2014 Power Broker

Entertainment

Protecting Clients from Reality

Seth Cohen, CPCU, ARM Area Vice President Arthur J. Gallagher, Glendale, Calif.

Seth Cohen, CPCU, ARM
Area Vice President
Arthur J. Gallagher, Glendale, Calif.

Working with more than 450 production companies in the past year, Seth Cohen, area vice president with Arthur J. Gallagher, has handled some unique client requests. That includes covering cast members to participate in activities involving live ammunition and police raids, procuring event cancellation insurance for big productions like the VMAs, weather insurance for live outdoor shoots, and protecting stars of hit reality shows like the Jersey Shore. “A lot of the time, just by the nature of what we do, in the way we shoot these reality shows, it sort of bends the rules of how you should do things,” said Clay VanNortwick, line producer for 495 Productions. “Seth is always there to make sure we are covered appropriately and also can actually pull off whatever it is we’re trying to pull off.” “Seth has been very effective in thinking outside the box and coming up with solutions to difficult issues we’ve run into, as far as providing cast and crew coverage,” said another client, a risk manager for a television production company. Cohen’s success has been enhanced by his expertise in media and theater, as well as the mechanics of producing film and television content. Among other certifications, he has completed a professional program in production at the UCLA School of Theater, Film & Television. That specialized knowledge has made communication with cast doctors, entertainment lawyers, producers, financiers, production crew, and loss control experts more efficient and pointed, and helps Cohen find solutions to fit each production’s unique needs.

Making the Impossible Possible

Lorrie McNaught Senior Vice President Aon, Los Angeles

Lorrie McNaught
Senior Vice President
Aon, Los Angeles

Plenty of the things you see on screen seem like they’d be impossible to insure. It’s people like Lorrie McNaught who turn those impossibilities into reality. One TV episode about ghost hunting in an abandoned gold mine presented big dangers, especially when the mine owner decided he wanted to blast it. McNaught pulled together mine schematics and details of the mining process for a team of underwriters willing to accept the risk of reopening the abandoned site. “Those shows were most challenging because we really had to look outside of the normal protocol,” said Lyle Smith, vice president of production for 51 Minds Entertainment, an Endemol USA company. “She gave us comfort knowing we could move forward with shows of that type and magnitude.” Another challenge was a movie set in Florida at the height of hurricane season — starring rehabilitated dolphins, which meant extensive coverage for the location as well as the dolphins. McNaught pulled it off smoothly with contingency plans and heavy negotiation A third tricky shoot involved — of all things — torture. Needless to say, carriers weren’t racing to cover the risk. Convincing the market that the waterboarding procedure would be conducted safely was a challenge, and involved placing medical malpractice, general liability and accident medical coverage for supervising doctors. “She literally knows everything,” said Ethan Cohan, vice president, production and business affairs for production company One Potato Two Potato. “Any claim we’ve had, we’ve always had the right coverage.”

BlueBar

LBR_ResponsiblityLeaderBLUE_logo-175Helping Young Leaders Achieve

Having seen to the coverage needs of dolphins, ghost hunters, and gun-toting, bear-hunting moonshiners, Lorrie McNaught has plenty of experience for young brokers to draw upon.

But McNaught is not your average mentor. Last year, she worked to revitalize a small business unit at Aon that was formed to give junior professionals leadership experience. The unit had folded only months after it was formed, for various reasons. But McNaught championed the unit and fought to bring it back, taking on the task of managing that unit, and hiring and re-training its members. She also took ownership of the unit’s disenfranchised accounts, maintaining their business and earning back their confidence until the unit was ready to take on accounts again.

Less than a year later, the unit isn’t merely stabilized, it is achieving success. It has grown by more than 100 accounts through her efforts. “The team is encouraged and inspired,” said McNaught.

In the long run, this accomplishment not only benefits the insureds, but serves to bolster the future of the industry through the development of young professionals.

Within her company and on LinkedIn groups, McNaught offers herself as a mentor to younger professionals. In that role, she has tutored younger brokers on what it takes to succeed in the entertainment sector of the insurance business. McNaught’s goal is to empower young brokers, and to encourage them to embrace the opportunities before them.

BlueBar

Enabling Growth

Ross Pebley Vice President Marsh, Los Angeles

Ross Pebley
Vice President
Marsh, Los Angeles

With experience as an underwriter, risk manager, and now broker, Ross Pebley’s greatest skill may be the ability to see an issue from all perspectives. Pebley first began serving one of his clients as their risk manager, helping them seamlessly acquire another company, who also became his client when he joined Marsh as broker. Part of integrating the two companies involved incorporating their E&O programs, one of which had much lower levels of self-insured retention, which they wanted to maintain. Pebley negotiated with underwriters to keep separate SIR structures with shared limits for the two companies. “He’s assisted us through the renewal,” said Chris Miller, head of litigation for DreamWorks Animation SKG, Inc. “We’ve done acquisitions of companies and he’s been really the driving force and the lead for us. He’s helped us in our strategies in terms of which policies we should renew and which we should merge into the overall corporate umbrella.” Pebley has helped DreamWorks grow by making sure the company is covered for M&A activity and by constantly looking for better deals in the marketplace, Miller said. A client with another media company said Pebley’s availability and responsiveness have been crucial in getting issues resolved quickly. He goes the extra mile to understand all aspects of a question and anticipates related issues that may stem from it. His industry knowledge makes him a key player in brainstorming sessions on risk analysis. Pebley currently serves as program chair of educational programs for the Los Angeles chapter of RIMS, where he was president for 2012 and 2013.

BlueBar

LBR_ResponsiblityLeaderBLUE_logo-175Nurturing the Next Generation

Ross Pebley is passionate about his career in insurance. So passionate, in fact, that he has made it his mission to share his knowledge with young insurance professionals and to encourage young people — including his own daughters — to explore the rewarding career paths in entertainment insurance and beyond.

Pebley has a unique perspective to share. Having been the head of risk management at both DreamWorks, LLC and DreamWorks Animation SKG, Inc., he has an insider’s understanding of the challenges the industry faces.

Pebley later made the move to Marsh and began serving DreamWorks as a broker instead.

The move to the brokerage side meant that Pebley had to step down as president of the Los Angeles chapter of RIMS after serving for two years. But he happily agreed to continue serving as program chair, and continues to bring dynamic educational programs to the LA chapter for the benefit of its membership.

Pebley has spoken with members of the Gamma Iota Sigma society for risk and insurance management students and also offers himself as a mentor for young colleagues at Marsh, sharing his experiences and insights as well as his love of learning.

“I never stop learning,” said Pebley. “I always enjoy learning from people who work with various mediums in the entertainment industry. No one knows everything, but everyone knows something.”

BlueBar

Not Pulling Any Stunts 

Scott Schachter Senior Vice President Marsh, New York

Scott Schachter
Senior Vice President
Marsh, New York

In the entertainment industry, schedules are tight and flexibility is crucial to keep things on track. Every second wasted is money lost. “If we’re late on a claim, we may have to delay shooting, which can cost us as much as half a million dollars, so communication is crucial between [Scott Schachter] and the production companies and business affairs people,” said Ron Pearlroth, vice president-group risk officer for WPP Group USA. “He’s very knowledgeable and very articulate.” Terry Rust, global production business manager for Red Fuse Communications, works with Schachter on a global basis. “Scott deals with me on production insurance on projects across the globe, and rules and regulations in different parts of the world influence what we need. No matter where I go, I know help will be there. Scott’s been tenacious in hooking us up and connecting us in different parts of the world,” he said. Rust’s company was filming a commercial in South Africa when a stuntman was severely injured before the shoot, which delayed filming by a week. Schachter advised Rust through the process, to the final reimbursement check. “That partnership is critical,” Rust said. Schachter also helped a client redirect their advertising strategy, switching from a large holding company to smaller boutique agencies. There was concern over risk management and costs associated with the smaller agencies, and Schachter was able to design a program that gave his client complete control over the advertising insurance process. This program led to much broader terms and conditions, and significant insurance cost savings.

Staying On the Ball

Allan Smith, CAIB, CRM Senior Vice President Marsh, Phoenix

Allan Smith, CAIB, CRM
Senior Vice President
Marsh, Phoenix

Marsh Senior Vice President Allan Smith helps his clients stay on top of their game. For the Arizona Cardinals Football Club, for example, Smith secured coverage from hesitant carriers for an inflatable bubble to protect the team’s stadium from inclement weather. Convincing underwriters meant compiling engineering data on the bubble’s construction and proving it could withstand winds that had toppled similar projects. Smith was able to alleviate their concerns and get competitive terms for coverage. “He really gained a great understanding of our companies,” said Greg Lee, CFO of the Arizona Cardinals. “We are primarily a football club, but we have a lot of operating business segments from charter aircraft, hospitality, concession services and restaurants. He jumped right in and gained a good understanding of how those companies relate and what other risks are associated with them. He made sure we had products in place to address those various risks, whether it’s terrorism coverage related to our stadium, or the necessary coverage for compliance with our financing. And he advised how we could reduce our overall risk.” A review of another client’s general liability policy revealed a critical exclusion that Smith was able to knock down. The client, Everlast Worldwide, used sand as filler for its heavy bags and other pieces of equipment. Their policy, however, excluded coverage for silica. Though he met with resistance, Smith negotiated for modification of the exclusion, which meant regaining coverage for a significant portion of the company’s sporting equipment.

Saving the Show, Scene by Scene

Winnie Wong Senior Vice President Momentous Insurance Brokerage, Van Nuys, Calif.

Winnie Wong
Senior Vice President
Momentous Insurance Brokerage, Van Nuys, Calif.

The show must go on, and Momentous Insurance Brokerage’s Winnie Wong makes sure it does. Serving movie and television production companies, Wong insures production facilities, crew members and actors, anywhere in the world. Nearing the end of a shoot in South Africa, one production company decided they wanted some additional scenes in a refugee camp in Kakuma, Kenya, an area known for kidnappings and shootings. Wong had to secure supplemental policies to protect the cast and crew, including accidental death and dismemberment, and kidnap and ransom coverage. Even trickier, a lead actress not involved in the scenes wanted to visit the camp anyway, but wouldn’t be covered under her essential elements policy. Wong worked around it, placing confidential key man life coverage with the production company as beneficiary. “I don’t even know how she got insurance but she did,” said Sarah Sprague, production supervisor in the United States for “The Good Lie” LLC. “She gave us peace of mind.” “When I would bring up issues that I thought were important, she already knows about them and we’d be able to discuss them intelligently,” said Greg Krutilek, head of business affairs for Silverscreen Alta Pictures. “Anytime you deal with someone who really knows your business and can discuss it intelligently with you, that’s important. I feel that Winnie’s that person.” Wong has also shared her industry knowledge in the form of a textbook. Published in 2013, her Hollywood Studio Production Techniques provides filmmakers with information about deal memos, budgets, schedules, legal issues, insurance, and safety on the set.

BlueBar

LBR_ResponsiblityLeaderBLUE_logo-175Tireless Educator

Winnie Wong’s passion for the industry that she serves as an insurance broker clearly goes beyond the transactional. She strives to be a resource for the filmmaking community and has taught classes on entertainment insurance for UCLA Extension, the International Documentary Association and Film Independent. Wong has also written articles and authored blog posts on some of the finer points of the film production business.

Experience taught Wong that filmmakers tend to pour all of their energy into the creative process and often lose sight of other crucial aspects of the business. She recognized that this lack of knowledge could imperil young filmmakers financially and even prevent promising films from ever being released. To help fill that gap, Wong authored a 14-chapter textbook, Hollywood Studio Production Techniques, to give young filmmakers the tools they need to navigate the business end of film. In addition to information about insurance and risk management on the set, it also covers the roles of the production crew, deal memos, contracts, tax incentives, locations, equipment, scheduling, budgets and more.

She does this because she wants to see young artists achieve their full potential creatively and not be blindsided by unforeseen liabilities. She is equally committed to helping young brokers thrive in their careers.

As a member of several film associations and a Women in Film board member, Wong encourages young people to pursue jobs in the entertainment insurance field.

BlueBar

More from Risk & Insurance

More from Risk & Insurance

Exclusive | Hank Greenberg on China Trade, Starr’s Rapid Growth and 100th, Spitzer, Schneiderman and More

In a robust and frank conversation, the insurance legend provides unique insights into global trade, his past battles and what the future holds for the industry and his company.
By: | October 12, 2018 • 12 min read

In 1960, Maurice “Hank” Greenberg was hired as a vice president of C.V. Starr & Co. At age 35, he had already accomplished a great deal.

He served his country as part of the Allied Forces that stormed the beaches at Normandy and liberated the Nazi death camps. He fought again during the Korean War, earning a Bronze Star. He held a law degree from New York Law School.

Advertisement




Now he was ready to make his mark on the business world.

Even C.V. Starr himself — who hired Mr. Greenberg and later hand-picked him as the successor to the company he founded in Shanghai in 1919 — could not have imagined what a mark it would be.

Mr. Greenberg began to build AIG as a Starr subsidiary, then in 1969, he took it public. The company would, at its peak, achieve a market cap of some $180 billion and cement its place as the largest insurance and financial services company in history.

This month, Mr. Greenberg travels to China to celebrate the 100th anniversary of C.V. Starr & Co. That visit occurs at a prickly time in U.S.-Sino relations, as the Trump administration levies tariffs on hundreds of billions of dollars in Chinese goods and China retaliates.

In September, Risk & Insurance® sat down with Mr. Greenberg in his Park Avenue office to hear his thoughts on the centennial of C.V. Starr, the dynamics of U.S. trade relationships with China and the future of the U.S. insurance industry as it faces the challenges of technology development and talent recruitment and retention, among many others. What follows is an edited transcript of that discussion.


R&I: One hundred years is quite an impressive milestone for any company. Celebrating the anniversary in China signifies the importance and longevity of that relationship. Can you tell us more about C.V. Starr’s history with China?

Hank Greenberg: We have a long history in China. I first went there in 1975. There was little there, but I had business throughout Asia, and I stopped there all the time. I’d stop there a couple of times a year and build relationships.

When I first started visiting China, there was only one state-owned insurance company there, PICC (the People’s Insurance Company of China); it was tiny at the time. We helped them to grow.

I also received the first foreign life insurance license in China, for AIA (The American International Assurance Co.). To date, there has been no other foreign life insurance company in China. It took me 20 years of hard work to get that license.

We also introduced an agency system in China. They had none. Their life company employees would get a salary whether they sold something or not. With the agency system of course you get paid a commission if you sell something. Once that agency system was installed, it went on to create more than a million jobs.

R&I: So Starr’s success has meant success for the Chinese insurance industry as well.

Hank Greenberg: That’s partly why we’re going to be celebrating that anniversary there next month. That celebration will occur alongside that of IBLAC (International Business Leaders’ Advisory Council), an international business advisory group that was put together when Zhu Rongji was the mayor of Shanghai [Zhu is since retired from public life]. He asked me to start that to attract foreign companies to invest in Shanghai.

“It turns out that it is harder [for China] to change, because they have one leader. My guess is that we’ll work it out sooner or later. Trump and Xi have to meet. That will result in some agreement that will get to them and they will have to finish the rest of the negotiations. I believe that will happen.” — Maurice “Hank” Greenberg, chairman and CEO, C.V. Starr & Co. Inc.

Shanghai and China in general were just coming out of the doldrums then; there was a lack of foreign investment. Zhu asked me to chair IBLAC and to help get it started, which I did. I served as chairman of that group for a couple of terms. I am still a part of that board, and it will be celebrating its 30th anniversary along with our 100th anniversary.

Advertisement




We have a good relationship with China, and we’re candid as you can tell from the op-ed I published in the Wall Street Journal. I’m told that my op-ed was received quite well in China, by both Chinese companies and foreign companies doing business there.

On August 29, Mr. Greenberg published an opinion piece in the WSJ reminding Chinese leaders of the productive history of U.S.-Sino relations and suggesting that Chinese leaders take pragmatic steps to ease trade tensions with the U.S.

R&I: What’s your outlook on current trade relations between the U.S. and China?

Hank Greenberg: As to the current environment, when you are in negotiations, every leader negotiates differently.

President Trump is negotiating based on his well-known approach. What’s different now is that President Xi (Jinping, General Secretary of the Communist Party of China) made himself the emperor. All the past presidents in China before the revolution had two terms. He’s there for life, which makes things much more difficult.

R&I: Sure does. You’ve got a one- or two-term president talking to somebody who can wait it out. It’s definitely unique.

Hank Greenberg: So, clearly a lot of change is going on in China. Some of it is good. But as I said in the op-ed, China needs to be treated like the second largest economy in the world, which it is. And it will be the number one economy in the world in not too many years. That means that you can’t use the same terms of trade that you did 25 or 30 years ago.

They want to have access to our market and other markets. Fine, but you have to have reciprocity, and they have not been very good at that.

R&I: What stands in the way of that happening?

Hank Greenberg: I think there are several substantial challenges. One, their structure makes it very difficult. They have a senior official, a regulator, who runs a division within the government for insurance. He keeps that job as long as he does what leadership wants him to do. He may not be sure what they want him to do.

For example, the president made a speech many months ago saying they are going to open up banking, insurance and a couple of additional sectors to foreign investment; nothing happened.

The reason was that the head of that division got changed. A new administrator came in who was not sure what the president wanted so he did nothing. Time went on and the international community said, “Wait a minute, you promised that you were going to do that and you didn’t do that.”

So the structure is such that it is very difficult. China can’t react as fast as it should. That will change, but it is going to take time.

R&I: That’s interesting, because during the financial crisis in 2008 there was talk that China, given their more centralized authority, could react more quickly, not less quickly.

Hank Greenberg: It turns out that it is harder to change, because they have one leader. My guess is that we’ll work it out sooner or later. Trump and Xi have to meet. That will result in some agreement that will get to them and they will have to finish the rest of the negotiations. I believe that will happen.

R&I: Obviously, you have a very unique perspective and experience in China. For American companies coming to China, what are some of the current challenges?

Advertisement




Hank Greenberg: Well, they very much want to do business in China. That’s due to the sheer size of the country, at 1.4 billion people. It’s a very big market and not just for insurance companies. It’s a whole range of companies that would like to have access to China as easily as Chinese companies have access to the United States. As I said previously, that has to be resolved.

It’s not going to be easy, because China has a history of not being treated well by other countries. The U.S. has been pretty good in that way. We haven’t taken advantage of China.

R&I: Your op-ed was very enlightening on that topic.

Hank Greenberg: President Xi wants to rebuild the “middle kingdom,” to what China was, a great country. Part of that was his takeover of the South China Sea rock islands during the Obama Administration; we did nothing. It’s a little late now to try and do something. They promised they would never militarize those islands. Then they did. That’s a real problem in Southern Asia. The other countries in that region are not happy about that.

R&I: One thing that has differentiated your company is that it is not a public company, and it is not a mutual company. We think you’re the only large insurance company with that structure at that scale. What advantages does that give you?

Hank Greenberg: Two things. First of all, we’re more than an insurance company. We have the traditional investment unit with the insurance company. Then we have a separate investment unit that we started, which is very successful. So we have a source of income that is diverse. We don’t have to underwrite business that is going to lose a lot of money. Not knowingly anyway.

R&I: And that’s because you are a private company?

Hank Greenberg: Yes. We attract a different type of person in a private company.

R&I: Do you think that enables you to react more quickly?

Hank Greenberg: Absolutely. When we left AIG there were three of us. Myself, Howie Smith and Ed Matthews. Howie used to run the internal financials and Ed Matthews was the investment guy coming out of Morgan Stanley when I was putting AIG together. We started with three people and now we have 3,500 and growing.

“I think technology can play a role in reducing operating expenses. In the last 70 years, you have seen the expense ratio of the industry rise, and I’m not sure the industry can afford a 35 percent expense ratio. But while technology can help, some additional fundamental changes will also be required.” — Maurice “Hank” Greenberg, chairman and CEO, C.V. Starr & Co. Inc.

R&I:  You being forced to leave AIG in 2005 really was an injustice, by the way. AIG wouldn’t have been in the position it was in 2008 if you had still been there.

Advertisement




Hank Greenberg: Absolutely not. We had all the right things in place. We met with the financial services division once a day every day to make sure they stuck to what they were supposed to do. Even Hank Paulson, the Secretary of Treasury, sat on the stand during my trial and said that if I’d been at the company, it would not have imploded the way it did.

R&I: And that fateful decision the AIG board made really affected the course of the country.

Hank Greenberg: So many people lost all of their net worth. The new management was taking on billions of dollars’ worth of risk with no collateral. They had decimated the internal risk management controls. And the government takeover of the company when the financial crisis blew up was grossly unfair.

From the time it went public, AIG’s value had increased from $300 million to $180 billion. Thanks to Eliot Spitzer, it’s now worth a fraction of that. His was a gross misuse of the Martin Act. It gives the Attorney General the power to investigate without probable cause and bring fraud charges without having to prove intent. Only in New York does the law grant the AG that much power.

R&I: It’s especially frustrating when you consider the quality of his own character, and the scandal he was involved in.

In early 2008, Spitzer was caught on a federal wiretap arranging a meeting with a prostitute at a Washington Hotel and resigned shortly thereafter.

Hank Greenberg: Yes. And it’s been successive. Look at Eric Schneiderman. He resigned earlier this year when it came out that he had abused several women. And this was after he came out so strongly against other men accused of the same thing. To me it demonstrates hypocrisy and abuse of power.

Schneiderman followed in Spitzer’s footsteps in leveraging the Martin Act against numerous corporations to generate multi-billion dollar settlements.

R&I: Starr, however, continues to thrive. You said you’re at 3,500 people and still growing. As you continue to expand, how do you deal with the challenge of attracting talent?

Hank Greenberg: We did something last week.

On September 16th, St. John’s University announced the largest gift in its 148-year history. The Starr Foundation donated $15 million to the school, establishing the Maurice R. Greenberg Leadership Initiative at St. John’s School of Risk Management, Insurance and Actuarial Science.

Hank Greenberg: We have recruited from St. John’s for many, many years. These are young people who want to be in the insurance industry. They don’t get into it by accident. They study to become proficient in this and we have recruited some very qualified individuals from that school. But we also recruit from many other universities. On the investment side, outside of the insurance industry, we also recruit from Wall Street.

R&I: We’re very interested in how you and other leaders in this industry view technology and how they’re going to use it.

Hank Greenberg: I think technology can play a role in reducing operating expenses. In the last 70 years, you have seen the expense ratio of the industry rise, and I’m not sure the industry can afford a 35 percent expense ratio. But while technology can help, some additional fundamental changes will also be required.

R&I: So as the pre-eminent leader of the insurance industry, what do you see in terms of where insurance is now an where it’s going?

Hank Greenberg: The country and the world will always need insurance. That doesn’t mean that what we have today is what we’re going to have 25 years from now.

How quickly the change comes and how far it will go will depend on individual companies and individual countries. Some will be more brave than others. But change will take place, there is no doubt about it.

Advertisement




More will go on in space, there is no question about that. We’re involved in it right now as an insurance company, and it will get broader.

One of the things you have to worry about is it’s now a nuclear world. It’s a more dangerous world. And again, we have to find some way to deal with that.

So, change is inevitable. You need people who can deal with change.

R&I:  Is there anything else, Mr. Greenberg, you want to comment on?

Hank Greenberg: I think I’ve covered it. &

The R&I Editorial Team can be reached at [email protected]