2017 Power Broker


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
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.”


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.


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.


Grant Bell
Senior Vice President
Marsh, Atlanta

Warren Printz
Senior Vice President
Marsh, Cleveland

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.