2014 Power Broker

Environmental

The Environmental Imperative

Jennifer Lester Senior Vice President Marsh, Chicago

Jennifer Lester
Senior Vice President
Marsh, Chicago

There may be no clearer example of insurance as an enabler of commerce than the dynamics of environmental insurance.

Jennifer Lester’s knowledge of environmental coverage was the key to her client securing work providing building operations and management services for Chicago’s Union Station, the third-busiest rail terminal in the United States.

The age of Union Station presented substantial challenges. It opened in 1925 and hazardous substances were very likely to be disturbed during the course of the client’s work. This in turn could endanger the more than 130,000 commuters and Amtrak passengers who pass through the terminal on a daily basis.

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Lester successfuilly crafted a contractor’s pollution liability policy that satisfied all contract requirements and provided coverage for the client’s work.

One client, which had acquired a division spun off from a supermarket, benefited from Lester’s work in getting underwriters comfortable with the properties’ historic environmental exposures.

Lester was also kept busy within the last year by providing last-minute insurance options for a nationally acclaimed real estate and asset management company. The work involved devising solutions for new construction projects, building renovations and real estate transactions.

“She was professorial … in instructing us in exactly what we were buying and what would be covered, what some of the definitions meant in the policy,” said one admiring client.

Breakneck Delivery

Steve Manz Senior Vice President Marsh, Detroit

Steve Manz
Senior Vice President
Marsh, Detroit

It may sound a little extreme, but this is how one client described the work of Marsh’s Steve Manz in the past year.

“Steve has done a terrific job for us,” a client said. “He’s gone the extra mile to meet our needs on a very different risk — he’s broken necks to do a good job this year.”

Another client put it less graphically. “He doesn’t waste our time. Some people spend too much time on sales and end up adding little. Steve is not that kind of broker—he is very professional.”

With a background in environmental engineering consulting and environmental remediation, Manz is well-suited to communicate with clients and underwriters the nuances of environmental exposures and coverages. His niche knowledge of construction exposures allowed him to craft a renewal for a construction client that reduced the overall premium 30 percent from the expiring program. This with a policy that covered the client for a range of pollutants, including mold and legionella.

For another client, Manz streamlined the process for getting coverage for new locations from weeks to a matter of days, which allowed the client to make advantageous business decisions in real time. While streamlining the process, Manz also found several deficiencies in the policy structure and worked with the carrier to make needed corrections.

Across the board, clients said Manz excelled at customer service, a key attribute in a Power Broker®. “He really understands the dynamics of our business,” said a client.

No Delay in Coverage

Adrian Pellen, CRM Director Aon, New York

Adrian Pellen, CRM
Director
Aon, New York

Governmental agencies are utilizing innovative public-private partnerships to replace their aging civil, transit and social infrastructure. But there can be significant environmental risks on such projects, particularly delay costs to remediate unexpected contamination. Such exposures generally are excluded.

To address this significant gap in coverage, Aon’s Adrian Pellen worked with an environmental carrier to modify its pollution legal liability policy to provide coverage for equipment rental costs, consulting and other expenses in connection with a delay arising out of the discovery of a pollution condition. This coverage extension has been offered to more than a dozen projects, including several public-private partnerships.

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One real estate development firm became aware that a redevelopment site likely had underground oil and gas storage tanks, but Pellen was able to obtain a comprehensive insurance program that protected both the client and its lender. It’s a situation Pellen has handled deftly more than once. “Once again, Adrian was able to come in relatively quickly to take care of our needs,” the client said. “We got a pretty good insurance program, with good pricing and really good coverage — no fuss, no muss and everything taken care of.”

“Adrian Pellen is always one step ahead of you — you don’t need to constantly request information,” said a real estate investment trust client.

“He’s excellent,” said a construction firm client. “We’ve done a lot of work together and worked closely with him and his team, and we can really count on their responsiveness.”

Getting the Markets to Pay Attention

Thomas Swartz Senior Vice President Marsh, Houston

Thomas Swartz
Senior Vice President
Marsh, Houston

Environmental Liability Transfer Inc. had one particularly challenging deal last year for a former solvent recycling company, including liabilities for properties no longer owned or operated by the seller.

Thomas Swartz was able to not only obtain third-party liability coverage for known conditions, but also first-party coverage, which is very seldom granted on complex sites. “Tom Swartz is extremely skilled at bringing comfort to our clients who are requesting insurance, by educating them about the policies, the exclusions and the covered items,” said Randall Jostes, ELT’s president and CEO.

For Niagara Worldwide, a demolition, salvage and real estate company, Swartz was able to acquire relatively broad coverage on a complex 100-year-old paper mill site, despite the fact that the site had not been thoroughly assessed. He obtained third-party liability coverage and even retained some cleanup coverages through the creative use of endorsements, which restricted the discovery of contaminants through voluntary Phase II assessments.

“Tom Swartz is probably one of the more sincere experts in this industry that I know,” said Eric Spirtas, president of Niagara Worldwide. “He’s always available to consult; he always has his phone on to talk and give advice on the whole spectrum of insurance.”

“He gets the markets to pay attention to my clients,” said George von Stamwitz, a partner at Armstrong Teasdale. “He can get a product wrapped around a difficult environmental risk, which is the case more often than not as we’re dealing with pre-existing conditions in a wide variety of settings.”

Making the Difficult Possible

James Vetter Managing Director Marsh, Philadelphia

James Vetter
Managing Director
Marsh, Philadelphia

A private equity firm was acquiring the global assets of a chemical company, including plants with both known and suspected pollution conditions. When another broker couldn’t secure on-site cleanup coverage, the firm went to James Vetter and his team.

Vetter worked with the client to draft a summary of the risks, including a tabular analysis regarding specific concerns and financial materiality. Vetter then convinced the client to present their case to carriers.

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“At the end of the meeting, one of the carriers commented that it was the best discussion and presentation of risk that they had ever been involved in,” the client said. “All carriers agreed that this greatly helped them in their understanding and ability to underwrite the risk.”

Vetter was able to secure coverage that included on-site cleanup for all but two sites, and the exclusions for known conditions were significantly minimized. On- and off-site coverage was afforded in addition to business interruption.

“Jim Vetter is outstanding,” the private equity client said. “We had signed up a transaction with assurance that we could get environmental liability insurance for unknown environmental conditions of chemical manufacturing facilities around the world, but that turned out to be inaccurate. Jim did an outstanding job of marketing the opportunity, revisiting the application for insurance and we got it done on time.”

“With Jim Vetter, Marsh brought a true subject matter expert to us, for an exposure that was difficult to get our arms around,” a client said. “He helped push this over the finish line.”

Covering the Known and the Unknown

Max West Senior Vice President Aon, Chicago

Max West
Senior Vice President
Aon, Chicago

A U.S. manufacturer was acquiring a U.K. company whose site had more than a 100 years of industrial use, and Max West had just five working days to obtain a quote. West told the London carrier that both known and unknown pollution conditions could be insured since operations would not change. Four days later, West was able to secure $10 million in protection, including coverage for any future cleanup costs.

West had another client, a law firm that was helping a Japanese company buy a U.S. manufacturer with sites that had “long environmental histories” — but the seller did not want to let the buyer perform any environmental testing prior to the acquisition. West helped the buyer secure environmental insurance that would allow them to test the soil and groundwater after the acquisition, and would cover them for cleanup costs and environmental third-party liabilities. West helped the carrier customize the policy to cover “the kitchen sink” for 10 years.

The buyer “had some pretty unprecedented demands about wanting a lot of unknown environmental liabilities and conditions to be covered,” said West’s law firm client. “They also wanted the ability to do subsurface testing, which seemed to be over-the-top. But Max was able to get it all. At the end of the day, the cost of the environmental policy, which complemented the reps and warranty policy, was a small fraction of the overall insurance cost — I was really blown away.”

“Max did a terrific job obtaining coverage for a known environmental pollution condition that typically is not insurable,” a law firm client said.

BlueBar

LBR_ResponsiblityLeaderBLUE_logo-175A Friend of the Water

Max West first became interested in the environment when, as a young man windsurfing off of Hayling Island in Great Britain, he became ill due to an accidental sewage spill.

After graduation, he took a position with AIG as an environmental underwriter and a career was born.

These days, West makes his mark by being a tireless advocate for his clients.

“I have a tremendous desire to win and manage the expectations of the client,” West said.

“I think some insurance brokers sit on data and submissions. I understand how important environmental insurance is to making a deal happen. I will never let environmental insurance get in the way of making a deal happen. They will never be waiting for me,” West said.

West regularly networks with environmental attorneys and consultants both to educate himself and to provide better professional contacts for his clients.

On the nonprofit side, West is a supporter and a board member of the Friends of the Chicago River. He also recently assisted his home town of Glenview, Ill., by finding an environmental solution that allowed affordable housing to be maintained on Chicago’s North Shore.

“Deals would not happen and litigation would not be settled without environmental risk transfer,” West said.

BlackBar Finalists:

Cristin Bullen Senior Vice President Marsh

Cristin Bullen
Senior Vice President
Marsh

Brian Lu Associate Director Aon

Brian Lu
Associate Director
Aon

Keith Montone Asst Vice President Willis

Keith Montone
Asst Vice President
Willis

Jack Palis Vice President Marsh

Jack Palis
Vice President
Marsh

Peter Pantalone Director Aon

Peter Pantalone
Director
Aon

More from Risk & Insurance

More from Risk & Insurance

4 Companies That Rocked It by Treating Injured Workers as Equals; Not Adversaries

The 2018 Teddy Award winners built their programs around people, not claims, and offer proof that a worker-centric approach is a smarter way to operate.
By: | October 30, 2018 • 3 min read

Across the workers’ compensation industry, the concept of a worker advocacy model has been around for a while, but has only seen notable adoption in recent years.

Even among those not adopting a formal advocacy approach, mindsets are shifting. Formerly claims-centric programs are becoming worker-centric and it’s a win all around: better outcomes; greater productivity; safer, healthier employees and a stronger bottom line.

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That’s what you’ll see in this month’s issue of Risk & Insurance® when you read the profiles of the four recipients of the 2018 Theodore Roosevelt Workers’ Compensation and Disability Management Award, sponsored by PMA Companies. These four programs put workers front and center in everything they do.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top,” said Steve Legg, director of risk management for Starbucks.

Starbucks put claims reporting in the hands of its partners, an exemplary act of trust. The coffee company also put itself in workers’ shoes to identify and remove points of friction.

That led to a call center run by Starbucks’ TPA and a dedicated telephonic case management team so that partners can speak to a live person without the frustration of ‘phone tag’ and unanswered questions.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top.” — Steve Legg, director of risk management, Starbucks

Starbucks also implemented direct deposit for lost-time pay, eliminating stressful wait times for injured partners, and allowing them to focus on healing.

For Starbucks, as for all of the 2018 Teddy Award winners, the approach is netting measurable results. With higher partner satisfaction, it has seen a 50 percent decrease in litigation.

Teddy winner Main Line Health (MLH) adopted worker advocacy in a way that goes far beyond claims.

Employees who identify and report safety hazards can take credit for their actions by sending out a formal “Employee Safety Message” to nearly 11,000 mailboxes across the organization.

“The recognition is pretty cool,” said Steve Besack, system director, claims management and workers’ compensation for the health system.

MLH also takes a non-adversarial approach to workers with repeat injuries, seeing them as a resource for identifying areas of improvement.

“When you look at ‘repeat offenders’ in an unconventional way, they’re a great asset to the program, not a liability,” said Mike Miller, manager, workers’ compensation and employee safety for MLH.

Teddy winner Monmouth County, N.J. utilizes high-tech motion capture technology to reduce the chance of placing new hires in jobs that are likely to hurt them.

Monmouth County also adopted numerous wellness initiatives that help workers manage their weight and improve their wellbeing overall.

“You should see the looks on their faces when their cholesterol is down, they’ve lost weight and their blood sugar is better. We’ve had people lose 30 and 40 pounds,” said William McGuane, the county’s manager of benefits and workers’ compensation.

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Do these sound like minor program elements? The math says otherwise: Claims severity has plunged from $5.5 million in 2009 to $1.3 million in 2017.

At the University of Pennsylvania, putting workers first means getting out from behind the desk and finding out what each one of them is tasked with, day in, day out — and looking for ways to make each of those tasks safer.

Regular observations across the sprawling campus have resulted in a phenomenal number of process and equipment changes that seem simple on their own, but in combination have created a substantially safer, healthier campus and improved employee morale.

UPenn’s workers’ comp costs, in the seven-digit figures in 2009, have been virtually cut in half.

Risk & Insurance® is proud to honor the work of these four organizations. We hope their stories inspire other organizations to be true partners with the employees they depend on. &

Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]