For one client completing a merger after the company’s insurance renewal, Sarah Allison had to arrange cost-efficient short-term coverage for its workers’ compensation, general liability, automobile liability and excess liability risks.
But the merger fell behind schedule, so the broker had to arrange another short-term renewal — and then another after yet another delay. After the merger’s completion, Allison had to arrange a fourth short-term renewal. The most important reason was that the risk manager wanted to show insurers that the merged entity was a much better risk than they anticipated. That led to a huge reduction in various insurance costs when the merged company renewed for a full year, the company’s risk manager said.
“The biggest challenge for us as [a merged] enterprise was the collateral required for our insurance program,” the risk manager said. “Sarah’s efforts resulted in an ultimate collateral reduction of 30 percent compared to where it was tracking for our insurance program.”
Allison also assisted another client, JHT Holdings Inc., realize significant collateral savings.
“JHT’s insurance program is high deductible in nature,” said Christopher H. Reehl, executive vice president and CFO. Many times, Allison negotiated JHT’s “two key needs,” he said: a depleting cash collateral program and a multi-month payment installment plan. Allison and her team also “have been strong advocates for the company [in] negotiating the release of excess collateral from JHT’s previous insurance carrier on a policy which predated Marsh’s involvement with the organization,” Reehl noted.
FirstGroup plc, a major operator of commuter rail and bus services in Europe and North America, recently benefitted from Barry Jones’ expertise. A FirstGroup unit had had a long-running, large, complex crime claim that had been “drifting,” said Richard D. Millington, group insurance director. The claim was becoming more problematic because FirstGroup had an opportunity to sell the unit.
Jones gathered all stakeholders on both sides of the claim and deftly managed their expectations, Millington said. In particular, insurers had to accept that FirstGroup had significant coverage, and FirstGroup had to understand that the claim’s complexity raised legitimate questions for insurers, he said.
Ultimately, a settlement met not only FirstGroup’s financial goals but also its tight deadline. Jones, who was brought into the dispute in November 2012, facilitated a deal by March 31, 2013 — FirstGroup’s fiscal year end.
Jones also has taken a seat on the management board of FirstGroup’s in-house third-party administrator to assist it in becoming a “best-in-class” claims handler, Millington said.
Another client also lauded Jones’ negotiating skills. “Barry is a great communicator and does an excellent job in bridging the gap between people with different opinions,” the client said. “He is open to hearing the views of other parties and in brokering a deal between those parties. He is adept at knowing when to give ground in order to secure a deal rather than just pushing against a closed door.”
Saving the Day
Changes in regulations and marine insurance policy terms were about to affect one company’s ability to transport nuclear materials and transfer them at its terminals.
Sheldon Kaufman saw it coming, and brought the situation to the shipper’s attention. Initially, company executives were not overly concerned, despite having a contract to transport an especially large nuclear shipment. Management felt that its environmental liability insurance policy should satisfy the new regulations, but that wasn’t the case. The insurer refused to cover the exposure.
Thankfully, Kaufman had already anticipated the problem, and had approached the insurance market for an underwriter willing to cover the risk. Hours after the environmental insurer refused to cover the risk — with the shipper waiting to transport the large radioactive materials cargo — Kaufman delivered a nuclear liability policy.
“If we didn’t have even the minimum possible coverage to protect [our company], we would have had to deal with breaking significant contractual obligations, labor issues and the ramifications associated with lost revenue,” an executive with the shipper noted.
Now, with the new coverage, the shipper has been able to win more nuclear cargo business, the executive said.
“Mr. Kaufman is attentive and solution-oriented in his work, which certainly helps him succeed,” one client observed. “His responsiveness makes him a reliable broker and very easy to work with.”
A Difference Maker
In its tough 2014 property renewal, a CSX Transportation reinsurer said it needed a 40 percent rate hike — if it even remained in the program, said Juliana J. Keaton, the railroad’s director of insurance. Simon Methven, Property leader, North America and Pacific Region, assisted CSX in more accurately quantifying exposures, especially in Cat-prone regions, and assessing whether the railroad had appropriate retentions and limits in its excess program. For Cat risks, Methven looked to alternative risk financing, and educating underwriters in the insurance-linked securities and Cat bond markets about the railroad’s risks and risk mitigation efforts.
The recalcitrant reinsurer stayed, increasing its participation and cutting its rate hike to 16 percent. Keaton noted that “at least one well-respected reinsurer” has said “on more than one occasion that Simon is the reason they write our program.”
Meanwhile, the departure of key risk management executives had put the 2013 property renewal behind schedule for commuter railroad Metra. R. John Anderson, then-new director of risk manager and insurance, brought in Methven to handle the renewal and also return a portion of the program to the London market after a long absence.
Despite a time challenge and a decade of poor loss history, Methven renewed the program in time and below budget, Anderson said. Methven not only placed much of the program in London, but also persuaded underwriters to make several coverage enhancements, including stripping out an aggregate limit that had cost the railroad $500,000 over the past decade.
A Real Mover
Canadian Pacific Railway relied on John Raymond to replace a key market, which had written 50 percent of the railroad’s primary property program but imposed significant coverage restrictions, said Shireen Bond, managing director-risk management. The insurer was investigating a large claim that would not be resolved until after renewal, so maintaining a good relationship was key. Raymond deftly placed broader property coverage for the railway while still maintaining the insurer’s goodwill.
Raymond also helped RailAmerica create “buzz” for a restructured property program that would provide the railroad greater coverage at a lower cost, said Mike Morningstar, director of risk management and claims at Genesee & Wyoming, which has since acquired RailAmerica.
“Transferring additional risk to the insurance carriers while realizing a savings in premium was paramount to our bottom line, and Mr. Raymond was able to develop a plan which he implemented,” Morningstar said.
Another transportation industry client last year asked Raymond to execute a late change in its property risk financing plans during its program renewal. The client decided to take a much larger self-insured retention to generate substantial premium savings. Raymond further negotiated higher sublimits on several coverages, the client’s risk manager said.
“My company wanted to reduce insurance spend, create more leverage in our relationship with insurers, and gain broader terms and conditions,” the client explained. “John was an integral component of accomplishing all of our objectives.”
Keeping the Railroad Running
Travelliance Inc. needed its liability program renewed far ahead of its summer 2013 renewal date to satisfy its largest client, with which it has a complex contractual agreement. Missing the deadline would damage the relationship with the client, explained Todd M. Friesen, president and chief operating officer-rail transportation.
White developed a robust marketing campaign that featured the railroad’s various risk management practices, putting the railroad’s executives directly in touch with underwriters. White’s plan created competition for the account, resulting in an early deal that met the client’s insurance requirements and reduced the railroad’s liability insurance costs. The program not only preserved Travelliance’s relationship with its largest client but also provided the railroad a framework it could use with other clients, Friesen noted. “Jeremiah is simply a problem solver when it comes to insurance,” Friesen observed.
Another railroad client faced a tougher property insurance renewal due to significant fire losses as a result of long-term drought conditions. It also faced dramatically higher liability insurance rates, noted its controller.
A previous broker attempted just weeks before renewal to place the property program plus rolling stock and vehicle coverage, but failed to obtain timely rate quotes. White came in and placed all of the coverage within days at a savings of $45,000, the controller noted. He also saved the railroad tens of thousands of dollars more by placing the liability program at expiring coverage and rating terms and only a slightly higher retention, she said.
Aon’s Jeremiah White takes involvement and leadership to the next level, both within his company and his community. He writes to political representatives on the federal level to express his clients’ opinions on industry-relevant topics and lobbies for their interests. He meets with local municipalities to discuss contract requirements and upcoming railroad projects, exceeding expectations to make life a little easier for his customers.
At Aon, he commits a few hours each week to talking with younger brokers, “to make sure they are learning the ‘why’ instead of just ‘how.’ ” He presents himself as a resource for his younger colleagues, helping to boost their product knowledge and pass along his energy and excitement.
And the number of community service projects that White gives his time to cannot be counted on two hands. He participates in 5K charity runs for schools in his community, volunteers for an area cold weather shelter, serves as a volunteer assistant coach for youth football and participates in his local chapter of the American Legion. White also represents the rail industry and Aon at numerous professional events.
“My time is my most valuable resource,” White said, “so whenever I am giving my time to help others I know that I am contributing positively to the future.” As the main contact for and face of the Aon Rail Practice, White is making a good impression.