High-Energy Client Focus
Alternative energy, especially renewable energy, is more than just high-tech vehicles and lab-bench demonstrations. Some forms, such as hydro power and geothermal, have been around for many decades. And while those use well-established building and operating techniques, they still require sophisticated insurance and risk management. That’s where Clayton Corbett comes in.
“We put our renewal out for bid in July, and Clayton showed himself to be an exceptionally effective negotiator in his ability to build bridges between parties,” said the insurance buyer for one geothermal contractor. “Our workers’ comp is a large placement, so I imagine it is sought after by the underwriters, but we have found there is a lot of play in the rates. Clayton was able to secure for us very favorable terms.”
That was not the end of the story, however. Soon after the renewal was completed, an audit turned up an error in some of the insured’s numbers. It was a simple clerical error, innocent of intent, but could have caused a big problem nonetheless. “We just referred the whole thing to Clayton,” said the buyer. “He got it resolved. Did an excellent job. All very smooth.”
Another client is a geothermal operator, but a new one. After buying an existing facility and beginning an expansion, the client ran into trouble because coverage of the existing plant only covered minor construction and maintenance, not a major capital project. The client credits Corbett for handling the situation on the fly, keeping the construction going, and getting the necessary coverage in place to satisfy all parties.
The Experience to Face the Winds of Change
“Peter has been providing us with invaluable guidance in putting together an appropriate risk management and insurance program for our very specialized business as a developer of offshore wind power projects,” said one CFO. “Because there have not yet been any offshore wind power projects yet built in North America, every aspect of what we do requires innovative thinking and a customized approach.”
Specifically, the client credits Mavraganis, leader of Marsh’s Global Renewable Energy Practice, with supporting “every aspect of risk management and insurance. He has also guided us through the planning process to understand the types, amounts and costs of insurance coverage we will need in the future during the construction and operating phases of our projects. His understanding of the very unique aspects of our industry, which includes both maritime and power-generation elements, has enabled him to provide us with an outstanding level of advice and service.”
Another wind-power client added, “No one is doing things in the U.S. like we are doing. In Europe, maybe, but we are really pushing the envelope. Peter has been able to get us nonbinding, soft quotes throughout our development, backed up with expert testimony to regulatory agencies, to keep the project moving. He has been able to put together evaluations with vendors and engineers that have identified risks for our carriers.”
Mavraganis also gets accolades for a $3.5 billion clean coal project that was an underwriter’s nightmare, with mining, generation, environmental and manufacturing risks.
Finding Savings in Unexpected Places
Many brokers get kudos for swinging into action at a moment’s notice, so it is unusual and thought-provoking that Laura Hunter Rubin’s clients champion her tenacity and energy. “We, as a team, like her persistence and can-do attitude,” said one client, a wind-energy company.
“Laura has saved us an incredible amount of money by being diligent and focusing on our needs as a wind-farm developer. Our needs are very specific and greatly varied. She was able to negotiate our policies in a timely manner, give us more for our money than we had with the old policies and follow up to make sure we are more than adequately covered.”
The client continued, “Laura accomplished all that in the space of a month, which is not easy when you consider how many wind farms we have. She has successfully negotiated a return on monies paid previously to another broker, furthering our cost savings.”
As reported in the Risk & Insurance® cover story on wind energy last June, nacelle (wind turbine) fires are a persistent peril for wind farms and seem to defy predictive modeling. As early-generation installations approach 30 and 40 years in service, their losses have been rising. Clients say that Hunter Rubin’s innovative approach has been unbundling coverage, which takes persistence and diligence, and reforming packages to address the protection needs of operators and investors that have changed over the life of the facility. Clients explain that the same comprehensive level of coverage that was required when an installation was new may not still be necessary later in the life of the wind farm.
The Client’s Champion
An essential element of being a Power Broker® is explaining the client to the underwriters and vice versa. Usually, that is done by the client educating the broker, but Garrard’s new clients are surprised and delighted by her research. “Susan has taken countless hours to get to know our company, our operations, our business plan and our story,” said one risk manager. “Not many brokers would take the enormous amount of time with their clients that she has expended on us. She actually gets to know the folks at our company and how we function. She relays our accomplishments in her market approach, which saves us thousands of premium dollars. There is no cookie-cutter approach to Susan’s service, which is rare at a major national brokerage.”
Another risk manager brought Garrard with him when he moved companies, and asked her to handle an international placement. “She has assisted the company with a unique placement in Africa. In that particular country, there were unique restrictive demands.” Garrard made the necessary connections and assisted with negotiations with the local insurance authority, in addition to helping the client understand the relevant law. Explained the client, Garrard “placed both an international and local policy, which was rated well and was cost effective.”
Closer to home, a solid-waste-to-energy operation had “a difficult renewal on our property policy this year due to a significant loss. One of the 50 percent carriers made the decision not to renew our property policy due to the loss. Susan worked very hard with other carriers to write the coverage” — close to a quarter-billion dollars.
Enabling an Industry’s Evolution
For this year’s Power Broker® competition, Mike McMullen had a tough act to follow — himself. McMullen took the honor last year for his innovative work helping operators backstop shaky warranties from panel makers in China. This year, he has continued applying his expertise on behalf of clients in the fast-growing, highly fragmented solar-power business.
One risk manager followed the onshore trend in the sector by moving to a U.S.-based panel manufacturer. “Mike provided great assistance at my old firm, and Mike has provided great best-practice assistance to my new firm, a startup using new technology. Mike has helped us with the types of best practice in manufacturing, particularly what we need in place to be insurable. That has also helped us with manufacturing excellence and customer assurance.”
In contrast to McMullen’s previous innovations in writing coverage, he got kudos this time around for helping insureds gain acceptance for new technology, which is a constant challenge in this rapidly evolving field. “Having that product assurance opens the door to a U.S. manufacturer with innovative technology in a space dominated by Chinese manufacturing,” said the risk manager.
Panel warranties are still a major source of concern for operators and for underwriters, one client noted. PowerGuard has launched a new website that allows customers to verify coverage. That is particularly important in the solar segment because some manufacturers have been less than forthright about the true nature of their coverage.
Working to Keep Coverage Within Reach
Lots of questions swirl around the alternative energy business and solar in particular, including siting, size and storage. While investors and operators can handle those issues on their own, the puzzle they can’t solve is why insurance seems to be so unaffordable. Carriers counter that underwriting is still evolving, and invite insureds and their brokers to make their case. Insureds say that’s one of the areas where Marc Toy excels.
“Marc intervened several times this year on our behalf,” said one client, a solar-power developer. “We had a great renewal this year, and Marc really brought down our premium. He made a strong presentation to the market about the changes in our business and was able to modify our program while staying with the same underwriters. That was important because we have highly unusual assets, even for the solar field. We thought we had to accept high premiums and tight terms and conditions, but Marc proved we did not.”
Other clients relate similar stories, of how well-developed and well-backed projects can be imperiled because Cat coverage can be unaffordable. In one case, a solar project was planned on an island subject to hurricanes.
Toy has encountered other situations where lenders or project investors have demanded high rates of coverage to protect their interests, in excess of what the project would otherwise require. In either circumstance, clients laud Toy’s ability to keep all sides engaged and focused. “Marc keeps everyone posted and informed. We appreciate that, but it’s especially important to the market,” said one client.