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

Insurtech

Kiss Your Annual Renewal Goodbye; On-Demand Insurance Challenges the Traditional Policy

Gig workers' unique insurance needs drive delivery of on-demand coverage.
By: | September 14, 2018 • 6 min read

The gig economy is growing. Nearly six million Americans, or 3.8 percent of the U.S. workforce, now have “contingent” work arrangements, with a further 10.6 million in categories such as independent contractors, on-call workers or temporary help agency staff and for-contract firms, often with well-known names such as Uber, Lyft and Airbnb.

Scott Walchek, founding chairman and CEO, Trōv

The number of Americans owning a drone is also increasing — one recent survey suggested as much as one in 12 of the population — sparking vigorous debate on how regulation should apply to where and when the devices operate.

Add to this other 21st century societal changes, such as consumers’ appetite for other electronic gadgets and the advent of autonomous vehicles. It’s clear that the cover offered by the annually renewable traditional insurance policy is often not fit for purpose. Helped by the sophistication of insurance technology, the response has been an expanding range of ‘on-demand’ covers.

The term ‘on-demand’ is open to various interpretations. For Scott Walchek, founding chairman and CEO of pioneering on-demand insurance platform Trōv, it’s about “giving people agency over the items they own and enabling them to turn on insurance cover whenever they want for whatever they want — often for just a single item.”

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“On-demand represents a whole new behavior and attitude towards insurance, which for years has very much been a case of ‘get it and forget it,’ ” said Walchek.

Trōv’s mobile app enables users to insure just a single item, such as a laptop, whenever they wish and to also select the period of cover required. When ready to buy insurance, they then snap a picture of the sales receipt or product code of the item they want covered.

Welcoming Trōv: A New On-Demand Arrival

While Walchek, who set up Trōv in 2012, stressed it’s a technology company and not an insurance company, it has attracted industry giants such as AXA and Munich Re as partners. Trōv began the U.S. roll-out of its on-demand personal property products this summer by launching in Arizona, having already established itself in Australia and the United Kingdom.

“Australia and the UK were great testing grounds, thanks to their single regulatory authorities,” said Walchek. “Trōv is already approved in 45 states, and we expect to complete the process in all by November.

“On-demand products have a particular appeal to millennials who love the idea of having control via their smart devices and have embraced the concept of an unbundling of experiences: 75 percent of our users are in the 18 to 35 age group.” – Scott Walchek, founding chairman and CEO, Trōv

“On-demand products have a particular appeal to millennials who love the idea of having control via their smart devices and have embraced the concept of an unbundling of experiences: 75 percent of our users are in the 18 to 35 age group,” he added.

“But a mass of tectonic societal shifts is also impacting older generations — on-demand cover fits the new ways in which they work, particularly the ‘untethered’ who aren’t always in the same workplace or using the same device. So we see on-demand going into societal lifestyle changes.”

Wooing Baby Boomers

In addition to its backing for Trōv, across the Atlantic, AXA has partnered with Insurtech start-up By Miles, launching a pay-as-you-go car insurance policy in the UK. The product is promoted as low-cost car insurance for drivers who travel no more than 140 miles per week, or 7,000 miles annually.

“Due to the growing need for these products, companies such as Marmalade — cover for learner drivers — and Cuvva — cover for part-time drivers — have also increased in popularity, and we expect to see more enter the market in the near future,” said AXA UK’s head of telematics, Katy Simpson.

Simpson confirmed that the new products’ initial appeal is to younger motorists, who are more regular users of new technology, while older drivers are warier about sharing too much personal information. However, she expects this to change as on-demand products become more prevalent.

“Looking at mileage-based insurance, such as By Miles specifically, it’s actually older generations who are most likely to save money, as the use of their vehicles tends to decline. Our job is therefore to not only create more customer-centric products but also highlight their benefits to everyone.”

Another Insurtech ready to partner with long-established names is New York-based Slice Labs, which in the UK is working with Legal & General to enter the homeshare insurance market, recently announcing that XL Catlin will use its insurance cloud services platform to create the world’s first on-demand cyber insurance solution.

“For our cyber product, we were looking for a partner on the fintech side, which dovetailed perfectly with what Slice was trying to do,” said John Coletti, head of XL Catlin’s cyber insurance team.

“The premise of selling cyber insurance to small businesses needs a platform such as that provided by Slice — we can get to customers in a discrete, seamless manner, and the partnership offers potential to open up other products.”

Slice Labs’ CEO Tim Attia added: “You can roll up on-demand cover in many different areas, ranging from contract workers to vacation rentals.

“The next leap forward will be provided by the new economy, which will create a range of new risks for on-demand insurance to respond to. McKinsey forecasts that by 2025, ecosystems will account for 30 percent of global premium revenue.

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“When you’re a start-up, you can innovate and question long-held assumptions, but you don’t have the scale that an insurer can provide,” said Attia. “Our platform works well in getting new products out to the market and is scalable.”

Slice Labs is now reviewing the emerging markets, which aren’t hampered by “old, outdated infrastructures,” and plans to test the water via a hackathon in southeast Asia.

Collaboration Vs Competition

Insurtech-insurer collaborations suggest that the industry noted the banking sector’s experience, which names the tech disruptors before deciding partnerships, made greater sense commercially.

“It’s an interesting correlation,” said Slice’s managing director for marketing, Emily Kosick.

“I believe the trend worth calling out is that the window for insurers to innovate is much shorter, thanks to the banking sector’s efforts to offer omni-channel banking, incorporating mobile devices and, more recently, intelligent assistants like Alexa for personal banking.

“Banks have bought into the value of these technology partnerships but had the benefit of consumer expectations changing slowly with them. This compares to insurers who are in an ever-increasing on-demand world where the risk is high for laggards to be left behind.”

As with fintechs in banking, Insurtechs initially focused on the retail segment, with 75 percent of business in personal lines and the remainder in the commercial segment.

“Banks have bought into the value of these technology partnerships but had the benefit of consumer expectations changing slowly with them. This compares to insurers who are in an ever-increasing on-demand world where the risk is high for laggards to be left behind.” — Emily Kosick, managing director, marketing, Slice

Those proportions may be set to change, with innovations such as digital commercial insurance brokerage Embroker’s recent launch of the first digital D&O liability insurance policy, designed for venture capital-backed tech start-ups and reinsured by Munich Re.

Embroker said coverage that formerly took weeks to obtain is now available instantly.

“We focus on three main issues in developing new digital business — what is the customer’s pain point, what is the expense ratio and does it lend itself to algorithmic underwriting?” said CEO Matt Miller. “Workers’ compensation is another obvious class of insurance that can benefit from this approach.”

Jason Griswold, co-founder and chief operating officer of Insurtech REIN, highlighted further opportunities: “I’d add a third category to personal and business lines and that’s business-to-business-to-consumer. It’s there we see the biggest opportunities for partnering with major ecosystems generating large numbers of insureds and also big volumes of data.”

For now, insurers are accommodating Insurtech disruption. Will that change?

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“Insurtechs have focused on products that regulators can understand easily and for which there is clear existing legislation, with consumer protection and insurer solvency the two issues of paramount importance,” noted Shawn Hanson, litigation partner at law firm Akin Gump.

“In time, we could see the disruptors partner with reinsurers rather than primary carriers. Another possibility is the likes of Amazon, Alphabet, Facebook and Apple, with their massive balance sheets, deciding to link up with a reinsurer,” he said.

“You can imagine one of them finding a good Insurtech and buying it, much as Amazon’s purchase of Whole Foods gave it entry into the retail sector.” &

Graham Buck is a UK-based writer and has contributed to Risk & Insurance® since 1998. He can be reached at riskletters.com.