Handling Client Challenges
A major metropolitan transit authority with an extensive subway system, buses and paratransit vehicles faced significant limits and the potential for substantial increases in its excess liability policy, especially because of a claim related to a transit accident.
Handling the claim was a challenge, but Daniel Bancroft, leader of the Willis transportation practice, was able to provide important assistance even though he wasn’t the broker at the time of the accident.
After the accident, he reviewed the authority’s existing policy and created a new program that reduced the premium costs.
In addition, for the existing three-year agreement on the commercial excess liability, despite the accident, he was able to successfully exercise an option for a fourth year. With the new fourth year, he was able to keep the premium at the same level as the previous three.
“Dan has been able to have our exposures covered under our excess liability policies at a very substantial savings,” the risk manager said.
In another situation, a potential client had won a large contract to provide transit services, but the company didn’t have its insurance coverage in place — and it was less than 30 days before the new services were scheduled to begin.
With the deadline approaching, the client terminated its relationship with its insurance broker and hired Willis and Bancroft. He was able to secure the needed railroad liability and rolling stock coverage in time for the beginning of service.
Smoothing Out Client Complications
For governmental transit authorities and other large transportation operating entities, contractor management and vendor management issues present significant risks.
These issues can range from risk management on large construction projects to day-to-day management of hundreds of independent contractors. The challenge here is effectively transferring the risk for the authority or agency through these contracts.
A transit authority risk manager said, “Barbara has an incredible understanding of the transportation industry and has been especially helpful in assisting us in lowering our risk using the procurement process. She was especially helpful in developing, on an ongoing basis, the proper insurance language for complex contracts.”
Another client worked with more than 350 third-party consultants contracted for diverse, expensive and significant projects. Insurance certificate tracking was an ongoing issue, and Goodwin advised the client on ways to modify its system, including the data fields for legacy data and standardizing codes.
She developed a process for identifying needed insurance requirements, and her advice has streamlined the system and improved efficiency.
One of Goodwin’s clients also sought help on a contract that had substantial risk associated with the work that was to be completed. Goodwin, using mapping applications, was able to quickly respond with a viable solution to the risk manager.
Resolving Complex Issues
Depending upon the nature of the cargo in commercial trucking, potential losses can be dramatically high.
One large national trucking and transportation company suffered a substantial claim involving an independent operator and a contingent liability endorsement. Two truckloads of copper were stolen.
The theft was difficult to prevent because all the documents for the shipments, including the insurance certificates, were forged. Initially, under the policy, because the cargo was entrusted to imposters and not an independent trucker, the insurer denied coverage under the company’s contingent liability endorsement to the cargo policy.
However, because the bill of lading was issued to Alan Jones’ client, the trucking company, and not to the independent trucker/contractor, the loss was covered under the client’s cargo policy directly. Jones was instrumental in getting the issue resolved.
He also successfully convinced the carrier to treat the loss as a single claim, reducing what could have been two very expensive deductibles, one for each truckload.
“Alan is more responsive than any broker I have worked with,” the risk manager said, adding that Jones brings persistence, knowledge and experience to the relationship.
Another client with more than 1,100 owner-operators was involved in a merger that required the consolidation of coverage. Jones rolled umbrella, auto and general liability coverage into the policy for no additional cost for the first year. The client was able to save $400,000 in coverage expenses, while receiving a higher level of coverage.
Hard Work Brings Results
Megan McClellan’s clients commonly remark that she works harder than any other broker. She’s aggressive and generally improves coverage and lowers costs for her transportation clients.
Part of Marsh’s FINPRO practice, McClellan advises her transportation clients on financial and professional liability issues.
This past year, McClellan was new to the account of a large, publicly owned railroad client, a longtime client of Marsh.
“We were concerned when Marsh made some significant changes to our account team,” said the director of risk management. “We are strong on building a relationship. Megan came on board to replace the person on the account who was our key player,” he said.
The change worked out far better than expected.
“Megan is gracious and alleviated our concerns. She was able to quickly earn our confidence,” he said.
During her review of the client’s fiduciary liability coverage, she discovered that one of the policies was out of sync, in terms of the renewal period, with the other policies. She reduced costs by combining the coverage and balancing the terms.
Another large rail client endorsed her “extraordinary record” of service, responsiveness and enthusiasm. With this client, McClellan also achieved excellent results for renewals of fiduciary liability policies and the directors and officers liability coverage.
She has strong relationships with the markets, the client said, and because she is also a lawyer, she brings an important perspective to the process in this strongly regulated industry.
From Soup to Nuts
It’s not unusual for major transportation companies to own other, non-transportation operations. Railroad clients historically have had large real estate holdings and owned real estate developments.
However, one long-haul trucking company also owned a casino. Its risk manager said that Jack Welbourn, with his broad background, has “been able to help us with issues from soup to nuts.”
There’s the usual range of risks for truckers: cargo, commercial auto along with large excess liability, extensive property risks for transportation facilities, and of course, ongoing workers’ compensation issues.
But the casino has been a challenge.
The cost of insurance against potential hurricane force winds along the Gulf of Mexico coastline came in exceptionally high. Welbourn traveled to London to meet with the underwriters where he explained the extensive steps the client had taken to protect against wind damage and used a video produced by the client to illustrate the extensive precautions built into the facility.
The effort was successful, and the facility received a rare premium reduction.
He had similar success with the client’s workers’ compensation/occupational accident program. He restructured the program and tightened its terms, resulting in a $750,000 premium reduction along with fewer losses. Claims handling improved when the company replaced its TPA.
Helping Clients Grow
A short-line railroad client embarked on a major expansion by opening a new locomotive repair shop, an important step that brought on new growth opportunities but exposed them to new risks.
Jeremiah White, charged with developing a new overall insurance program, feared that the new facility could mean large premium increases.
Early on, he brought the property and casualty underwriters into the process. He arranged for a site visit by the underwriters to the new facility where the client could show the company’s commitment and record of effective safety programs.
The result: The renewal program was a success, with a minimal price increase along with significant changes in the property program reflecting the risks of the new repair shop.
Another client, a small Midwestern railroad that lacked passenger services, was presented with new risks arising out of a contract to allow a “polar express” excursion conducted by an outside contractor on their rail system. Management was unfamiliar with the complex risks involved with passenger rather than freight on the system, along with issues of contingent liability.
“Having people ride on the system is a very different animal for us,” a risk manager said.
As part of the process, White devised an “Insurance 101” program that helped senior management understand the risk issues, particularly as related to railroads, and the language and process of property casualty insurance.