2017 Power Broker

Pharmaceutical

Anticipating Client Needs

Dawn Buelow
Senior Vice President
Marsh, Chicago

When Japanese pharma company Astellas moved its clinical trial cover to a new carrier, an Astellas executive in the Netherlands objected. They didn’t appreciate the new carrier’s failure to provide a summary of the policy exclusions for countries where a broker is not used and the option for long-tail certificates of insurance.

The colleague lobbied hard to switch back, so Marsh’s Dawn Buelow marshaled her considerable negotiation skills and long experience with clinical trials to press the new carrier to accommodate the request.

She prevailed, even though the carrier had never agreed to this for any previous client.

“This was a huge win for us,” said Barbara Devine, Astellas’ assistant director, risk management.

A health care research and manufacturing client recently split in half. “We needed to turn over our liabilities to the newly spun-off part of the company,” said the company’s global risk manager. Buelow worked through each underwriter agreement, putting the company in a better cash and collateral position.

“Before we knew we had to do that, she had already worked through the bulk of them with the underwriters,” said the risk manager. “She spared us a lot extra work with the underwriters.”

Anticipating client needs before they’re aware of them is a habit of Buelow’s, the risk manager said.

Tackling Problems With Diligence

Aashish “A.C.” Chauhan, ARM
Director
Aon, Chicago

An insurance analyst for a global health care products manufacturer wasn’t sure if the incumbent or the prefund renewal rates for the GL and workers’ compensation lines were optimal. So A.C. Chauhan went back to the market for more proposals.

Convinced the incumbent was the right choice, he negotiated a lower prefund, and in the process, discovered collateral from the early 2000s. He studied what could be returned to the company and was able to cut premium payments by half.

“A.C. goes looking,” the insurance analyst said. “He knows what he’s doing.”

Another company executive said Chauhan used “a basic blocking attack” when re-evaluating a workers’ comp program that was ripe for bidding. The company was unhappy with some parts of the program but liked others. The “motivated incumbent” made desired changes to the program, the executive said. “He got us fairness and consistency.”

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Chauhan comes through in a pinch, said Larry Armbruster, director, insurance and risk management, Sodexo. When the company got a surprise nonrenewal notice, Chauhan had 60 days to gather information and review several policies. Late in the process, Sodexo decided to place a global policy. The timing “gave us angst and put us against the wall in gathering liability data,” he said, because the data varied with local laws and customs.

“A.C. smoothed over the differences,” and was able to put together a program that saved money. “He’s absolutely organized,” said Armbruster. “He’s an A-plus personality.”

Cutting Through the Noise

Marty Gould
Managing Director
Marsh, New York

The memory of a deadly 2012 fungal meningitis outbreak originating at a Boston-area compounding pharmacy hung like a dark shadow over one of Marty Gould’s clients as it contemplated buying a compounding pharmacy — one with a clean record. “It signaled a major shift in our risk profile,” the risk manager said.

Gould took on the task of educating more than 20 senior underwriters on the business rationale for the acquisition, differentiating between the risk the proposed acquisition posed from the risk that resulted in the meningitis outbreak, said the risk manager. Gould was able to hold most of the insurance program together, replacing the few pieces that inevitably splintered away.

“It could have been a real train wreck if the underwriters didn’t understand what and why we were acquiring,” the risk manager said. “He averted a mess.”

Gould’s communication style and relationships with insurers benefit his clients, said the risk manager for a global health care supplier. When the primary insurer on the company’s casualty program came in with an “utterly ridiculous” renewal quote last year, Gould declined it, as he did the second “still ridiculous” quote, the risk manager said.

At the end of an RFP process, a competing insurer came in with a flat renewal rate — essential to the rest of the program, because secondary insurers take their pricing cue, increase or decrease, from the primary insurer.

“He cut through the noise,” she said.

Leader and Mentor

Michelle Greene, ARM
Senior Vice President
Marsh, Boston

When a global specialty biopharmaceutical company spun out of an older company, it didn’t have much of a process for conducting clinical trials, said its risk manager.

That wasn’t a crisis at the time, but 18 months later, after “incredibly dynamic” acquisition activity, it was conducting 100-plus trials at any given time. Michelle Greene helped avert disaster by aiding the company in revamping its clinical trial processes, including tracking protocols, informed consent documents and FDA-required procedures.

“That kind of work required leadership on Michelle’s part and repeatable, sustainable processes on our side,” the risk manager said.

The company also inherited considerable inefficiencies when it spun out of its owner. “We took the existing insurance program whether it was a good fit or not.”

With a scrupulous eye to shaping the new company’s casualty and liability coverage around mitigating its actual risks, not merely producing an insurance certificate, Greene eliminated overbilling and “right-sized” the program, the risk manager said.

The company’s treasury analyst, who is relatively new to her insurance responsibilities, also credited Greene with the soft skills of “leadership and mentoring” as well as shaping a competitive insurance program.

“She a great trainer of future leaders,” the treasury analyst said. “She’s so knowledgeable. Very humble. A great listener.”

The ‘Gold Standard’

Amy Klitzke, ARM
Vice President
Aon, Minneapolis

Amy Klitzke brings a “gold standard” knowledge of coverage, said Deb Harder, vice president, risk management, inVentiv Health. “And she’s thorough.”

Klitzke united those traits when reviewing a D&O policy drafted by a prominent law firm, scrutinizing every word, submitting replacement language and producing “skinnied-down policy language” that prompted less pushback from underwriters.

In the world of global clinical trials, Harder said, perfectionism with D&O policies is essential. “With others, I try to be patient, but I don’t have to be with Amy. She responds completely and thoroughly.”

Lé Andra Holly, senior manager, risk management, Staples, depends on Klitzke to flag uncovered risks, such as active shooter and workplace violence. Applying savings Klitzke negotiated from renewals, the coverage cost is “nothing to very little,” Holly said.

Klitzke brought the same attention to detail to a global leader in beauty salons and cosmetology education. Even before being awarded the insurance program, Klitzke identified two dozen coverage deficiencies and gaps, and resolved 16 of them.

Once hired, she established a learning center that included, among other things, a crime prevention and response program.

“She works as easily with senior management as with day-to-day folks,” said the company’s risk manager. “She’s always thorough, always concise and clear.”

An Advocate and Communicator

Walker Taylor, CPCU
Managing Director
Arthur J. Gallagher, Wilmington, N.C.

With the acquisition of several high-risk products, Akorn Pharmaceuticals needed a way to bring its new product portfolio into its insurance program. Akorn engaged Arthur J. Gallagher’s Walker Taylor to guide its annual renewal. Favorable terms were a priority.

“We were impressed with [Taylor’s] grasp of the science and the business points,” said Akorn’s general counsel Joe Bonaccorsi. Taylor procured the lines Akorn sought under favorable terms.

“He’s a good advocate and a good communicator,” Bonaccorsi said, and he’s able to speak in plain language to attorneys, scientists and the R&D teams.

When two private equity companies bought a large contract research organization, they transferred the existing insurance program — which included professional services, E&O, medical malpractice and product liability — from Taylor to their own broker.

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That relationship didn’t work out, so the organization’s general counsel prevailed upon the new owners to meet with Taylor, who pitched a return under a flat fee arrangement for two years. His program generated savings, far outstripping the other broker in cost and performance. It also included new, robust cyber security coverage, necessary because of the volume of personal health data in the client’s databases.

Still, the owners hired an independent third party to scrutinize the program. “They had zero recommendations for improvement,” the attorney said.

Finalists:

Grant Bell
Senior Vice President
Marsh, Atlanta

Warren Printz
Senior Vice President
Marsh, Cleveland

More from Risk & Insurance

More from Risk & Insurance

2017 RIMS

Resilience in Face of Cyber

New cyber model platforms will help insurers better manage aggregation risk within their books of business.
By: | April 26, 2017 • 3 min read

As insurers become increasingly concerned about the aggregation of cyber risk exposures in their portfolios, new tools are being developed to help them better assess and manage those exposures.

One of those tools, a comprehensive cyber risk modeling application for the insurance and reinsurance markets, was announced on April 24 by AIR Worldwide.

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Last year at RIMS, AIR announced the release of the industry’s first open source deterministic cyber risk scenario, subsequently releasing a series of scenarios throughout the year, and offering the service to insurers on a consulting basis.

Its latest release, ARC– Analytics of Risk from Cyber — continues that work by offering the modeling platform for license to insurance clients for internal use rather than on a consulting basis. ARC is separate from AIR’s Touchstone platform, allowing for more flexibility in the rapidly changing cyber environment.

ARC allows insurers to get a better picture of their exposures across an entire book of business, with the help of a comprehensive industry exposure database that combines data from multiple public and commercial sources.

Scott Stransky, assistant vice president and principal scientist, AIR Worldwide

The recent attacks on Dyn and Amazon Web Services (AWS) provide perfect examples of how the ARC platform can be used to enhance the industry’s resilience, said Scott Stransky, assistant vice president and principal scientist for AIR Worldwide.

Stransky noted that insurers don’t necessarily have visibility into which of their insureds use Dyn, Amazon Web Services, Rackspace, or other common internet services providers.

In the Dyn and AWS events, there was little insured loss because the downtime fell largely just under policy waiting periods.

But,” said Stransky, “it got our clients thinking, well it happened for a few hours – could it happen for longer? And what does that do to us if it does? … This is really where our model can be very helpful.”

The purpose of having this model is to make the world more resilient … that’s really the goal.” Scott Stransky, assistant vice president and principal scientist, AIR Worldwide

AIR has run the Dyn incident through its model, with the parameters of a single day of downtime impacting the Fortune 1000. Then it did the same with the AWS event.

When we run Fortune 1000 for Dyn for one day, we get a half a billion dollars of loss,” said Stransky. “Taking it one step further – we’ve run the same exercise for AWS for one day, through the Fortune 1000 only, and the losses are about $3 billion.”

So once you expand it out to millions of businesses, the losses would be much higher,” he added.

The ARC platform allows insurers to assess cyber exposures including “silent cyber,” across the spectrum of business, be it D&O, E&O, general liability or property. There are 18 scenarios that can be modeled, with the capability to adjust variables broadly for a better handle on events of varying severity and scope.

Looking ahead, AIR is taking a closer look at what Stransky calls “silent silent cyber,” the complex indirect and difficult to assess or insure potential impacts of any given cyber event.

Stransky cites the 2014 hack of the National Weather Service website as an example. For several days after the hack, no satellite weather imagery was available to be fed into weather models.

Imagine there was a hurricane happening during the time there was no weather service imagery,” he said. “[So] the models wouldn’t have been as accurate; people wouldn’t have had as much advance warning; they wouldn’t have evacuated as quickly or boarded up their homes.”

It’s possible that the losses would be significantly higher in such a scenario, but there would be no way to quantify how much of it could be attributed to the cyber attack and how much was strictly the result of the hurricane itself.

It’s very, very indirect,” said Stransky, citing the recent hack of the Dallas tornado sirens as another example. Not only did the situation jam up the 911 system, potentially exacerbating any number of crisis events, but such a false alarm could lead to increased losses in the future.

The next time if there’s a real tornado, people make think, ‘Oh, its just some hack,’ ” he said. “So if there’s a real tornado, who knows what’s going to happen.”

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Modeling for “silent silent cyber” remains elusive. But platforms like ARC are a step in the right direction for ensuring the continued health and strength of the insurance industry in the face of the ever-changing specter of cyber exposure.

Because we have this model, insurers are now able to manage the risks better, to be more resilient against cyber attacks, to really understand their portfolios,” said Stransky. “So when it does happen, they’ll be able to respond, they’ll be able to pay out the claims properly, they’ll be prepared.

The purpose of having this model is to make the world more resilient … that’s really the goal.”

Additional stories from RIMS 2017:

Blockchain Pros and Cons

If barriers to implementation are brought down, blockchain offers potential for financial institutions.

Embrace the Internet of Things

Risk managers can use IoT for data analytics and other risk mitigation needs, but connected devices also offer a multitude of exposures.

Feeling Unprepared to Deal With Risks

Damage to brand and reputation ranked as the top risk concern of risk managers throughout the world.

Reviewing Medical Marijuana Claims

Liberty Mutual appears to be the first carrier to create a workflow process for evaluating medical marijuana expense reimbursement requests.

Cyber Threat Will Get More Difficult

Companies should focus on response, resiliency and recovery when it comes to cyber risks.

RIMS Conference Held in Birthplace of Insurance in US

Carriers continue their vital role of helping insureds mitigate risks and promote safety.

Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]