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2018 Power Broker

Hospitality

Your First Call

Terence Bohan
Senior Broker
Aon, San Francisco

Carriers want to know that a company is mitigating its risk. Terence Bohan knows this, and he makes sure his clients do, too. Bohan uses his industry knowledge, including his perspective from his former role on the carrier side, to guide his clients through renewals, claims or just about anything they need.

Bohan and his Aon team devised a unique risk management solution for Boyd Gaming Corporation while trying to lower rates that had increased after Hurricane Katrina losses.

They split the Boyd portfolio into two separate programs: One program would encompass all the assets in Nevada, while the other program would cover the remainder of the Boyd assets throughout the Gulf Coast and central United States.

This strategy enabled the risk manager to maintain key relationships, especially in London, but introduced competition that helped drive savings to the tune of 25 percent.

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Bob Berglund, vice president, benefits and insurance, said, “The mitigation is attributable to Terence.”

Another client, Lauren Young, managing director, chief risk officer, and chief compliance officer, PCCP, LLC, gave Bohan the highest recommendation.

“When we suffered damage during Hurricane Harvey and had questions about our coverage, it was clear that the fastest way to get an answer was to call Terence,” Young said.

“He knew our policy in and out and was helpful in explaining everything clearly.”

The Strength of the Bulkhead

Ryan Davidge
Vice President
Aon, Pembroke, Bermuda

Aon’s VP of Property Ryan Davidge is like a bulkhead. The sailors among us know that the bulkhead strengthens the boat. Located below deck, it’s not visible to all, but those in the thick of things understand that this element of the ship helps keep them safe.

“Ryan always has his client’s best interests at heart, and he has a depth and breadth of industry knowledge that is well-respected in our circle,” said one client.

Davidge was tapped by the organizer and sponsor of the 35th America’s Cup to be its local broker in Bermuda.

The temporary “event village” had specific insurance requirements —property, marine D&O, P&I, WC, hull, cargo, AD&D and liability to name a few. But no one person was in charge of procuring all the insurance. For Davidge, this meant a lot of last-minute calls.

The sponsor struck up a sponsorship and coverage deal with a local insurer. But both the insurer and the race sponsor soon realized that they needed an intermediary.

Davidge stepped in and never looked back. He pulled together a number of insurance lines, including property, marine liability, D&O and workers’ comp. Transportation issues, for instance Bermuda’s location 640 miles off the coast of North Carolina, made logistics and coverage considerations complex and demanding.

So successful was Davidge’s handling of the Bermuda event’s insurance needs that his colleagues in New Zealand called him to advise on how to handle the next America’s Cup event.

Mr. Go-To

Gerald Levine, CPCU
Managing Director
Beecher Carlson, Waterford, Conn.

When asked about what he finds exceptional about Gerald Levine’s work, Andrew Lee, vice president, architecture and construction, The Lam Group, responded, “Do you have a day and a half for me to tell you?”

On the top of Lee’s list is the tremendous savings Levine helped him achieve with a recent package.

“Gerry was able to negotiate coverage for us and the contractor together, so we saved a lot of money and reduced our risk,” Lee said.

“He is our 100 percent, trusted go-to person. We don’t sign anything until it has gone by Gerry’s desk.”

Lee also described a property loss on a building that was just about to open. “Gerry put a package together quickly to get it resolved, and he even managed getting people in for some of the repairs, so we were not taken advantage of,” Lee said.

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Thayer Thompson, general counsel and VP-commercial, Virgin Hotels North America, said that when their partners meet Gerry and see what he does for Virgin, they sometimes switch to him for their brokerage needs.

“Gerry Levine is an absolutely amazing broker. We’ve worked with him for five or six years, and he is simply the best. Some of our partners have hired him as well.

“I can’t imagine a better advocate on insurance for our business than Gerry. He is incredibly responsive, 24/7, very knowledgeable and very proactive. He has a great team.” 

Risk Never Sleeps

Christian Ryan
Managing Director
Marsh, Dallas

Christian Ryan’s client philosophy is simple; colleagues and clients first — 24/7 — and never forget that clients’ risks can’t wait and don’t sleep. This philosophy has served him well, and more importantly, it’s served his clients best.

When a large gaming client merged with another large gaming company, Ryan and his team reviewed both risk programs and made recommendations for the structure of the merged programs.

Company size and different risk philosophies, including different retentions, limits and overall structures, made combining their coverage challenging, but Ryan’s team was able to recommend a program while also reducing millions of dollars of costs and volatility.

Another client, Sam Makani, director, portfolio strategy and reporting, Solid Rock Group, experienced Ryan’s expertise firsthand.

“Christian is very familiar and experienced with the various options for property insurance for hotels — both big and small. He has a breadth of knowledge with a depth of industry contacts to align clients’ interests with the proper carriers.

“He and his team have provided guidance on various property and supplemental policies for our portfolio, including earthquake, wind and cyber insurance,” Makani said.

Additionally, Ryan and his London team crafted Marsh’s exclusive PRIME Hospitality and Gaming property facility, including manuscript language around booking cancellations, broader loss of attraction language and other ancillary but important features. 

Over the Moon

Ronald Sung
Assistant Vice President
Aon, Chicago

Ronald Sung postponed his honeymoon so he could attend a strategic client meeting last year. Not a dentist appointment or a ballgame — his honeymoon. If that’s not dedication and exemplary customer service, we’ll never know what is.

“Ron acts with the customer in mind,” said hospitality risk manager Michael Dougherty.

“Ron provided several different solutions to restructure our professional/cyber liability product this past year and some of the options were drastically different than what was done in the past,” Dougherty said.

“Ron walked us through each of the solutions and explained the unique advantage of each option. He not only helps clients find the right product, but he further helps by working to adapt the product, so it can be a closer solution for his clients.”

And this was simply one example.

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“Ron has been excellent,” said another client. “I talk to him at least once a week and he goes above and beyond for us. He’s very collaborative. He’ll walk me through things and he’ll make presentations to our carriers,” she said.

Sung worked with that client on a confidential program that will help cell phone carriers place emergency 911 calls more accurately.

“We had a lot of details to think about and a lot of risk to identify,” said the client. “We couldn’t do this without Ron.”

More from Risk & Insurance

More from Risk & Insurance

Pharma Under Fire

Opioids Give Rise to Liability Epidemic

Opioids were supposed to help. Instead, their addictive power harmed many, and calls for accountability are broadening.
By: | May 1, 2018 • 8 min read

The opioid epidemic devastated families and flattened entire communities.

The Yale School of Medicine estimates that deaths are nearly doubling annually: “Between 2015 and 2016, drug overdose deaths went from 33,095 to 59,000, the largest annual jump ever recorded in the United States. That number is expected to continue unabated for the next   several years.”

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That’s roughly 160 deaths every day — and it’s a count that’s increasing daily.

In addition to deaths, the number of Americans struggling with an opioid disorder disease (the official name for opioid addiction) is staggering.

The National Institute on Drug Abuse (NIDA) estimates that 2 million people in the United States suffer from substance use disorders related to prescription opioid pain relievers, and roughly one-third of those people will “graduate” to heroin addiction.

Conversely, 80 percent of heroin addicts became addicted to opioids after being prescribed opioids.

As if the human toll wasn’t devastating enough, NIDA estimates that addiction costs reach “$78.5 billion a year, including the costs of health care, lost productivity, addiction treatment, and criminal justice involvement.”

Shep Tapasak, managing principal, Integro Insurance Brokers

With numbers like that, families are not the only ones left picking up the pieces. Municipalities, states, and the federal government are strained with heavy demand for social services and crushing expenditures related to opioid addiction.

Despite the amount of money being spent, services are inadequate and too short in duration. Wait times are so long that some people literally die waiting.

Public sector leaders saw firsthand the range and potency of the epidemic, and were among the first to seek a legal reckoning with the manufacturers of  synthetic painkillers.

Seeking redress for their financial burden, some municipalities, states and the federal government filed lawsuits against big pharmaceutical companies and manufacturers. To date, there are more than 100 lawsuits on court dockets.

States such as Ohio, West Virginia, New Jersey, Pennsylvania and Arkansas have been hit hard by the epidemic. In Arkansas alone, 72 counties, 15 cities, and the state filed suit, naming 65 defendants. In Pennsylvania, 16 counties, Philadelphia, and Commonwealth officials have filed lawsuits.

Forty one states also have banded together to subpoena information from some drug manufacturers.

Pennsylvania’s Attorney General, Josh Shapiro, recently told reporters that the banded effort seeks to “change corporate behavior, so that the industry can no longer do what I think it’s been doing, which is turning a blind eye to the effects of dumping these drugs in the communities.”

The volume of legal actions is growing, and some of the Federal cases have been bound together in what is called multidistrict litigation (MDL). These cases will be heard by a judge in Ohio. Plaintiffs hope for a settlement that will provide funding to be used to help thwart the opioid epidemic.

“From a societal perspective, this is obviously a big and impactful issue,”  said Jim George,  a managing director and global claims head with Swiss Re Corporate Solutions. “A lot of people are suffering in connection with this, and it won’t go away anytime soon.

“Insurance, especially those in liability, will be addressing this for a long time. This has been building over five or six years, and we are just now seeing the beginning stages of liability suits.” 

Basis for Lawsuits

The lawsuits filed to date are based on allegations concerning: What pharma knew or didn’t know; what it should have known; failure to monitor size and frequency of opioid orders, misrepresentation in marketing about the addictive nature of opioids; and false financial disclosures.

Opioid manufacturers, distributors and large drugstore chains together represent a $13 billion-a-year industry, meaning the stakes are high, and the pockets deep. Many have compared these lawsuits to the tobacco suits of the ’90s.

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But even that comparison may pale. As difficult as it is to quit smoking, that process is less arduous than the excruciating and often impossible-to-overcome opioid addiction.

Francis Collins, a physician-geneticist who heads the National Institutes of Health, said in a recorded session with the Washington Post: “One really needs to understand the diabolical way that this particular set of compounds rewires the brain in order to appreciate how those who become addicted really are in a circumstance where they can no more [by their own free will] get rid of the addiction than they can get free of needing to eat or drink.”

“Pharma and its supply chain need to know that this is here now. It’s not emerging, it’s here, and it’s being tried. It is a present risk.” — Nancy Bewlay, global chief underwriting officer for casualty, XL Catlin

The addiction creates an absolutely compelling drive that will cause people to do things against any measure of good judgment, said Collins, but the need to do them is “overwhelming.”

Documented knowledge of that chemistry could be devastating to insureds.

“It’s about what big pharma knew — or should have known.  A key allegation is that opioids were aggressively marketed as the clear answer or miracle cure for pain,” said Shep Tapasak, managing principal, Integro Insurance Brokers.

These cases, Tapasak said, have the potential to be severe. “This type of litigation boils down to a “profits over people” strategy, which historically has resonated with juries.”

Broadening Liability

As suits progress, all sides will be waiting and watching to see what case law stems from them. In the meantime, insurance watchers are predicting that the scope of these suits will broaden to include other players in the supply chain including manufacturers, distribution services, retail pharmacies, hospitals, physician practices, clinics, clinical laboratories and marketing agencies.

Litigation is, to some extent, about who can pay. In these cases, there are several places along the distribution chain where plaintiffs will seek relief.

Nancy Bewlay, global chief underwriting officer for casualty, XL Catlin

Nancy Bewlay, XL Catlin’s global chief underwriting officer for casualty, said that insurers and their insureds need to pay close attention to this trend.

“Pharma and its supply chain need to know that this is here now. It’s not emerging, it’s here, and it’s being tried. It is a present risk,” she said.

“We, as insurers who identify emerging risks, have to communicate to clients. We like to be on the forefront and, if we can, positively influence the outcome for our clients in terms of getting ahead of their risks.”

In addition to all aspects of the distribution chain, plaintiffs could launch suits against directors and officers based on allegations that they are ultimately responsible for what the company knew or should have known, or that they misrepresented their products or signed off on misleading financial statements.

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Shareholders, too, could take aim at directors and officers for loss of profits or misleading statements related to litigation.

Civil litigation could pave the way, in some specific instances, for criminal charges. Mississippi Attorney General Jim Hood, who in 2015 became the first state attorney general to file suit against a prescription drug maker, has been quoted as saying that if evidence in civil suits points to criminal behavior, he won’t hesitate to file those charges as well.

Governing, a publication for municipalities and states, quoted Hood in late 2017 as saying, “If we get into those emails, and executives are in the chain knowing what they’ve unleashed on the American public, I’m going to kick it over to a criminal lawsuit. I’ve been to too many funerals.”

Insurers and insureds can act now to get ahead of this rising wave of liability.

It may be appropriate to conduct a review of policy underwriting and pricing. XL Catlin’s Bewlay said, “We are not writing as if everyone is a pharma manufacturer. Our perception of what is happening is that everyone is being held accountable as if they are the manufacturer.

“The reality is that when insurers look at the pharma industry and each part of the supply chain, including the pharma companies, those in the chain of distribution, transportation, sales, marketing and retail, there are different considerations and different liabilities for each. This could change the underwriting and affect pricing.”

Bewlay also suggests focusing on communications between claims teams and underwriters and keeping a strong line of communication open with insureds, too.

“We are here to partner with insureds, and we talk to them and advise them about this crisis. We encourage them to talk about it with their risk managers.”

Tapasak from Integro encourages insureds to educate themselves and be a part of the solution. “The laws are evolving,” he said. “Make absolutely certain you know your respective state laws. It’s not enough to know about the crisis, you must know the trends. Be part of the solution and get as much education as possible.

“Most states have ASHRM chapters that are helping their members to stay current on both passed and pending legislation. Health care facilities and providers want to do the right thing and get educated. And at the same time, there will likely be an uptick in frivolous claims, so it’s important to defend the claims that are defensible.”

Social Service Risk

In addition to supply chain concerns, insurers and insureds are concerned that even those whose mission it is to help could be at risk.

Hailed as a lifesaver, and approved by the Food and Drug Administration (FDA), the drug Naloxone, can be administered to someone who is overdosing on opioids.  Naloxone prevents overdose by blocking opioid receptor sites and reversing the effects of the overdose.

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Some industry experts are concerned that police and emergency responders could incur liability after administering Naloxone.

But according to the U.S. Department of Justice, “From a legal standpoint, it would be extremely difficult to win a lawsuit against an officer who administers Naloxone in good faith and in the course of employment. … Such immunity applies to … other professional responders.”

Especially hard hit are foster care agencies, both by increased child placements and stretched budgets. More details in our related coverage.

While the number of suits is growing and their aim broadening, experts think that some good will come of the litigation. Settlements will fund services for the addicted and opioid risk awareness is higher than ever. &

Mercedes Ott is managing editor of Risk & Insurance. She can be reached at [email protected]