2015 Power Broker

Construction

Over Delivery

02012015_PB_08_Construction_MBaeche

Mark Baechle, Managing Director, Willis, Chicago

Mark Baechle never under promises, but he sure tends to over deliver. Mining client Ambre Energy North America Inc. planned to build its business through a key acquisition — a challenging strategy given the company lacked a strong balance sheet and robust cash flow, which generated uncertainty among bond insurers. Without those bonds, Ambre would have been unable to close its acquisition deal.

Baechle positioned Ambre in front of bond underwriters, discussing the company’s history, the value of the acquisition and the support Ambre had from a major financial partner.

The result: better surety support than Ambre had sought, leading to “a successful acquisition of the target asset,” said Darin Adlard, vice president of finance at Ambre.

“Mark Baechle’s confidence in our business model, his understanding of the business needs, and his willingness to approach the marketplace knowing he could provide the solution we needed gave our company the confidence in him as our broker.”

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For a new contractor client, Baechle developed a surety marketing plan featuring the company’s construction team, processes and partner relationships. He also improved the client’s risk management program, contractually shifting more risk to subcontractors.

The resulting surety support far exceeded any that the client previously could procure, allowing it to plan a business expansion.
“Without a quick solution which was to the satisfaction of our surety, we would not have been able to bid certain works,” said an executive for the client.

Taking Charge

Danette Beck, CPCU, ARM, CRIS Senior Vice President Marsh, Los Angeles

Danette Beck, CPCU, ARM, CRIS
Senior Vice President
Marsh, Los Angeles

Danette Beck is a take-charge broker with an eye for unconventional solutions to coverage problems.

One contractor client was expanding into Puerto Rico and asked for an introduction to the local Marsh office. Beck instead led a series of meetings involving the client’s project team, joint venture partner and project owner, as well as local Marsh representatives. The resulting program included an owner-controlled insurance program, professional liability coverage for design flaws, contractors’ pollution liability wrap-up insurance and builder’s risk insurance.

Beck’s quick work allowed the project to begin as scheduled, solidifying the contractor’s relationship with the project owner, the client said.
For another client struggling to attract competing bids for an OCIP, Beck generated competition by allowing insurers to bid on either multiple or single lines of coverage.

A third project-owner client with a rapidly expanding nationwide footprint needed an OCIP that ensured the client would not face delays waiting on insurance when a project had to be executed quickly. The insurer also had to be comfortable with a rapid accumulation of risk and changing deadlines.
Beck negotiated such a program and at a dramatically reduced cost, saving the client millions of dollars.

The coverage gives the client’s busy project team the ability “to focus where they can best add value, rather than worrying about insurance,” the client said.

Producing Big Savings

Juan Cordoba, AAI, CRIS Sales Executive Wells Fargo, Coconut Grove, Fla.

Juan Cordoba, AAI, CRIS
Sales Executive
Wells Fargo, Coconut Grove, Fla.

Juan Cordoba storms through his clients’ weather-peril coverage problems.

Bayview Condominium Management Inc. had seen flood insurance premiums skyrocket for units at a large Miami property.

“Future buyers, as well as existing unit owners applying with financial institutions to refinance, were unable to secure financing through normal channels,” said Bayview President Robert J. Alwine.

Cordoba, assisted by engineers, redesigned areas of the property to mitigate the flood risk. Insurers reduced premiums by $150,000, which was the key to satisfying the buyers’ lenders, Alwine said.

One real estate investment firm depends on Cordoba’s advice on all property transactions. For a $500 million building project in a windstorm-prone area, the client could not find reasonably priced hurricane insurance. Cordoba and his team developed a strategy for the firm to purchase coverage in stages as the project was developed.

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“This helped big time to budget properly for the project,” the client said. “The actual cost of the builder’s risk placement was over $2 million less than the amount initially projected.”

Cordoba also helped to revise a flood insurance rating on a newly finished building for KW Property Management and Consulting, saving the client $900,000.

”The process took 60 days and it was key to the financial stability of the project,” said Paul S. Kaplan, KW’s managing director.

Due Diligence, and Then Some

Amy Fedena, CPCU, CRIS, ARM, AIM Director of Commercial Accounts Arthur J. Gallagher, Media, Pa.

Amy Fedena, CPCU, CRIS, ARM, AIM
Director of Commercial Accounts
Arthur J. Gallagher, Media, Pa.

Amy Fedena finds solutions where clients see only problems.

A client that had formed a joint venture to build a large project had not realized the associated $50 million of liability insurance it had to provide was not covered under its corporate program. It therefore hadn’t factored the approximate $250,000 insurance premium into the project’s budget.

In Fedena’s extensive research of all pertinent contracts, she found that the project’s general contractor had purchased insurance and named the client and JV as additional insureds. With this information, she persuaded the client’s corporate program underwriter to cover the project at no additional premium, and then persuaded the JV partner to amend its contract with the client so it wouldn’t have to purchase a stand-alone liability policy.

“She is more than our broker and more than a consultant; we feel she is an extension of our team,” the client said.

Another client, Pennoni Associates Inc., was being excluded from bidding on many lucrative projects because some aberrant claims had ballooned its NCCI and Pennsylvania workers’ comp experience modifier beyond 1.0, which was hurting the entire company.

Fedena addressed Pennoni’s clients’ specific concerns, “analyzing and explaining extenuating circumstances and consideration of other states’ data and our overall operations, and detailing corrective actions,” said Nelson Shaffer, executive vice president and CAO. “This ultimately resulted in acceptance of Pennoni’s bids and award of several large projects.”

Enabling $1 Billion in Business

Michael Heffernan, CPCU, ARM Managing Director Aon, San Jose, Calif.

Michael Heffernan, CPCU, ARM
Managing Director
Aon, San Jose, Calif.

Michael Heffernan ensures that key stakeholders in his clients’ businesses understand their risk mitigation efforts.

For renewable energy firm EnviroMission Inc., Heffernan “did a tremendous job” of providing solutions to the government agencies responsible for deciding whether to lease the company land where it can erect its solar energy technology, said President Christopher Davey.

“Mike, by providing risk mitigation solutions, allowed a level of comfort to be reached,” Davey said. “This has resulted in our company successfully negotiating a number of land leases. Without Mike’s vision, we would not have projects, as we would not have the land. The dollar value on this is priceless but would be in the $1 billion range.”

At Joseph J. Albanese Inc., the founder, CEO and sole shareholder became seriously ill as the construction company was renewing its general liability, automobile and workers’ compensation coverages. Questions about the company’s succession plan along with some past poor claims experience were at the forefront of underwriters’ minds.

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“Mike was able to work with our underwriters, communicating the severity of the situation while retaining their confidence in the company’s succession contingency plan in the event something happened to my father,” said Kevin J. Albanese, who succeeded his father as president and CEO after the elder Albanese passed away.

Heffernan “accomplished the renewal with a very modest adjustment, and supported our company as we transitioned, all the while, protecting the organization’s balance sheet.”

In the Driver’s Seat

Joe Pardue Vice President HUB, Burlington, N.C.

Joe Pardue
Vice President
HUB, Burlington, N.C.

Clients turn to Joe Pardue in emergencies for quick and comprehensive aid.

Samet Corp. was building a dormitory for a large university when the structure was destroyed by fire. Pardue had placed the builder’s risk coverage, which provided not only sufficient building limits but also loss of income and expedited expenses for an immediate and accelerated rebuild.

“The night of the fire, Joe was available and jumped on the issue with his team to ensure we had access to the carrier at the right level to speed processing and help answer many questions upfront,” including how quickly the structure could be demolished, said Rick Davenport, Samet’s president of construction. The loss exceeded $10 million.

Pardue organized many calls between the carrier and Samet and personally joined those meetings “as a resource to help ensure we didn’t misstep, as we have never had a fire previously or any type of issue of this magnitude,” Davenport said.

Adams Electric faced an emergency of a different kind. It had won three new large bids and then found that its current surety underwriter would not bond the aggregate value of work. That development also surprised the company’s incumbent surety broker, whom Pardue hadn’t been able to unseat for eight years.
But Operations Manager Don Young turned to Pardue, whom the company was using to place other coverages. Within days, including a weekend, Pardue found a surety that agreed to write a bond covering all three projects.

BlackBarFinalist:

Marisa Thielen Regional Director Aon, Washington

Marisa Thielen
Regional Director
Aon, Washington

More from Risk & Insurance

More from Risk & Insurance

Risk Scenario

The Betrayal of Elizabeth

In this Risk Scenario, Risk & Insurance explores what might happen in the event a telemedicine or similar home health visit violates a patient's privacy. What consequences await when a young girl's tele visit goes viral?
By: | October 12, 2020
Risk Scenarios are created by Risk & Insurance editors along with leading industry partners. The hypothetical, yet realistic stories, showcase emerging risks that can result in significant losses if not properly addressed.

Disclaimer: The events depicted in this scenario are fictitious. Any similarity to any corporation or person, living or dead, is merely coincidental.

PART ONE: CRACKS IN THE FOUNDATION

Elizabeth Cunningham seemingly had it all. The daughter of two well-established professionals — her father was a personal injury attorney, her mother, also an attorney, had her own estate planning practice — she grew up in a house in Maryland horse country with lots of love and the financial security that can iron out at least some of life’s problems.

Tall, good-looking and talented, Elizabeth was moving through her junior year at the University of Pennsylvania in seemingly good order; check that, very good order, by all appearances.

Her pre-med grades were outstanding. Despite the heavy load of her course work, she’d even managed to place in the Penn Relays in the mile, in the spring of her sophomore season, in May of 2019.

But the winter of 2019/2020 brought challenges, challenges that festered below the surface, known only to her and a couple of close friends.

First came betrayal at the hands of her boyfriend, Tom, right around Thanksgiving. She saw a message pop up on his phone from Rebecca, a young woman she thought was their friend. As it turned out, Rebecca and Tom had been intimate together, and both seemed game to do it again.

Reeling, her holiday mood shattered and her relationship with Tom fractured, Elizabeth was beset by deep feelings of anxiety. As the winter gray became more dense and forbidding, the anxiety grew.

Fed up, she broke up with Tom just after Christmas. What looked like a promising start to 2020 now didn’t feel as joyous.

Right around the end of the year, she plucked a copy of her father’s New York Times from the table in his study. A budding physician, her eyes were drawn to a piece about an outbreak of a highly contagious virus in Wuhan, China.

“Sounds dreadful,” she said to herself.

Within three months, anxiety gnawed at Elizabeth daily as she sat cloistered in her family’s house in Bel Air, Maryland.

It didn’t help matters that her brother, Billy, a high school senior and a constant thorn in her side, was cloistered with her.

She felt like she was suffocating.

One night in early May, feeling shutdown and unable to bring herself to tell her parents about her true condition, Elizabeth reached out to her family physician for help.

Dr. Johnson had been Elizabeth’s doctor for a number of years and, being from a small town, Elizabeth had grown up and gone to school with Dr. Johnson’s son Evan. In fact, back in high school, Evan had asked Elizabeth out once. Not interested, Elizabeth had declined Evan’s advances and did not give this a second thought.

Dr. Johnson’s practice had recently been acquired by a Virginia-based hospital system, Medwell, so when Elizabeth called the office, she was first patched through to Medwell’s receptionist/scheduling service. Within 30 minutes, an online Telehealth consult had been arranged for her to speak directly with Dr. Johnson.

Due to the pandemic, Dr. Johnson called from the office in her home. The doctor was kind. She was practiced.

“So can you tell me what’s going on?” she said.

Elizabeth took a deep breath. She tried to fight what was happening. But she could not. Tears started streaming down her face.

“It’s just… It’s just…” she managed to stammer.

The doctor waited patiently. “It’s okay,” she said. “Just take your time.”

Elizabeth took a deep breath. “It’s like I can’t manage my own mind anymore. It’s nonstop. It won’t turn off…”

More tears streamed down her face.

Patiently, with compassion, the doctor walked Elizabeth through what she might be experiencing. The doctor recommended a follow-up with Medwell’s psychology department.

“Okay,” Elizabeth said, some semblance of relief passing through her.

Unbeknownst to Dr. Johnson, her office door had not been completely closed. During the telehealth call, Evan stopped by his mother’s office to ask her a question. Before knocking he overheard Elizabeth talking and decided to listen in.

PART TWO: BETRAYAL

As Elizabeth was finding the courage to open up to Dr. Johnson about her psychological condition, Evan was recording her with his smartphone through a crack in the doorway.

Spurred by who knows what — his attraction to her, his irritation at being rejected, the idleness of the COVID quarantine — it really didn’t matter. Evan posted his recording of Elizabeth to his Instagram feed.

#CantManageMyMind, #CrazyGirl, #HelpMeDoctorImBeautiful is just some of what followed.

Elizabeth and Evan were both well-liked and very well connected on social media. The posts, shares and reactions that followed Evan’s digital betrayal numbered in the hundreds. Each one of them a knife into the already troubled soul of Elizabeth Cunningham.

By noon of the following day, her well-connected father unleashed the dogs of war.

Rand Davis, the risk manager for the Medwell Health System, a 15-hospital health care company based in Alexandria, Virginia was just finishing lunch when he got a call from the company’s general counsel, Emily Vittorio.

“Yes?” Rand said. He and Emily were accustomed to being quick and blunt with each other. They didn’t have time for much else.

“I just picked up a notice of intent to sue from a personal injury attorney in Bel Air, Maryland. It seems his daughter was in a teleconference with one of our docs. She was experiencing anxiety, the daughter that is. The doctor’s son recorded the call and posted it to social media.”

“Great. Thanks, kid,” Rand said.

“His attorneys want to initiate a discovery dialogue on Monday,” Emily said.

It was Thursday. Rand’s dreams of slipping onto his fishing boat over the weekend evaporated, just like that. He closed his eyes and tilted his face up to the heavens.

Wasn’t it enough that he and the other members of the C-suite fought tooth and nail to keep thousands of people safe and treat them during the COVID-crisis?

He’d watched the explosion in the use of telemedicine with a mixture of awe and alarm. On the one hand, they were saving lives. On the other hand, they were opening themselves to exposures under the Health Insurance Portability and Accountability Act. He just knew it.

He and his colleagues tried to do the right thing. But what they were doing, overwhelmed as they were, was simply not enough.

PART THREE: FALLING DOMINOES

Within the space of two weeks, the torture suffered by Elizabeth Cunningham grew into a class action against Medwell.

In addition to the violation of her privacy, the investigation by Mr. Cunningham’s attorneys revealed the following:

Medwell’s telemedicine component, as needed and well-intended as it was, lacked a viable informed consent protocol.

The consultation with Elizabeth, and as it turned out, hundreds of additional patients in Maryland, Pennsylvania and West Virginia, violated telemedicine regulations in all three states.

Numerous practitioners in the system took part in teleconferences with patients in states in which they were not credentialed to provide that service.

Even if Evan hadn’t cracked open Dr. Johnson’s door and surreptitiously recorded her conversation with Elizabeth, the Medwell telehealth system was found to be insecure — yet another violation of HIPAA.

The amount sought in the class action was $100 million. In an era of social inflation, with jury awards that were once unthinkable becoming commonplace, Medwell was standing squarely in the crosshairs of a liability jury decision that was going to devour entire towers of its insurance program.

Adding another layer of certain pain to the equation was that the case would be heard in Baltimore, a jurisdiction where plaintiffs’ attorneys tended to dance out of courtrooms with millions in their pockets.

That fall, Rand sat with his broker on a call with a specialty insurer, talking about renewals of the group’s general liability, cyber and professional liability programs.

“Yeah, we were kind of hoping to keep the increases on all three at less than 25%,” the broker said breezily.

There was a long silence from the underwriters at the other end of the phone.

“To be honest, we’re borderline about being able to offer you any cover at all,” one of the lead underwriters said.

Rand just sat silently and waited for another shoe to drop.

“Well, what can you do?” the broker said, with hope draining from his voice.

The conversation that followed would propel Rand and his broker on the difficult, next to impossible path of trying to find coverage, with general liability underwriters in full retreat, professional liability underwriters looking for double digit increases and cyber underwriters asking very pointed questions about the health system’s risk management.

Elizabeth, a strong young woman with a good support network, would eventually recover from the damage done to her.

Medwell’s relationships with the insurance markets looked like it almost never would. &

Bar-Lessons-Learned---Partner's-Content-V1b

Risk & Insurance® partnered with Allied World to produce this scenario. Below are Allied World’s recommendations on how to prevent the losses presented in the scenario. This perspective is not an editorial opinion of Risk & Insurance.®.

The use of telehealth has exponentially accelerated with the advent of COVID-19. Few health care providers were prepared for this shift. Health care organizations should confirm that Telehealth coverage is included in their Medical Professional, General Liability and Cyber policies, and to what extent. Concerns around Telehealth focus on HIPAA compliance and the internal policies in place to meet the federal and state standards and best practices for privacy and quality care. As states open businesses and the crisis abates, will pre-COVID-19 telehealth policies and regulations once again be enforced?

Risk Management Considerations:

The same ethical and standard of care issues around caring for patients face-to-face in an office apply in telehealth settings:

  • maintain a strong patient-physician relationship;
  • protect patient privacy; and
  • seek the best possible outcome.

Telehealth can create challenges around “informed consent.” It is critical to inform patients of the potential benefits and risks of telehealth (including privacy and security), ensure the use of HIPAA compliant platforms and make sure there is a good level of understanding of the scope of telehealth. Providers must be aware of the regulatory and licensure requirements in the state where the patient is located, as well as those of the state in which they are licensed.

A professional and private environment should be maintained for patient privacy and confidentiality. Best practices must be in place and followed. Medical professionals who engage in telehealth should be fully trained in operating the technology. Patients must also be instructed in its use and provided instructions on what to do if there are technical difficulties.

This case study is for illustrative purposes only and is not intended to be a summary of, and does not in any way vary, the actual coverage available to a policyholder under any insurance policy. Actual coverage for specific claims will be determined by the actual policy language and will be based on the specific facts and circumstances of the claim. Consult your insurance advisors or legal counsel for guidance on your organization’s policies and coverage matters and other issues specific to your organization.

This information is provided as a general overview for agents and brokers. Coverage will be underwritten by an insurance subsidiary of Allied World Assurance Company Holdings, Ltd, a Fairfax company (“Allied World”). Such subsidiaries currently carry an A.M. Best rating of “A” (Excellent), a Moody’s rating of “A3” (Good) and a Standard & Poor’s rating of “A-” (Strong), as applicable. Coverage is offered only through licensed agents and brokers. Actual coverage may vary and is subject to policy language as issued. Coverage may not be available in all jurisdictions. Risk management services are provided or arranged through AWAC Services Company, a member company of Allied World. © 2020 Allied World Assurance Company Holdings, Ltd. All rights reserved.




Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at [email protected]