Clearing the Hurdle of Capacity Challenges
Jonathan Ball’s accolades came from a wide spectrum of energy companies. The need for capacity was the common denominator across sectors of the industry. “Jon was instrumental in restructuring our excess liability and excess workers’ compensation insurance programs in 2013,” said one corporate insurance program manager. “We faced a shortage of capacity. However, Jonathan and his team were able to replace the lost capacity and expand our relationships with international insurance carriers. Jon and his team negotiated several coverage enhancements including expanded DIC drop-down coverage and more consistent awareness dates.
They were also able to negotiate enhancements to mandatory known loss exclusions. Faced with a challenge to keep risk-transfer premiums to an absolute minimum, Jonathan was able to differentiate our company from our peers and achieve best-in-class renewal premium terms.”
Another client in a completely different sector of the industry added, “Jon has been instrumental in negotiations with our excess liability carriers in a tough market for the midstream/pipeline business, to keep increases modest.
He went above and beyond in serving the account and responds appropriately and quickly to meet the needs and requests of our many changes. From my perspective, the underwriters view him as tough but fair.”
In the broadest possible endorsement, Ball also received testimonials from companies across the spectrum of energy from traditional to alternative: clean coal, biomass and wind. In particular, they note his poise in dealing with large projects, and in keeping them on schedule.
Nimble Broker Delivers Superior Solutions
One of the standards of Western films is the cowboy jumping onto a horse in full gallop. Such was the year for John Keely, global upstream sector leader for Aon, whose clients had a variety of projects underway when they asked him to ride to the rescue. “Our business is to take a working interest in wells that are already being drilled,” said the executive vice president of one independent producer. “As we buy into wells, John and his team are able to react and get us the protection we need case by case.”
The client added that the constant stream of investments and exposures makes each renewal unique. “For this most recent renewal, John was able to present our portfolio in a way that drove down our rates. That’s despite the reality that capacity is very much an issue in our industry. John went to London for capacity for us.”
Flowing the opposite way, Keely also won laurels for his ability to place a program for a new entry to the Gulf of Mexico deepwater drilling market. The operating company was the U.S. subsidiary of a huge global energy company, but initially underwriters were leery of the operating company’s capitalization. With drilling scheduled to begin early this year, Keely was on the spot to get the placement done.
“There was a lot of education to be done on both sides, the insurance companies as well as our people in the U.S.,” said the president of the subsidiary. “He got both sides to understand each other. That was especially important for us to understand the nature of the markets in the U.S.”
Expert Tailoring for Better Coverage Fit
Duncan Ross understands that sometimes big needs to be nimble. One client, a global energy transmission company, brought its program to him seeking better terms and conditions, as well as more capacity. “We have a complicated account,” said the manager of insurance risk management. “We have a very large liability and casualty program. We wanted to make changes to our program, and to find new capacity both in North American and London markets. That was to cover growth of our business as well as to replace some that we lost when carriers repositioned themselves. Duncan was our key broker and contact to the London market.”
That resolution may have been helped by the attractive size and capitalization of the owner, but Ross was able to accomplish a similar retrofit for a midsized midstream company operating in the United States and Canada. That is a common business model but, as in this case, it often creates a pastiche of coverages from various carriers in both countries.
According to the client, the company had too much coverage in some areas, and insufficient protection in others. A big new acquisition was the trigger for the overhaul because the deal could not be completed with the existing program.
Clients concur that even as a production and transportation boom grows across North American oil and gas markets, pollution coverage has become harder to place and more expensive when it is secured. But one risk manager of a midsized company credits Ross and his team with being aggressive and innovative in obtaining the necessary coverage.
A Passion for Keeping Clients Above Water
A great deal of the activity and attention throughout 2013 in the upstream energy business — finding and producing oil and gas — was focused on the unconventional bonanza, using horizontal drilling and hydraulic fracturing to coax hydrocarbons out of dense rock. That so-called “shale gale” is primarily being led by small and midsized independent companies with proportionally sized insurance needs. But the global majors, the household names and national oil companies (NOC) from around the world, are still exploring and drilling, mostly offshore in deep water, in expensive programs with huge insurance needs. The opportunities for brokers are few, but very rewarding, in every sense.
“Darren recently placed some complex deepwater, offshore risks for us,” said the corporate insurance adviser for one large NOC. “His knowledge of the insurance market is second to none, and he manages to balance the placement targets and the interests of insurers well. Darren understands the buyer’s perspective, and carries out his tasks with integrity.”
While Jones is experienced in working with the global majors on big conventional drilling projects, he also puts his talents to work on more cutting-edge projects. Clients say his specialty is very large, complex, floating offshore platforms, used for both oil and gas. The size of these structures, valued at $3 billion to $4 billion and even higher, means that Jones had to craft multilayered placements across several international markets. In one case, he was able to bring nearly two dozen participants together to provide sufficient capacity.
Meeting Challenges with Creativity
There are many brokers who have a good understanding of mining risks, but few are faced with the challenge of placing a program with $1 billion in limits particularly when there has been some difficult claim history to address. “Our placement is very complex, and involves accessing substantially all of the available mining capacity in the commercial market,” said the director of risk management for a sizeable natural resources company.
“Jim not only provided significant support to navigate the complexities of pursuing two difficult claims in consecutive policy years,” the director said, “but he proposed creative and innovative ways to structure the renewal program so that there was no ongoing premium penalty or impact from the claim activity. Additionally, Jim secured new capacity to replace markets that exited the program as a result of the claim activity and maximized the remaining capacity by suggesting a revised and flexible program restructure.”
In a similar vein, but a different industry, one client in the oil and gas sector also lauds Meyers for his deft handling of a tricky renewal. “Of particular note last year is Jim’s work in securing renewal coverage on our large property rig program at below market terms utilizing various carriers for the placement. This combined with his negotiated no-claims bonus on the same program made a significant impact on our overall cost of risk,” said the risk manager. “Not only does Jim have an in-depth understanding of the industry that insures our risks, but he excels in his approach with underwriters to secure better than market terms.”
Propelling New Ventures Toward Success
Present at the creation is an oft-used expression, but for Kevin Sisk, it was manifest for real last year when a client was divested from its former parent. Once the divestiture was complete, the company retained Sisk to manage its new, stand-alone placement. “We were desirous of a total approach to our risk management,” said the CFO, “and the platform for growth that would propel us for the coming years, not just the cheapest coverage that could be quickly assembled.”
The CFO continued, “Kevin is a consummate risk management professional who proved his worth many times over from our negotiations to underwriting to binding of coverage. Kevin is truly a partner in our risk management.”
Another new company brought in Sisk a few months after its founding because it quickly outgrew its initial program. The client explained that after a thorough audit, Sisk cancelled and rewrote most of their coverage, cutting rates in about half.
Bigger, established firms brought Sisk other challenges. One large domestic oil and gas producer commissioned a complete review of its contractual liability exposures in light of the revelations for the industry coming out of the Deepwater Horizon litigation. The complication was not just the number and size of the contractors and agreements, but that the exploration and production projects could not be stopped or significantly changed. The client asked Sisk to identify and quantify exposures in the existing contracts, and then recommend risk-management ideas that could be implemented while the contracts were in effect.