2017 Power Broker

Health Care

Long-Term Risk Management

Martha Acker, CIC, CRM, CHSP
Area Senior Vice President
Arthur J. Gallagher, Birmingham, Ala.

For 30 years, Arthur J. Gallagher’s Martha Acker mitigated risk and helped insure the long-term care market.

Last year, Acker further fortified the industry when she established a risk purchasing group (RPG) program for the property and liability environmental exposures of long-term care.

Long-term care has an inherent risk for environmental claims such as mold, mildew and Legionella because of the compromised health of most residents.

The RPG program presented a simplified underwriting process, broader coverage and a lower price to the LTC clients.

The program also was designed around loss control resources to assist clients in identifying and reducing their exposure to loss in this area.

Acker also developed and managed two captive insurance programs for the PL/GL exposure. The first captive was established during the industry crisis of 2000 as a group captive. The second is a single parent captive established in 2013.

Her clients in this industry view her expertise and dedication as unmatched.

“I have never come across anyone that even comes close to what Martha does,” said Richard Brockman, an attorney who sits on the board of Associated Long Term Care Insurance Company.

“She’s there, soup to nuts, with her clients up and down the line,” Brockman said.

A ‘Visionary’ Broker

Chris Ainscough
Account Executive
Aon, Cleveland

A client of Aon’s Chris Ainscough faced a large property loss. The client shared concerns with Ainscough: How would the carrier’s policy respond to the loss? How could they quickly get whole again after the business interruption? Finally, how would this recent setback affect the upcoming property renewal?

Ainscough quickly got to work and confirmed coverage with the carrier, set meetings between the carrier and client, and assisted throughout the process to make sure the claim was adequately adjusted.

Next, he collected the data needed to make sure the client recovered fully from the business interruption. Ainscough worked to have the insurer allow Aon to act as a consultant, all the while having the policy cover the funds for the consulting services.


Finally, the insurer agreed to a two-year term with a flat renewal rate in the first year, and a low single-digit rate increase the following year.

“I really enjoy working with Chris,” said one client, Chet Porembski, system vice president and deputy general counsel for OhioHealth Corp. “I can always rely on him.  When he tells me he’s going to do something, he does it. Chris is always trying to think ahead about our business to bring value to our organization.”

Ainscough’s preparation and foresight left an impression with other clients as well.

“He is a visionary,” said Kimberly Baughman, the director of risk & compliance at Wood County Hospital. “He always thinks five to 10 years out.”

The Unflappable Mr. DePriest

Tim DePriest, ARM
Managing Director
Arthur J. Gallagher, Glendale, Calif.

Clients value Tim DePriest for the significant amount of time he puts into education, planning and negotiating creative solutions with the carriers. They know he’ll pore over policies to find weaknesses and ways to reduce premiums.

When the CFO of a mental health services center invited DePriest to review its P&C program, DePriest found significant coverage gaps and issues throughout the program.

DePriest created a comprehensive marketing overview for carriers, working to educate them on the strength of the  management team, their risk management philosophy and their strategic operational plans.

Coverage for many areas such as earthquakes, board directors and cyber liability was expanded and improved. A claims management, loss control and safety education services plan was created to prevent workplace injuries and manage claims. All of these coverage enhancements as well as substantial improvements in client service, were achieved while reducing annual premiums by 25 percent.

DePriest will go the extra mile to get policies to work in his client’s favor, said Carl Coan, CEO of White Memorial Community Health Center. DePriest helped Coan sort through malpractice coverage issues for health care workers acquired through a recent merger.

“He was really helpful as we were trying to work through the malpractice issues,” Coan said. “He’s unflappable.”

Big in Telemedicine

Larry Hansard
Regional Managing Director
Arthur J. Gallagher, Dallas

This year, Larry Hansard designed a comprehensive telemedicine medical professional liability program. It offers global protection for U.S. health care providers who, in the past, had coverage that was limited by location.

The new liability responds in the jurisdiction where the patient resides around the globe and provides defense in nearly every venue, allowing the emerging telemedicine sector to provide health care internationally.

Matt Scalo, head of finance at Doctor on Demand, Inc., said Hansard was able to get his company a more than 50 percent discount on medical malpractice coverage. Doctor on Demand offers a mobile application that provides mental health care to patients in all 50 states. As a startup, it struggled to find affordable insurance coverage.


Hansard educated carriers on the business model, making them far more comfortable insuring the business.

“Part of our challenge with our original broker is they didn’t understand our business,” Scalo said. “Larry … spent the time to understand what we do and how we do it.”

Hansard frequently reconnects with Scalo to learn about any new products the company is developing and suggest ways to incorporate risk and insurance issues early on, before they go too far down any path.

“What Larry and his team have done is really build a partnership,” Scalo said. “I don’t worry about insurance, he really owns the insurance process.”

Exclusive Treatment

Coleen Kelly
Vice President, Program Management
Aon, Hatboro, Pa.

Aon’s Coleen Kelly was contacted by a colleague seeking her help: Could Kelly help provide a solution for a specific exposure faced by a client with multiple franchise operations?

Kelly thought she could. She quickly realized that many of the coverages being sold were not aligned with the franchise requirements, nor did they address the client’s exposures.

Kelly helped to secure the commitment of the carrier with a product offering that would meet and actually exceed the clients’ need as well as offer a streamlined process to ensure compliance with the franchise requirements. Additionally, the client indicated early on that the franchisees needed a health insurance solution.

Kelly worked with a group from Aon Risk Solutions to offer ideas, gain the endorsement and launch a new product offering to the client franchisees. Kelly is now helping take to market products for all the franchisees.

Kelly also helped set up the nonemergency medical program used by R.E. Chaix & Associates. “It’s really taken off, it’s been great for us,” said Kristi Mulford, a broker at R.E. Chaix. “It allows me to not turn away as many accounts. I almost feel like I’m an exclusive, like she would do anything to help me and if I have questions, she is always available.”

“She gets things done, and gets things done quickly,” said Richard Walthall, a commercial insurance producer at Walthall Sachse & Pipes Inc. ”She is responsive, she’s accessible, she understands specifically what I want, and she’s able to negotiate what I want.”

A Great Client Asset

Charles Krauth, CIC, CRM
Vice President
Aon, Atlanta

Texas-based HNI Healthcare is a rapidly growing physician group with operations nationwide. It recently expanded to provide emergency department and anesthesia services as well as IT and management services.

Medical malpractice insurance is its largest risk and insurance cost and it is critically important for the practice to remain competitive when pursuing new contracts and recruiting new physicians.

HNI’s 2016 renewal needed to account for the company having doubled in size, entering into several new states, expanding into new specialty areas and rolling out proprietary practice management software.

Based on expiring rates, the 2016 renewal premium would have doubled.

Aon’s Charles Krauth reached out to insurers and highlighted the experience of HNI’s leadership team and new risk management strategies. He also emphasized the company’s positive five-year loss history.


Four top medical malpractice insurance carriers offered rate cuts of between 30 percent to 50 percent. Additionally, Krauth negotiated an auditable policy provision that allowed for additional growth and an 18-month policy period, further locking in the very low rates.

“He wants to make sure he fully understands what our risks are and educates us on that,” said Skip Courtney, the chief operating officer at HNI. “We ultimately have to make the decision, but he’s brought us some things that we didn’t even think of.”

Medical Buying Power

Lee Newmark
Senior Vice President
Arthur J. Gallagher, Itasca, Ill.

This year, Arthur J. Gallagher’s Lee Newmark was asked to help integrate the insurance/risk management programs for several local gastroenterology practices into one single program.

Physicians seeking coverage face tough challenges in today’s health care market. The individual doctors know that they have to collaborate to survive. Newmark worked with the various groups and encouraged them to come together on their own terms while remaining as independent practices continuing to serve their local communities.

He helped construct a program that took advantage of the collective size of the combined gastroenterology group by offering preferred pricing. He also put together a coordinated risk management plan that would allow the group to become more efficient in its day-to-day work while offering the best patient care.

Ultimately, Newmark put together a single integrated platform that saved the doctors a significant amount in annual premiums and allowed them to establish a robust risk management plan that is already making great strides in improving patient care.

Gallagher continues to work with this group of physicians and introduced them to its employee benefits team. Now the medical group is considering a proposal that’s designed to achieve similar results in the benefits area.

“I think he does a very good job,” said Dr. Neil Friedman of the Metro Chicago Surgical Oncology group. “He’s always well researched and he’s there if we need him.”

Preserving Relationships in Tough Times

John Orr
Managing Principal
Integro, San Francisco

Integro’s John Orr found a way to structure a comprehensive insurance program by securing aligned or joint policies for three different medical companies with interconnected businesses.

“They are two companies but most of our policies are joint policies for both entities because the covered risk is shared to both of them,” said the medical group’s director of corporate real estate. “They are really married.

“We’ve done a lot of work around structuring a comprehensive program where the coverages are aligned with insurers to close those gaps identified,” the director said.

Another client faced a dicey renewal with uneasy insurers. The client had several unrelated class action lawsuits over a three-year period, giving rise to challenging D&O renewals. On top of that, the client’s market cap tripled over the same period.

Orr managed the client’s carrier relationships while reworking the positions of some insurers on the tower. In the end, Orr delivered a 10 percent premium decrease, capping off four years of reductions in the wake of increased market caps and other challenges.

More importantly, Orr preserved relationships and negotiated coverage enhancements for the client.

“He’s incredibly available to clients. He is proactive in advising about litigation trends, insurance contract clauses and the nuance of what’s going on in relevant litigation,” said David Lehman,  general counsel at Intersect ENT. “That is incredibly helpful to me.”

A Health Care Partner

Larry Reback, ARM
Managing Principal
Integro, San Francisco

After Banner Health received a large and unexpected adverse jury verdict on a medical malpractice case, its insurer claimed it was not properly advised of key developments in the case and was not afforded the opportunity to settle prior to the jury verdict.

Integro’s Larry Reback contacted senior underwriters on behalf of his client and got up to speed with every detail of the case. He was able to bring both sides to the table  and negotiate a full reimbursement of the verdict by the carrier.

“I’ve been in the industry for over 35 years, it’s really hard to find a good broker that you can partner with,” said Ellen Rensklev, chief risk officer at Oregon Health & Science University.

“In Larry, we get somebody who gets the big picture, who listens to what our needs are and who’s able to execute on those needs,” Rensklev said. “Then we set our goals together.”

Reback, a former insurance defense attorney, works with clients on everything from cyber to general liability to professional liability to the domestic market to international markets.

“Every time I encounter Larry, he provides advice and guidance that is thoughtful and considerate and I always feel that I am his only client,” said Yvette Carrillo, a claims director at Banner Health who has worked with Reback for about 18 years.

A Model for Others

John Selgrath, ARM
Senior Vice President,
Integro, San Francisco

Oregon Health and Science University owned a mature captive with a significant number of coverage lines.

Over the years, coverage lines were bolted on as endorsements without fully integrating the coverage into the policy. As a result, the policy coverage was often hard to determine.

Integro’s John Selgrath noticed the patchwork quality of the policy and immediately volunteered to rewrite it.

“He actually took it on his own initiative to suggest we rewrite the policy,” said Cassandra Forbess, risk and insurance manager at the university.

Selgrath was able to recommend and implement significant coverage enhancements while streamlining and clarifying the policy.

“He’s been a great resource for us,” Forbess said.

Susan Plante, senior insurance analyst at UMass Memorial Health Care, Inc., recalled the time the hospital experienced an after-hours emergency and she reached out to him for help. Selgrath responded immediately, reviewed affected policies and offered her a preliminary action plan to bring back to senior leadership within just a few hours.

Jeff Winecoff, with corporate insurance & risk at John Muir Health, added that Selgrath’s background as an attorney further enhances his value.

“Having somebody who can break down the form and also share a legal perspective is really invaluable and perhaps something all brokers should strive for,” Winecoff said.

Interpersonal Skill

Mary Walkenhorst, CPCU, ARM
Senior Account Executive
Aon, St. Louis

This year, with considerable M&A activity in the health care industry, Aon’s Mary Walkenhorst found herself in the awkward position of representing two of her clients in an acquisition.

She impressed them both by pointing out risks that neither had contemplated in the arrangement. She advised them not to seek just the least costly option for combining insurance programs, but to choose the options that made the most sense from a risk management standpoint. The clients said Walkenhorst helped make the transition as smooth as possible.

For policy renewals, clients said, Walkenhorst treats every part of the program as new business, asking, How can we improve the risk financing program? Is it still relevant? Does it position the client to accept future anticipated risks?

Walkenhorst coaches clients on how to avoid risk and better negotiate contracts, rather than always transferring risk to an insurance company,

Clients said she’s a great resource on cyber liability, stop loss coverage and financing programs through the government. She’s able to pull in additional information from industry sources and her colleagues at Aon.

“She’s just one heck of a good collaborator,” said Bill Kauffman, general counsel at St. Louis University. “She asks insightful questions. The interpersonal skill Mary possesses is one of the things that separates her from others in the industry with whom I’ve dealt.

“I would give her an A-plus in terms of service,” Kauffman said.

Capping the Losses

Julie Wisener, AINS
Vice President
Marsh, Nashville, Tenn.

Julie Wisener’s health care client was recently named in a lawsuit for alleged negligence while providing labor and delivery services for the indigent back in 2012. Since the incident involved an infant, there was potential for long-term liability.

The legal entity named in the lawsuit was only supposed to be operating in a holding capacity in Louisiana. While the entity was covered under their professional liability program, it was not enrolled in the Louisiana Patient Compensation Fund (LA PCF). Without participation in the LA PCF, the client’s liability for the claim would not be capped, and economic damages could be unlimited.

Wisener discovered that the entity could have coverage because the law considers independent contractors as employees. As long as that independent contractor was enrolled into the LA PCF, there was hope.

Wisener’s next challenge was negotiating with the LA PCF back to the year of the loss. She successful enrolled the legal entity back to 2012, allowing the known loss to be capped under the program, thus potentially saving the client a large, long-term financial payout.

Wisener helped another client properly insure a health care property while it was still under construction and the client was uncertain when it could begin seeing patients.

When construction dragged on, Wisener went back to the carrier and got a discount.

“That is something that wouldn’t normally happen with other companies,” said John Edmunds, CFO with Generations Behavioral Health.


Theresa Edwards
Senior Vice President, National Practice Leader Healthcare Industry Practice
Wells Fargo Insurance, Charlotte, N.C.

Nicole Francis
Senior Vice President
Marsh, Danville,Calif.

Timothy Hoover
Area Executive Vice President
Arthur J. Gallagher, Whippany, N.J.

Ruth Kochenderfer
Senior Vice President
Marsh, Washington, DC

Peter Lavery
Integro, Boston


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.