Chicago-based Leslie Hindman Auctioneers.

Riding to the Rescue

Emily Weiss Account Executive DeWitt Stern, New York

Emily Weiss
Account Executive
DeWitt Stern, New York

This past year was one in which Emily Weiss rode to the rescue on a number of major fronts.

In one case, Weiss took over the account of New York-based Di Donna Galleries LLC during a colleague’s maternity leave.

“She made a huge effort to update herself quickly on the many aspects of all of our different policies and she made the intricacies of our insurance policies easy to understand,” said business director Courtney Conway.

And when it came to renewing the galleries’ fine arts insurance policy in September, Weiss put together an insurance package with the galleries’ preferred underwriter that reduced the galleries’ premium by about 35 percent, said Conway.

In another important accomplishment, Weiss took over an artist’s studio account after it had been neglected for many years.  When she took over the account there were locations and buildings missing, incorrect limits and subjectivities that were not appropriate given the nature of the business. Weiss amended the definition of property covered and valuation clauses so that they were more in line with the nature of the artist’s work.

At New York’s New Museum, registrar Derya Kovey counts on Weiss for various skills.

“The broker needs to be strong in both hard skills such as insurance knowledge, as well as soft skills like emotional intelligence, understanding the museum’s values, and knowing what is needed  to keep the artists happy,” Kovey said.

BlackBar

Finalists:

Blythe Hogan Director Aon, New York

Blythe Hogan
Director
Aon, New York

Kristina Marcigliano Account Executive DeWitt Stern, New York

Kristina Marcigliano
Account Executive
DeWitt Stern, New York

Casey Wigglesworth Account Executive Aon, Washington, D.C.

Casey Wigglesworth
Account Executive
Aon, 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.”

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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.

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“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.

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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.