Creating Innovative Products
Railroad clients needed affordable catastrophe insurance capacity to cover the risks inherent in transporting hazardous materials. But the marketplace did not exist, so Veronica Benzinger created it.
“While a catastrophic event exceeding $1 billion is highly unlikely, even its remote possibility … has prompted many in our industry to purchase as much capacity as the markets will offer,” one client said.
But the industry has been challenged by the limited excess casualty capacity.
Thus, Benzinger developed the manuscripted Cantilever Excess Pollution Liability Insurance product, which utilizes a quota share structure and attaches excess sudden and accidental pollution coverage.
“While we arguably could have sourced other capacity, the cost was prohibitive,” the client said. “Veronica was able to obtain pricing for a fraction of what these other sources were asking us to consider and in line with the remainder of our liability tower.
“In doing so, Veronica called upon untouched markets and brought our company an additional $148.5 million in new capacity.”
Meanwhile, Benzinger remains a staunch advocate for clients facing claims disputes.
One client faced a regulatory agency-issued cleanup order at a closed landfill site for which it had purchased environmental insurance eight years earlier with Benzinger’s aid.
The insurer, however, was balking at covering the claim. Benzinger made peace, saving her client millions.
Doing More Than Necessary
Kimberly Mann doesn’t always do what her clients ask. Often, she does more.
For one new client, Mann unilaterally reviewed the environmental insurance program, although it would not renew for a year.
“Fortunately she did, as there were a number of locations not covered,” the client said.
For no additional premium, the client’s surplus lines insurer provided current-conditions coverage for those locations — even without seeing some critical documentation. The insurer agreed to provide pre-existing conditions coverage after seeing the documentation.
“Without Kim’s immediate attention to this issue, we would not have coverage,” the client said. “Since this is a claims-made policy, we may not find out just how important and how valuable her action was until sometime down the road.”
Later, at renewal, Mann negotiated broader coverage with an admitted insurer at a 14 percent premium reduction, which allowed the client to purchase higher limits.
For a new, multinational client, Mann developed a multi-tiered pollution and liability program on time that offered broader coverage and better protection for the parent company, while protecting a new acquisition with dissimilar risks in a stand-alone program — all at a 16 percent savings.
“It was very important for her to work quickly, because we had to get numerous parties on board with the strategy, and there were varying priorities,” the client said.
Timely and Tactical
When the environmental insurance marketplace is tough, insurance buyers count on Jack Palis to be tougher.
One client observed, “We occasionally experience emergencies with deadlines that might seem unachievable; however, Jack has assisted us by formulating strategies and timelines that ensure goals are met.”
Although it was a “must have,” the client had unsuccessfully attempted many times to consolidate its multiple environmental/professional liability programs for distinctly different operations.
Palis engineered an aggressive marketing strategy that would “place us in front of the right people with the right information and presentations that would overcome underwriter hurdles, while fostering comfort levels they needed in order to insure our risk.”
“This complex program consolidation also provided increased limits and enhanced coverage while achieving a 10 percent premium reduction in spite of the increased exposure values,” the client said.
Another client with a spotless claims history thought it had a simple renewal ahead. But with only a couple weeks’ notice, a longtime incumbent insurer cut its capacity 50 percent for the client.
Palis quickly contacted several markets to solicit quotes to replace the lost $25 million of capacity. Among the offers was one that resulted in a 25 percent premium reduction for the client.
Painting the Picture
Peter Pantalone knows how to tell a story — a talent that greatly benefits clients.
One client was finalizing a property acquisition when an environmental report identified surrounding properties that could pose pollution risks. The client’s incumbent broker heavily marketed the risk but garnered only a few offers from insurers, which proposed excluding the risks the client wanted to insure.
The client retained Pantalone, who, because of the earlier marketing effort, was left with only a few environmental insurers to approach.
After Pantalone reviewed the technical reports, he was able to present insurers with a clear picture of the risk and its various mitigating factors. Within 24 hours, he received a quote without any of the previous exclusions. The coverage allowed the client to close its deal.
Pantalone “understands that unanticipated delays during the course of a transaction can result in significant costs to both buyers and sellers,” the client said.
For economies of scale, another client wanted to bring a large, separately insured unit under its corporate environmental insurance policy.
The stand-alone coverage was placed before the unit’s acquisition by its current owner. But under the previous owner, the unit’s loss ratio was poor, which now was hurting the current owner’s experience, and its record-keeping lacked detail.
Pantalone developed a narrative that convinced the carrier to cover the unit.
A Trusted Adviser
James Vetter is more than “the insurance guy.” He is a trusted client adviser, whose input sometimes influences clients’ transactions.
Vetter assumed that role for a client that was purchasing one of the largest and oldest former steelmaking sites in the country.
Several other buyers previously backed out of deals for the Brownfield site because of environmental concerns, but Vetter addressed that issue for his client, said the client’s attorney, Michael K. Ohm, a partner at Bryan Cave LLP.
“Closing, including the placement of a complex, multi-layer PLL [pollution legal liability] program with limits of $100 million, was successfully completed [in 2014] after nearly 12 months of due diligence and negotiation among the contracting parties as well as state and federal regulators,” Ohm said.
“The complexity … did require a high state of readiness and responsiveness from not only Jim and his team at Marsh but the adroitness of Jim to anticipate the needs of the purchaser’s deal team, the underwriters and other important parties such as the seller and the regulators,” he said.
Another client, wholly owned by an employee stock ownership plan, retained Vetter to quickly review and — if necessary — modify its environmental risk coverage for a group of properties.
“We believe the projected cost savings our company was able to realize is in excess of $10 million, without question,” the client said.
Delivering on Deadline
The pollution perils that companies face often don’t develop quickly. But their need for insurance protection does, and Max West delivers it.
One client was facing a potentially costly uninsured pollution liability risk after it sold a property to, and carried the mortgage for, another company that subsequently leased the site to a third organization.
The tenant polluted the premises and then filed bankruptcy. The client was concerned about getting back a contaminated property and possibly being named in pollution liability claims.
West secured two strong pollution legal liability quotes “in record time,” the client said. The client opted for a five-year $5 million policy — above a $100,000 self-insured retention — covering government-ordered cleanups of pre-existing conditions.
“Pretty tough coverage to get, and the price was very fair,” the client said. “We really count on Max.”
Attorney Nancy J. Rich, a partner at Katten Muchin Rosenman LLP, said West came through for two of her clients — also in short order.
One client had just days to produce proof of PLL coverage to meet a government agency’s strict terms when bidding on a property.
The other client was involved in redeveloping a Brownfield site into a residential subdivision.
Although governmental agencies had not issued “No Further Action” letters regarding the environmental cleanup work at the site, the client wanted PLL coverage so it could quickly begin construction. West delivered when not many other brokers could have, she said.