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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

High Net Worth

High Net Worth Clients Live in CAT Zones. Here’s What Their Resiliency Plan Should Include

Having a resiliency plan and practicing it can make all the difference in a disaster.
By: | September 14, 2018 • 7 min read

Packed with state-of-the-art electronics, priceless collections and high-end furnishings, and situated in scenic, often remote locations, the dwellings of high net worth individuals and families pose particular challenges when it comes to disaster resiliency. But help is on the way.

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Armed with loss data, innovative new programs, technological advances, and a growing army of niche service-providers aimed at addressing an astonishingly diverse set of risks, insurers are increasingly determined to not just insure against their high net worth clients’ losses, but to prevent them.

Insurers have long been proactive in risk mitigation, but increasingly, after the recent surge in wildfire and storm losses, insureds are now, too.

“Before, insurance was considered the only step in risk management. Now, our client families realize it is one of the many imperative steps in an effective risk management strategy,” said Laura Sherman, founding partner at Baldwin Krystyn Sherman Partners.

And especially in the high net worth space, preventing that loss is vastly preferable to a payout, for insurers and insureds alike.

“If insurers can preserve even one house that’s 10 or 20 or 40 million dollars … whatever they have spent in a year is money well spent. Plus they’ve saved this important asset for the client,” said Bruce Gendelman, chairman and founder Bruce Gendelman Insurance Services.

High Net Worth Vulnerabilities

Laura Sherman, founding partner, Baldwin Krystyn Sherman Partners

As the number and size of luxury homes built in vulnerable areas has increased, so has the frequency and magnitude of extreme weather events, including hurricanes, harsh cold and winter storms, and wildfires.

“There is a growing desire to inhabit this riskier terrain,” said Jason Metzger, SVP Risk Management, PURE group of insurance companies. “In the western states alone, a little over a million homes are highly vulnerable to wildfires because of their proximity to forests that are fuller of fuel than they have been in years past.”

Such homes are often filled with expensive artwork and collections, from fine wine to rare books to couture to automobiles, each presenting unique challenges. The homes themselves present other vulnerabilities.

“Larger, more sophisticated homes are bristling with more technology than ever,” said Stephen Poux, SVP and head of Risk Management Services and Loss Prevention for AIG’s Private Client Group.

“A lightning strike can trash every electronic in the home.”

Niche Service Providers

A variety of niche service providers are stepping forward to help.

Secure facilities provide hurricane-proof, wildfire-proof off-site storage for artwork, antiques, and all manner of collectibles for seasonal or rotating storage, as well as ahead of impending disasters.

Other companies help manage such collections — a substantial challenge anytime, but especially during a crisis.

“Knowing where it is, is a huge part of mitigating the risk,” said Eric Kahan, founder of Collector Systems, a cloud-based collection management company that allows collectors to monitor their collections during loans to museums, transit between homes, or evacuation to secure storage.

“Before, insurance was considered the only step in risk management. Now, our client families realize it is one of the many imperative steps in an effective risk management strategy.” — Laura Sherman, founding partner, Baldwin Krystyn Sherman Partners

Insurers also employ specialists in-house. AIG employs four art curators who advise clients on how to protect and preserve their art collections.

Perhaps the best known and most striking example of this kind of direct insurer involvement are the fire teams insurers retain or employ to monitor fires and even spray retardant or water on threatened properties.

High-Level Service for High Net Worth

All high net worth carriers have programs that leverage expertise, loss data, and relationships with vendors to help clients avoid and recover from losses, employing the highest levels of customer service to accomplish this as unobtrusively as possible.

“What allows you to do your job best is when you develop that relationship with a client, where it’s the same people that are interacting with them on every front for their risk management,” said Steve Bitterman, chief risk services officer for Vault Insurance.

Site visits are an essential first step, allowing insurers to assess risks, make recommendations to reduce them, and establish plans in the event of a disaster.

“When you’re in a catastrophic situation, it’s high stress, time is of the essence, and people forget things,” said Sherman. “Having a written plan in place is paramount to success.”

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Another important component is knowing who will execute that plan in homes that are often unoccupied.

Domestic staff may lack the knowledge or authority to protect the homeowner’s assets, and during a disaster may be distracted dealing with threats to their own homes and families. Adequate planning includes ensuring that whoever is responsible has the training and authority to execute the plan.

Evaluating New Technology

Insurers use technologies like GPS and satellite imagery to determine which homes are directly threatened by storms or wildfires. They also assess and vet technologies that can be implemented by homeowners, from impact glass to alarm and monitoring systems, to more obscure but potentially more important options.

AIG’s Poux recommends two types of vents that mitigate important, and unexpected risks.

“There’s a fantastic technology called Smart Vent, which allows water to flow in and out of the foundation,” Poux said. “… The weight of water outside a foundation can push a foundation wall in. If you equalize that water inside and out at the same level, you negate that.”

Another wildfire risk — embers getting sucked into the attic — is, according to Poux, “typically the greatest cause of the destruction of homes.” But, he said, “Special ember-resisting venting, like Brandguard Vents, can remove that exposure altogether.”

Building Smart

Many disaster resiliency technologies can be applied at any time, but often the cost is fractional if implemented during initial construction. AIG’s Smart Build is a free program for new or remodeled homes that evolved out of AIG’s construction insurance programs.

Previously available only to homes valued at $5 million and up, Smart Build recently expanded to include homes of $1 million and up. Roughly 100 homes are enrolled, with an average value of $13 million.

“In the high net worth space, sometimes it takes longer potentially to recover, simply because there are limited contractors available to do specialty work.” — Curt Goetsch, head of underwriting, Private Client Group, Ironshore

“We know what goes wrong in high net worth homes,” said Poux, citing AIG’s decades of loss data.

“We’re incenting our client and by proxy their builder, their architects and their broker, to give us a seat at the design table. … That enables us to help tweak the architectural plans in ways that are very easy to do with a pencil, as opposed to after a home is built.”

Poux cites a remote ranch property in Texas.

Curt Goetsch, head of underwriting, Private Client Group, Ironshore

“The client was rebuilding a home but also installing new roads and grading and driveways. … The property was very far from the fire department and there wasn’t any available water on the property.”

Poux’s team was able to recommend underground water storage tanks, something that would have been prohibitively expensive after construction.

“But if the ground is open and you’ve got heavy equipment, it’s a relatively minor additional expense.”

Homes that graduate from the Smart Build program may be eligible for preferred pricing due to their added resilience, Poux said.

Recovery from Loss

A major component of disaster resiliency is still recovery from loss, and preparation is key to the prompt service expected by homeowners paying six- or seven-figure premiums.

Before Irma, PURE sent contact information for pre-assigned claim adjusters to insureds in the storm’s direct path.

“In the high net worth space, sometimes it takes longer potentially to recover, simply because there are limited contractors available to do specialty work,” said Curt Goetsch, head of underwriting for Ironshore’s Private Client Group.

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“If you’ve got custom construction or imported materials in your house, you’re not going to go down the street and just find somebody that can do that kind of work, or has those materials in stock.”

In the wake of disaster, even basic services can be scarce.

“Our claims and risk management departments have to work together in advance of the storm,” said Bitterman, “to have contractors and restoration companies and tarp and board services that are going to respond to our company’s clients, that will commit resources to us.”

And while local agents’ connections can be invaluable, Goetsch sees insurers taking more of that responsibility from the agent, to at least get the claim started.

“When there is a disaster, the agency’s staff may have to deal with personal losses,” Goetsch said. &

Jon McGoran is a novelist and magazine editor based outside of Philadelphia. He can be reached at [email protected]