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Thinking Outside the (Very Big) Box

Managing, measuring, monitoring with large property.
By: | January 9, 2017 • 3 min read

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In the space where large property brokers play, it’s important to use capital responsibly.

For instance, consider all of the components of a state operation.  This can include buildings, agencies, officials and boards along with universities, parks, airports, and in some cases, sports arenas, as part of the package.  Another example is a multi-media organization. Risks involve network and distribution, and also entertainment and film/video production exposures.  A major retail chain, with tens of thousands of locations from coast to coast and all of the stock and cash flow exposures that are critical business assets, is a third type of a complex operation.

Nationwide_sponsoredcontent_0117And all of these require coverage.

“Brokers need a stable partner with the ability to offer larger property lines. As part of Nationwide, we have a competitive edge to offer significantly more in-house limit capacity than many other carriers,” said Tom Jurgens, senior vice president, Brokerage at Nationwide.

Though Nationwide has the capital to handle high limits, it is very strategic in its approach to writing these risks.  For John Brunette, senior director, Brokerage Property, this means thinking outside a very big box to come up with solutions that provide the perfect balance of protection and profitability.

“The key is leveraging capacity deployment throughout the risk,” he said. “When we deploy capacity in lower layers, we’re also looking to deploy additional capacity in the excess layers. Understanding the concentration and knowing where you can add more –that’s what thoughtful deployment of capacity is really about.”

Nationwide_sponsoredcontent_0117Brunette also emphasized the importance of taking a mindful, measured approach to risk, especially in today’s insurance and financial landscape.

“The economy has improved, and there is capital coming off the sidelines,” he said. “There are lots of deals being made, but many of these investors are not insurance people, and as such, often don’t fully understand the exposure involved.”

For Brunette, this starts with adequately accounting for the catastrophe footprint of the risk and also looking at the design of a building.

“When you look at building design, you want to make sure developers are not skimping on materials and know the building will survive if a catastrophe event should occur,” he said. “You also want to look at ongoing site maintenance.”

Nationwide_sponsoredcontent_0117But building design and structure are just the beginning of a good risk. Other factors Brunette takes into consideration include behind-the-scenes operations, such as electronic surveillance and other protection like sprinklers and alarms. Also, understanding the exposure and matching that with layer structure is critical.

“If I’m insuring a risk in Missouri, I don’t want to be in a position where the totality of the exposure is tornado driven,” he said. “The key to that is spread of risk and attachment point.”

Brunette, who employs a philosophy that includes “managing, measuring and monitoring” when it comes to effective catastrophe underwriting, believes in constantly staying on top of trends and patterns to make sure the solutions he provides are appropriate.

“Insurance is never a ‘one and done’ kind of thing,” he said. “If you’re going to responsibly write a risk, you need to make sure you are not just on top of the game, but ahead of it.”

About Nationwide

An expert in large, complex property accounts, Nationwide writes primary and excess layers for business conglomerates with a multitude of components and diverse requirements though its excess and surplus Brokerage Property division.

Products underwritten by Nationwide Mutual Insurance Company and Affiliated Companies. Not all Nationwide affiliated companies are mutual companies, and not all Nationwide members are insured by a mutual company. Subject to underwriting guidelines, review, and approval. Products and discounts not available to all persons in all states. Home Office: One Nationwide Plaza, Columbus, OH. Nationwide, the Nationwide N and Eagle, and other marks displayed on this page are service marks of Nationwide Mutual Insurance Company, unless otherwise disclosed. © 2017 Nationwide Mutual Insurance Company.

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This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Nationwide. The editorial staff of Risk & Insurance had no role in its preparation.




Nationwide, a Fortune 100 company, is one of the largest and strongest diversified insurance and financial services organizations in the U.S. and is rated A+ by both A.M. Best and Standard & Poor’s.

More from Risk & Insurance

More from Risk & Insurance

2017 RIMS

RIMS Conference Opens in Birthplace of Insurance in US

Carriers continue their vital role of helping insureds mitigate risks and promote safety.
By: | April 21, 2017 • 4 min read

As RIMS begins its annual conference in Philadelphia, it’s worth remembering that the City of Brotherly Love is not just the birthplace of liberty, but it is the birthplace of insurance in the United States as well.

In 1751, Benjamin Franklin and members of Philadelphia’s first volunteer fire brigade conceived of an insurance company, eventually named The Philadelphia Contributionship for the Insurance of Houses from Loss by Fire.

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For the first time in America — but certainly not for the last time – insurers became instrumental in protecting businesses by requiring safety inspections before agreeing to issue policies.

“That included fire brigades and the knowledge that a brick house was less susceptible to fire than a wood house,” said Martin Frappolli, director of knowledge resources at The Institutes.

It also included good hygiene habits, such as not placing oily rags next to a furnace and having a trap door to the roof to help the fire brigade fight roof and chimney blazes.

Businesses with high risk of fire, such as apothecary shops and brewers, were either denied policies or insured at significantly higher rates, according to the Independence Hall Association.

Robert Hartwig, co-director, Center of Risk and Uncertainty Management at the Darla Moore School of Business, University of South Carolina

Before that, fire was generally “not considered an insurable risk because it was so common and so destructive,” Frappolli said.

“Over the years, we have developed a lot of really good hygiene habits regarding the risk of fire and a lot of those were prompted by the insurance considerations,” he said. “There are parallels in a lot of other areas.”

Insurance companies were instrumental in the creation of Underwriters Laboratories (UL), which helps create standards for electrical devices, and the Insurance Institute for Highway Safety, which works to improve the safety of vehicles and highways, said Robert Hartwig, co-director, Center of Risk and Uncertainty Management at the Darla Moore School of Business at the University of South Carolina and former president of the Insurance Information Institute.

Insurers have also been active through the years in strengthening building codes and promoting wiser land use and zoning rules, he said.

When shipping was the predominant mode of commercial transport, insurers were active in ports, making sure vessels were seaworthy, captains were experienced and cargoes were stored safety, particularly since it was the common, but hazardous, practice to transport oil in barrels, Hartwig said.

Some underwriters refused to insure ships that carried oil, he said.

When commercial enterprises engaged in hazardous activities and were charged more for insurance, “insurers were sending a message about risk,” he said.

In the industrial area, the common risk of boiler and machinery explosions led insurers to insist on inspections. “The idea was to prevent an accident from occurring,” Hartwig said. Insurers of the day – and some like FM Global and Hartford Steam Boiler continue to exist today — “took a very active and early role in prevention and risk management.”

Whenever insurance gets involved in business, the emphasis on safety, loss control and risk mitigation takes on a higher priority, Frappolli said.

“It’s a really good example of how consideration for insurance has driven the nature of what needs to be insured and leads to better and safer habits,” he said.

Workers’ compensation insurance prompted the same response, he said. When workers’ compensation laws were passed in the early 1900s, employee injuries were frequent and costly, especially in factories and for other physical types of work.

Because insurers wanted to reduce losses and employers wanted reduced insurance premiums, safety procedures were introduced.

“Employers knew insurance would cost a lot more if they didn’t do the things necessary to reduce employee injury,” Frappolli said.

Martin J. Frappolli, senior director of knowledge resources, The Institutes

Cyber risk, he said, is another example where insurance companies are helping employers reduce their risk of loss by increasing cyber hygiene.

Cyber risk is immature now, Frappolli said, but it’s similar in some ways to boiler and machinery explosions. “That was once horribly damaging, unpredictable and expensive,” he said. “With prompting from risk management and insurance, people were educated about it and learned how to mitigate that risk.

“Insurance is just one tool in the toolbox. A true risk manager appreciates and cares about mitigating the risk and not just securing a lower insurance rate.

“Someone looking at managing risk for the long term will take a longer view, and as a byproduct, that will lead to lower insurance rates.”

Whenever technology has evolved, Hartwig said, insurance has been instrumental in increasing safety, whether it was when railroads eclipsed sailing ships for commerce, or when trucking and aviation took precedence.

The risks of terrorism and cyber attacks have led insurance companies and brokers to partner with outside companies with expertise in prevention and reduction of potential losses, he said. That knowledge is transmitted to insureds, who are provided insurance coverage that results in financial resources even when the risk management methods fail to prevent a cyber attack.

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This year’s RIMS Conference in Philadelphia shares with risk managers much of the knowledge that has been developed on so many critical exposures. Interestingly enough, the opening reception is at The Franklin Institute, which celebrates some of Ben Franklin’s innovations.

But in-depth sessions on a variety of industry sectors as well as presentations on emerging risks, cyber risk management, risk finance, technology and claims management, as well as other issues of concern help risk managers prepare their organizations to face continuing disruption, and take advantage of successful mitigation techniques.

“This is just the next iteration of the insurance world,” Hartwig said. “The insurance industry constantly reinvents itself. It is always on the cutting edge of insuring new and different risks and that will never change.” &

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