2015 Power Broker

Energy (Upstream)

Broker’s Efforts Help Drive Expansion

Clayton Corbett, ARM Assistant Vice President Aon, Houston

Clayton Corbett, ARM
Assistant Vice President
Aon, Houston

At the same time a client was doubling the size of its holdings in the U.S. and in the Middle East, Aon’s Clayton Corbett pulled off quite a coup.

“[He] was able to negotiate enhanced coverage for our expanded global business,” said the client, “largely with our existing insurance providers, and increased some of our policy limits to reflect the market demand, yet broadly maintained the overall dollar premium cost we paid last year.”

The client completed its annual renewal late in 2014, a year that included acquisitions in Europe and Southeast Asia.

“Clayton has gone the extra mile,” the insurance manager said, “achieving fantastic results in securing enhanced cover for our company during our renewal this year at substantially improved rates, while retaining continuity across our providers.

Advertisement




“Clayton is always very responsive to our requirements, knowledgeable about the market in which we operate and a great source of advice on what level of cover is appropriate for our business as it develops.

During our recent renewal program he was very supportive in guiding the team regarding the information requirements and managed the process effectively.” He said that Corbett was also able obtain some specific coverages required by the bank, at no additional cost to the company.

Said another client, “Clayton does not avoid discussing difficult topics with me or our executive management which is greatly appreciated as he is also able to anticipate our questions prior to being asked. He is integrated into our day-to-day processes and procedures.”

Guidance That’s Worth a Million

George Dougherty Managing Principal Integro, New York

George Dougherty
Managing Principal
Integro, New York

More than a few Power Brokers have helped new risk manager clients through their first renewals or claims. George Dougherty won his laurels for 2014 in part by supporting a risk manager who was not just new in his job, but the first ever to hold the office for his company.

“We never had a risk manager, and we never really had a good marketing plan,” said the client.

“I came into the newly created position and was asked to reduce costs. This was at a time of rising costs.”

That has been because energy-industry service providers and subcontractors have been under their own coverage exclusions, thus pushing exposures back to their customers.

“George took us to market, an area in which we had never done a good job. Once the full effects of his work were seen, he saved us about a million dollars. We had to take some higher deductibles, but he was able to explain that to senior management as a prudent approach.” The company was able to spend some of the savings on safety improvements, which are expected to pay further dividends at next renewal.

Risk transfer between companies also figured into Dougherty’s work for another client. The client carried exclusions for environmental liabilities, but because of the nature of its business, could be exposed to environmental claims or even litigation.

Dougherty coordinated an effort among carriers that was part integration and part gap analysis that aligns all the policies, clarifies abutting coverage and specifies exclusions.

Helping Small Players Gain Leverage

Adam Hall Senior Vice President Alliant, Fort Worth, Texas

Adam Hall
Senior Vice President
Alliant, Fort Worth, Texas

“We are an oil and gas company at a volatile time in the commodity cycle,” one client said.

“Adam has shown superior skill at handling a smaller size company that acts often like a larger company. I wouldn’t call us flippers of oil and gas properties, but we are certainly active and this year was an unusually active year on both the buy and sell fronts.”

It’s no small challenge buying assets with known environmental issues. Hall helped develop a program that covered the assets for claims on a go-forward basis and included assets with pre-existing conditions, the client said.

The risk manager noted, “with our carrier changing the way they are handling pollution — which is the major issue in our sector — [Hall] not only navigated us through the pros and cons of switching pollution carriers and style of coverage, but he also made it personal to a company our size that is family backed.”

Advertisement




The risk manager added, “He did this with the knowledge that we had done a full marketing of our liability coverages just two years ago and some carriers would be reluctant to quote us again.

“My favorite thing about Adam,” he said, “is the way that he uses his network, freely, to help his clients get together to mutually beneficial outcomes. In a year where we sold two of our larger properties and turned around and bought a few different properties, Adam has made sure we have had zero bumps.”

Unifying Approach the Key to Success

Lee Hollmann First Vice President Alliant, Houston

Lee Hollmann
First Vice President
Alliant, Houston

In many ways, the oilfield is the ultimate nightmare for risk management: heavy equipment operating 24/7 at height and high speeds, often with dangerous substances and usually far from emergency services.

Risk management is a challenge to say the least, and the next stage — disaster recovery — even more so.

One client charged Hollmann with integrating its disaster recovery program from disparate parts to an integrated whole.

“We called it the continuity project, because it covered our company itself as well as our field operations,” said the risk manager, “from a storm damaging our headquarters to an incident in the field affecting our equipment or crews. We had separate programs, but really needed to put all the plans and resources and coverage together. We were with another broker, but heard that Lee was an expert in this area. He really delivered for us.”

Hollmann was able to accomplish that despite rapid growth by firm that meant a large number of new and variable unknowns in the equation. There had also been losses, some with open claims. Markets were reticent, to say the least, but responded favorably to the holistic approach Hollmann took.

The client said that his previous efforts to address coverage, claim and cost issues individually had involved great exertion, but little progress. With relish, he added that once Hollmann’s strategic integration was underway, individual details fell into place. For example, $1 million of inaccurate reserve limits were discovered and corrected.

The Expertise Big Players Rely On

Brian Hudler First Vice President Alliant, Fort Worth, Texas

Brian Hudler
First Vice President
Alliant, Fort Worth, Texas

One of the defining characteristics of the upstream oil and gas sector is the size of the capital requirements for development.

New drilling and production techniques consume huge amounts of initial capital. One recent project had a total value of a billion dollars, and included a new physical plant, to be staffed by hundreds of new hires.

It could have been a bumpy road — the client, a start-up firm, was new to Hudler and to Alliant. But it only took a dozen meetings for Hudler to put all the ducks in a row and secure the placement.

Other clients are equally well versed in the way Hudler handles tough challenges. “We use Brian for all of our commercial insurance and well control policies,” said one risk manager.

“Brian helped us on four acquisitions of producing properties … as well as the disposition of two different producing properties. All of those individual transactions in the same year required revisions and updates to our insurance policies. With this level of activity for an exploration and production operator with a very lean staff, we relied heavily on Brian and Alliant for their expertise on insurance.”

Advertisement




Many brokers earn praise for winning new business, but for Power Brokers, the courtship never ends.

“We changed over to him a few years ago after not receiving the best service from our prior provider,” said one client. “I can’t say enough good things about him. We feel like he and his firm have done a great job of marketing our insurance program when necessary.”

A Reputation That Commands Respect

David Owen, CISR, CRM Area Vice President Arthur J. Gallagher, Dallas

David Owen, CISR, CRM
Area Vice President
Arthur J. Gallagher, Dallas

Brokers serving the technology category talk about how their sector is highly complex and fast moving.

But theirs isn’t the only one. Oil and gas production might seem prosaic, but the latest drilling and production techniques are nothing short of rocket science, two miles down in solid rock.

Above ground, the price of oil changes by the second, while the financial structure of operating companies and their investors evolve constantly.

“I am a former broker myself, and I keep my fingers on the industry,” said one of David Owen’s clients.

“Word was out that he was good, so we gave him a shot and were very pleased with the results. David thought he would be able to get carriers to compete head to head, and they did.

“David increased our coverage and reduced our premium by a significant amount by taking our program from a strictly domestic placement out to offshore markets,” the client said.

It’s no surprise that Owen’s reputation preceded him. Consider what he managed for another client, a privately held operator, backed by large institutional investors.

The client acquired actively producing assets from a large multinational, publicly traded, major energy company. Regulatory jurisdictions for both operational, insurance and financial rules ran the gamut. Owen arranged for multiple risk-transfer mechanisms, including contractual analysis, layered programs through Lloyd’s, and bespoke surety solutions.

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]