2015 Power Broker

Technology

Not a Know-It-All

Tom Draper Technology & Cyber Practice Leader Arthur J. Gallagher, London

Tom Draper
Technology & Cyber Practice Leader
Arthur J. Gallagher, London

Table stakes among Power Brokers is an authoritative, if not encyclopedic, knowledge of the industry.

How refreshing, then, to hear from clients that Tom Draper has no pretense to mastery in cyber risk.

In sharp contrast, they credit him with listening and learning, working collegially through his contacts, and putting his greatest efforts into keeping current in the fast-moving field.

“Tom really came to the fore for us this year,” said one risk manager. “We completely revamped our program, bought additional limits, and broadened our coverage. All of that was happening while the news was full of massive breaches at major retail operators and even government agencies.”

It would have been easy for Draper to encourage an already eager client to go as big as it could. Instead, Draper worked his industry sources and contacts, learned what was realistic and practical, and helped secure broader and deeper coverage, but not more than was necessary.

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Draper placed a single policy with a $100 million limit, which is among the larger, if not the largest cyber limit placed to date. It was done on a manuscripted wording that created a global breach-response team, among other features.

Again under the aegis of learning and growing, Draper is credited with helping to craft an admitted policy through Lloyd’s syndicates that taps into broad support in the underwriter community but also risk-mitigation expertise that can flow back to the insured.

A Great Partner

Eric Long Founding Principal ABD, San Mateo, Calif.

Eric Long
Founding Principal
ABD, San Mateo, Calif.

Eric Long presented a broader business case for one of his clients to its incumbent carrier, enabling the client to realize over $100,000 in annual savings.

For another client that was effectively forced into moving its 1,000 employees under a co-employer arrangement,

Long advised the client on contract terms and pricing that resulted in more than $200,000 in annual savings — even though this meant a number of policies would be transitioned away from ABD Insurance & Financial Services.

“I work in a challenging industry, which is not always easy to understand,” said Chris Lowe, chief financial officer at Hansen Medical.

“Eric is an outstanding advocate to ensure underwriters are making an informed decision about our coverage. His ability to educate and facilitate the underwriting process has been by far my best experience in 20-plus years in the industry. Eric has successfully supported our risk management programs, ensuring adequate coverage from high quality underwriters, while also ensuring cost effectiveness as well.”

“We’ve worked with a number of brokers over the years and Eric Long is the best risk management partner we’ve ever had,” said Doug Farrell, senior vice president, investment relations, corporate communications and treasury at Affymetrix. “He’s helped us to strengthen our coverage every year and he has done this in a consistently cost-effective manner.”

“With the problems I try to solve, I don’t have time for insurance, so Eric looks out for me — like turning around a 500-page document,” said a client at a flash storage solutions company. “He also understands my risks.”

Just the Right Touch

Phil Norton National Managing Director Arthur J. Gallagher, Chicago

Phil Norton
National Managing Director
Arthur J. Gallagher, Chicago

Sometimes there is nothing fancy to being a Power Broker®. Nothing more than getting down and grappling with a complex claim.

“Phil has worked on several claims for us in the past,” said one corporate insurance manager of a major technology firm.

“It had been a while, but we recently had a claim that was going nowhere fast. And there was no light at the end of the tunnel. We asked Phil to step in, to see what he could do.”

Norton spent time with the people he determined could help resolve the stalemate.

“Among the people he met with were the person who was in charge of all claims, the team who was directly managing our claim, the person the team reported to, other senior claims professionals providing input, and finally the outside counsel to determine common legal ground where the two sides could meet.”

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The client concluded, “When you have argued all of the valid legal aspects of the policy and there doesn’t seem to be a way out, a broker’s personal touch is and can be critical to ensure the best possible outcome.”

That’s power.

That said, Norton is not afraid to be gentle. Several clients are large consumer operations, but not technology driven.

As those firms expand their presence online, they encounter new exposures, and laud Norton for providing tech-savvy insight without being condescending to their legacy operations.

Quick and Effective

Jason Peery, CPCU Senior Vice President Aon, Newport Beach, Calif.

Jason Peery, CPCU
Senior Vice President
Aon, Newport Beach, Calif.

Many Power Brokers have handled a big acquisition or divestiture for a client. Often, large acquisitions involve expanding the acquirer’s program to accommodate new, larger exposures.

In contrast, Aon’s Jason Peery had to tackle the more ticklish task of integrating two programs, the extant one for an existing client, and one that came with a nearly half-billion-dollar acquisition.

The client said that the answer was a combined approach that integrated much of the existing two programs, supplemented by independent run-offs.

The plan saved the combined company a third of a million dollars over the pro-forma programs.

In another situation, a client’s perils extended beyond cyber threats to physical threats to employees in another country. The incident involved a complex claim, issues of physical security of people and property, and litigation in addition to the claims process for a loss that ran close to a million dollars.

“Jason is a true extension of our risk management department — which otherwise is just me,” said one client with a laugh.

That risk manager detailed how Peery won a large portion of the client’s business, but not casualty. The broker trying to place that business got two extensions, but could not find coverage that included electromagnetic frequency.

Peery’s team stepped in. Given just a month to place the casualty coverage, they did so, including the frequency cover on better terms than had originally been sought.

Wise Beyond His Years

Brent Rieth Assistant Vice President Aon, San Francisco

Brent Rieth
Assistant Vice President
Aon, San Francisco

Stepping in as a new broker on an existing account can be daunting, but Brent Rieth’s fresh eye yielded big benefits.

“It was my first time working with Brent this year as he took over for a colleague who left the firm,” said one risk manager.

“We were able to increase our limits significantly this year working with new markets in an accelerated timeline and staying within budget. Also being new on our account, Brent performed a detailed review of our policy wording in collaboration with coverage counsel and achieved various coverage enhancements.”

Rieth is credited with being “wise beyond his years,” by a client for whom he handled a simultaneous claim and renewal.

“He went over and beyond for us this year, placing an existing coverage with an incumbent while in the midst of a possible high-dollar claim. I placed this line of coverage with him for the first time this year, and he hit the ground running. This was one of the smoothest renewals with a nominal increase due to possible claims activity.”

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Another client is a cloud-based firm that handles customers’ confidential information.

“E&O is an important coverage for us as it is our primary source of cyber risk coverage particularly as it relates to data breaches,” said the company’s director of enterprise risk management.

“We hear from Brent frequently outside the renewal cycle. Only a few weeks ago, Brent took the initiative to reach out with some industry cost and remediation data.”

Setting the Pace in Cyber

Robert Rosenzweig, RPLU Assistant Vice President DeWitt Stern, New York

Robert Rosenzweig, RPLU
Assistant Vice President
DeWitt Stern, New York

“Robert was instrumental in helping us assess the correct coverage for our growing technology firm which acts as a pass-through for client revenue,” said a vice president for business affairs.

“We needed a consultative approach, and he was able to give this to us, which prompted us to leave our prior broker. Robert is especially knowledgeable in the area of errors and omissions — a coverage area in which we had minimal understanding, especially given the recent data breaches in multiple industries.

“I am impressed that he understood our business without a lot of explanation. Our relationship is still new, and I expect that we will receive excellent direction from now on. I finally feel that we’re in good hands.”

Expanding on that theme, other clients recognized Rosenzweig for his ability to customize and manuscript coverage to keep pace with the rapidly changing exposures in the high-tech sector. Clients said that responses that they get from the market are often different from what they believe their risks to be, especially in E&O, cyber liability, and professional services.

“Up to this year,” said one client, “we relied upon our media clients to provide wrap insurance [for completion of a show or film].

“Clients would have to provide us with proof of that coverage, but we would have to pay for it, and we would have to take their word that it was sufficient. Sometimes it was, sometimes not. Robert was able to secure wrap insurance for us directly, increasing our security and cutting our costs.”

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]