Brokers

Policy Haunts Halloween Attraction

A sunken haunted house attraction resulted in a lawsuit against the insurance broker.
By: | September 14, 2016 • 2 min read

It was a Halloween trick the theater company didn’t expect.

Between Oct. 31, 2014 and the following morning, the Foundation Theatre Group’s haunted house attraction on a floating stationary barge at Chicago’s Navy Pier sank during a storm.

A more disconcerting surprise came afterward: It discovered its commercial general liability insurer denied coverage.

The ghoul, according to the theater group, is their insurance brokerage, which they accuse of negligently failing to place insurance coverage that would “cover, among other things, storms and sinking,” according to a lawsuit filed on June 15.

Foundation Theatre Group sued New Lisbon, Wisc.-based Donat Insurance Services and Kenneth Donat, its director of special events, in U.S. District Court for the Northern District of Illinois, seeking at least $1.5 million in damages.

The brokerage was instructed to protect the theater company “for possible losses to the barge, including marine and hull risks, protection and indemnity insurance, pollution liability insurance, crew insurance and excess insurance,” according to the lawsuit.

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“Donat and Donat Insurance, acting as agents for Foundation, negligently failed to exercise the proper knowledge, skill and professional care of someone engaged in the business of procuring insurance policies … ,” the lawsuit alleged.

It noted that the brokerage “promotes themselves as ‘one of the best in the special events insurance industry,’ as someone a customer ‘can truly trust that knows the industry from the inside out,’ and as someone that can provide ‘the most comprehensive coverage available.’ ”

The sinking of the barge resulted in several different lawsuits, including one from Capitol Specialty Insurance Corp., which issued the CGL policy, seeking a court declaration that it does not need to provide a defense or indemnity to the theater group.

Donat’s attorney, Mitchell A. Orpett of Tribler Orpett & Meyer, said in an email that the brokerage denies any liability.

The litigation is “only one version of a complicated situation,” he said, and the theater group is “the target of several other companies who have attempted to blame Foundation and thereby escape their own responsibility and legal liability for the damages they caused at Navy Pier.”

He said the theater group’s lawsuit, “I am confident, [was] only reluctantly filed as a defense to the unwarranted claims of the others. I am confident as well that Foundation’s lawsuit will be resolved without any finding of liability against Mr. Donat or Donat Insurance Services.” &

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

More from Risk & Insurance

More from Risk & Insurance

2018 Risk All Stars

Stop Mitigating Risk. Start Conquering It Like These 2018 Risk All Stars

The concept of risk mastery and ownership, as displayed by the 2018 Risk All Stars, includes not simply seeking to control outcomes but taking full responsibility for them.
By: | September 14, 2018 • 3 min read

People talk a lot about how risk managers can get a seat at the table. The discussion implies that the risk manager is an outsider, striving to get the ear or the attention of an insider, the CEO or CFO.

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But there are risk managers who go about things in a different way. And the 2018 Risk All Stars are prime examples of that.

These risk managers put in gear their passion, creativity and perseverance to become masters of a situation, pushing aside any notion that they are anything other than key players.

Goodyear’s Craig Melnick had only been with the global tire maker a few months when Hurricane Harvey dumped a record amount of rainfall on Houston.

Brilliant communication between Melnick and his new teammates gave him timely and valuable updates on the condition of manufacturing locations. Melnick remained in Akron, mastering the situation by moving inventory out of the storm’s path and making sure remediation crews were lined up ahead of time to give Goodyear its best leg up once the storm passed and the flood waters receded.

Goodyear’s resiliency in the face of the storm gave it credibility when it went to the insurance markets later that year for renewals. And here is where we hear a key phrase, produced by Kevin Garvey, one of Goodyear’s brokers at Aon.

“The markets always appreciate a risk manager who demonstrates ownership,” Garvey said, in what may be something of an understatement.

These risk managers put in gear their passion, creativity and perseverance to become masters of a situation, pushing aside any notion that they are anything other than key players.

Dianne Howard, a 2018 Risk All Star and the director of benefits and risk management for the Palm Beach County School District, achieved ownership of $50 million in property storm exposures for the district.

With FEMA saying it wouldn’t pay again for district storm losses it had already paid for, Howard went to the London markets and was successful in getting coverage. She also hammered out a deal in London that would partially reimburse the district if it suffered a mass shooting and needed to demolish a building, like what happened at Sandy Hook in Connecticut.

2018 Risk All Star Jim Cunningham was well-versed enough to know what traditional risk management theories would say when hospitality workers were suffering too many kitchen cuts. “Put a cut-prevention plan in place,” is the traditional wisdom.

But Cunningham, the vice president of risk management for the gaming company Pinnacle Entertainment, wasn’t satisfied with what looked to him like a Band-Aid approach.

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Instead, he used predictive analytics, depending on his own team to assemble company-specific data, to determine which safety measures should be used company wide. The result? Claims frequency at the company dropped 60 percent in the first year of his program.

Alumine Bellone, a 2018 Risk All Star and the vice president of risk management for Ardent Health Services, faced an overwhelming task: Create a uniform risk management program when her hospital group grew from 14 hospitals in three states to 31 hospitals in seven.

Bellone owned the situation by visiting each facility right before the acquisition and again right after, to make sure each caregiving population was ready to integrate into a standardized risk management system.

After consolidating insurance policies, Bellone achieved $893,000 in synergies.

In each of these cases, and in more on the following pages, we see examples of risk managers who weren’t just knocking on the door; they were owning the room. &

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Risk All Stars stand out from their peers by overcoming challenges through exceptional problem solving, creativity, clarity of vision and passion.

See the complete list of 2018 Risk All Stars.

Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at [email protected]