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2017 Power Broker

Real Estate

A Key Innovator

Robert Colburn
Principal
ColburnColburn, Bloomfield Hills, Mich.

One of Robert Colburn’s clients faced challenges with the historic renovation of some of its buildings and the purchase of vacant distressed properties. Colburn was able to create and negotiate a program with the carriers to successfully mitigate the risks and costs across the entire portfolio.

Another developer, owner and property manager just recapitalized a high-rise office property with extensive catastrophe exposure and a high total insurable value. The lender imposed a new set of loan and insurance terms including high limits for flood and wind coverage. But because capacity wasn’t readily available in the traditional marketplace, Colburn had to go directly to the carrier’s top management to obtain the necessary limits to meet the lender’s requirements.

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“Even while on a family vacation in a different time zone, Robert accommodated several conference calls, which is a clear example of dedication,” said his client, William Gilbert, vice president and corporate controller at REDICO Management.

For another client, he leveraged his relationship with a carrier to create a stand-alone property program with comparable terms to its historic master global property program run by its joint venture partner. He was able to negotiate significant savings on the property rate and lower the attachment point in line with the client’s risk tolerance.

“Once Robert has the ball on something, I don’t need to worry about whether it gets done — I know it will,” said his client.

Man of Many Talents

Michael Feinberg
Executive Vice President
Alliant Insurance Services Inc., Boston

When one of Michael Feinberg’s clients was left without a competitive policy for its multi-building phased development project, Feinberg was quick to act.

Designing an $80 million-limit residential builder’s risk coverage in a secondary market policy form, he was able to achieve best-in-class coverage terms as well as a lower price and more favorable security terms than quoted by the incumbent.

Another client suffered fire damage to a $500,000 HVAC chiller at one of its properties in South Carolina, but the insurers were only willing to replace the control board with a retrofit model. When the client insisted that a new chiller was the only way to ensure proper HVAC operation, Feinberg spent more than six months advocating to 11 insurers and received a $530,000 payment to replace the chiller.

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In another case, he redesigned a large residential real estate client’s property insurance placement after the incumbent declined to renew after substantial flood losses.

Feinberg successfully procured the same coverage at a lower rate, including a $20 million flood aggregate with a $10 million aggregate in high hazard to meet the lender’s requirements.

“Mike has a personal feeling for every loss — he treats it like it’s his own,” said his client Edward J. Easton, owner of the Easton Group. “He’s extremely professional and highly responsive to everything that we do to meet our insurance needs.”

A Force of Nature

Alexandra Glickman
Managing Director
Arthur J. Gallagher, Glendale, Calif.

Starting a multimillion dollar five-star destination resort from scratch is never easy. Risks to consider include potential business interruption due to offshore pollution and contingent business interruption for shipments of one-of-a-kind materials.

That’s not to mention the decision to go with owner controlled or contractor controlled insurance programs.
That was the challenge facing Alexandra Glickman when her client Caruso Affiliated announced a new California coast development.

Having gone out to about 30 markets, she came up with a comprehensive and highly manuscripted insurance and risk-financing program that satisfied all parties’ needs.

She also put together a liability and property insurance program for a real estate investment trust that runs an incubator for startups in its properties across the country.

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“To be able to structure a deal that protected not only our interests and the interests of the landlord, but also to provide the startups with a simple license solution was a big win for us, both in terms of coverage and cost,” said her client.

“Alexandra is a force of nature — she’s probably one of the best brokers on the West Coast, if not in the country.”

Another client said: “Alexandra sets the tone immediately in familiarizing her clients with delivery expectations, given her real estate knowledge and stellar relationships with the insurance markets and professional networks.”

‘He’s That Good’

Mike Gong, CIC, CAWC
Area Vice President
Arthur J. Gallagher, Fresno, Calif

Mike Gong discovered that a self-storage client was paying far more than necessary for flood insurance. Working closely with the client and a risk management company specializing in flood risk, Gong proved that the majority of the client’s buildings weren’t in a flood zone, and convinced the client’s lender to amend its insurance requirement, saving the client 80 percent on its flood insurance premiums.

“Mike understands how our business works and is quick to resolve issues that arise from time to time,” said Charlie Fritts, COO for Storage Investment Management. “Because of his extensive experience he knows many of the underwriters whom he will contact personally when he feels he can make a good argument for a lower rate.”

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He has also come up with a solution for self-storage clients whose properties don’t conform to local zoning laws, which enables them to rebuild their real estate asset and indemnifies against losses.

“Mike’s key strengths are his knowledge and customer service,” said another client, Terry Aston, vice president at Carlo Development Co.

“I just send something to him and I never even have to think about it again — he’s that good.”
Another client said: “I have dealt with many brokers and agents during my time but Mike is up there with the best.”

Taking It to the Next Level

Tony Lorber
Senior Vice President
EPIC, San Francisco

When one of Tony Lorber’s clients told him it wanted to purchase earthquake insurance on its large portfolio of properties, it was time to put his thinking cap on.

Leveraging the use of earthquake models and analytics as well as his knowledge of the market, he quickly identified specific criteria where the client didn’t need to buy cover on all of its properties, on a program the client admits is difficult to insure.

This allowed the client to maximize the amount of coverage it could purchase at the best value. Last year, his client asked him to develop a new methodology that would significantly increase the number of properties included without a rise in premium.
He was able to achieve this by looking at every building on a case-by-case basis and then utilized his contacts to find the best carriers.

In another case, he recommended that his client could take greater control of its general liability losses if it had a larger retention, while also providing cost savings.

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He took about six months to finally convince the carrier that this approach made sense for his client and how it could implement this practice going forward.

“Tony is probably the most experienced and knowledgeable broker that I have ever worked with,” said Shanna Berrien, director of risk and insurance at CWS Capital Partners.

Another client said: “Tony just takes broking to a new level with his unique approach, hard work and dedication, meaning that he always exceeds our expectations.”

The One to Rely on for Complex Projects

Fred Zutel, CIC
Senior Vice President
Willis Towers Watson, Miami

When real estate development company BH3 Management decided to build a $200 million-plus ultra-luxury condominium project on Miami’s last private island, they turned to Fred Zutel.

He managed to secure an extremely competitive program, reducing the projected premium spend by more than $1.5 million, while leveraging analytics to negotiate insurance requirements with the lender and optimizing the builder’s risk program.

For another developer working on a condo project of similar size, he structured a unique surety program that saved millions and significantly reduced overall exposure.
Rocco Carlucci, director of risk management at Property Markets Group, for whom Zutel designed a new program, said: “Over the course of the 11 months that we worked together, Fred has brought to light issues that previously existed that we were then able to address at renewal, as well as to make sure that we are adhering to industry best practice.

“Fred has gone out of his way time and time again to make sure I understand what we’re discussing and why it’s important. He’s taken the time to make me feel comfortable with the options presented and in determining what solution works best.”

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Another developer client said: “Fred has always provided exceptional customer service.

“He is extremely responsive and has a quick turnaround. He always delivers when or before he says he will.”

Finalists:

Nancy Ayers
Senior Vice President
Alliant/Mesirow Insurance Services, Chicago

William Bray
Vice President
Wells Fargo, Houston

Robert Mazzaro
Managing Director
Marsh, New York

Caroline Parrish
Senior Property Broker
Aon, Miami

Nicholas Rawden
Vice President
Marsh, New York

More from Risk & Insurance

More from Risk & Insurance

High Net Worth

To the High Net Worth Homeowner: Build a Disaster Resiliency Plan You Can Be Proud Of

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]