2015 Power Broker

Utilities

Triumph in the Face of Loss

Jonathan Ball Managing Director Marsh, New York

Jonathan Ball
Managing Director
Marsh, New York

Jonathan Ball’s clients are the large and mid-sized utilities with integrated operations, myriad risks, legacy exposures and regulatory complications.

Clients with inherent gas, electric, and steam operations are exposed to the potential catastrophic liability loss that an accident in these areas could produce.

One client suffered a major loss including injuries and property damage. And the incident took place just a month prior to the excess liability insurance renewal.

“Mr. Ball was able to negotiate acceptable and responsive coverage terms and conditions with various domestic, worldwide and Bermuda insurers on our 2014 renewal,” said the risk manager.

“Our excess liability renewal in 2014 was a real challenge. Our operations obviously bring exposure to potential significant catastrophic third-party loss, and Mr. Ball — in spite of the loss — was able on our behalf to negotiate insurance with coverage terms and conditions that we needed.”

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Ball, who is national casualty leader, and his colleagues also put together the needed tower of insurance capacity and limits with various excess liability insurers.

“Due to the loss, some insurers were cutting capacity, others were reluctant to continue, and others were no longer interested. … In spite of the obstacles resulting from the loss, Mr. Ball again negotiated responsive coverage terms and conditions giving us important liability protection from accidents as well as the coverage limits that our company needed.”

Leading the Way on Cyber

Michael J. Gaudet, RPLU Senior Vice President Marsh, Philadelphia

Michael J. Gaudet, RPLU
Senior Vice President
Marsh, Philadelphia

“Michael assisted our utility in placing our first-ever cyber policy this year,” said one risk manager, “with superior terms and conditions [compared to what] had been previously offered by the lead carrier to anyone else in our industry.

“His knowledge of the markets and coverage enabled our senior management to understand our options fully regarding transfer and retention, and the pros and cons of both. He demonstrated first-rate professionalism throughout the entire sales process and beyond.”

It is a rare talent to be able to craft such a tailored program for a major client with myriad exposures, and then to be able to replicate the coverage for a second client — similar in scope and size but with its own risk profile and specific exposures.

But Gaudet, a FINPRO energy, power and utility leader, pulled it off. Then he achieved a trifecta of sorts, working with a focus group at Marsh and taking the better of the two client-specific programs to develop a large-limit cyber program for utilities.

The model program works with two large primary underwriters as well as several excess carriers. Limits placed have run to $100 million and above.

Clients noted that Gaudet’s approach to cyber risk is informed by his D&O expertise, as well as by long experience in the utility sector. Prior to their experience with Gaudet, they said, they found cyber coverage to be highly customized and therefore too complicated to craft and place.

One Smart Dude

John Shannon Moyer, CPCU, ARM Senior Vice President Marsh, Washington, D.C.

John Shannon Moyer, CPCU, ARM
Senior Vice President
Marsh, Washington, D.C.

“Our ability to go to market has been heavily limited by our regulatory structure,” said one risk manager. “but Shannon is one smart dude.

“He definitely helped solve that problem. He changed the way the markets understood our business and was able to work on a very different type of structure for our program.

“As a result, we were able to move more of our program to markets that historically would not write us. That has meant a significant savings, as well as improvement in our terms and conditions.”

Another client had long kept its program organized into three discrete placements. When a new risk manager took the reins, he sought to combine the placements into a single program.

As a strong operator, the client was not overly worried with taking the integrated placement to the market, but was deeply concerned about missing some important detail in the combination, especially under a new risk manager.

Running coverage screens and gap analysis, Moyer placed the program and secured a substantial savings in aggregate cost over the previous separate placements.

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A different client was one of many in the sector that spun off a segment of its business, clarifying its operations for managers, investors and insurers.

In this case the departing operations were not established as a stand-alone company but combined with the similar operations of another firm. That process meant that Moyer had to create several different programs for the old and new entities, covering all transition stages.

A Power Broker® in Every Sense

David Nichols, AIC Senior Account Executive / Manager Aon, St. Louis

David Nichols, AIC
Senior Account Executive / Manager
Aon, St. Louis

In a year when carriers seemed hesitant to extend themselves, David Nichols earned his laurels by digging in and securing significantly enhanced coverage for one thankful client.

“Dave was instrumental in accessing additional property and liability limits while keeping the premiums flat and a moderate increase respectively for the September 2014 renewals,” said the risk manager.

Many brokers advise and guide clients on presentations to carriers, but in one case Nichols had to take up the baton himself.

“Dave stepped in and helped deliver the presentation to the excess liability underwriters when my co-worker was unable to make the trip,” said a risk manager.

In another situation, Nichols worked both inside and outside for greater overall coverage, and also for adjustments and enhancements within the program. “Dave suggested we include some additional risk mitigation points in the presentation to the underwriters, restructured the layers to make it more economical, and accessed new markets to fill out the additional limits.”

Nichols also played a large role in literally bringing power to the people by helping a new generating station come into service.

The client credited Nichols for jumping aboard early in the process and helping to guide the formation of the whole risk-management philosophy. That extended logically to detailed planning for budgeting, deductibles and retentions.

More than a few Power Brokers have won their clients’ appreciation by fixing troubled placements, but there is just as much work in crafting a program out of tabula rasa.

A Respected Leader and Guide

Julie Reinhardt, CIC, CRM Senior Vice President Marsh, Cincinnati

Julie Reinhardt, CIC, CRM
Senior Vice President
Marsh, Cincinnati

“Julie’s relationship and reputation in our casualty insurance marketplace was very beneficial on our latest renewals,” said one risk manager.

“Her fair approach to negotiations and diligent pursuit of terms favorable for us proved both productive and efficient navigating a challenging renewal involving exposure changes and a large, sensitive loss.

“These efforts resulted in competitive rates, expansions in terms, improved communication with team members and further acceptance of our company in the marketplace.”

The client continued, “Julie’s market respect, and a detailed review of a proposed endorsement to be offered by our preferred insurer, prevented the form from being released with more restrictive terms than was anticipated. This benefited not only my company, but our industry as a whole. Julie is a valuable part of our insurance risk management team and we rely on and trust her like we would a long-term employee.”

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Such industry savvy does not preclude Reinhardt from providing patient and gentle guidance when needed.

“I went from one company to another, and stepped into the middle of a renewal,” one client recalled. “It should have been done, but my predecessor retired and sort of let it go. Julie took the time to walk me through the whole program, including some modifications, and we got the renewal done.”

Those modifications included consolidating three different placements, one for each of the company’s operating groups, into one unified program. “There was some internal resistance,” said the risk manager, “but Julie helped quell that angst.”

Amplifying the Positives

Paul C. Whitstock, CPCU Managing Director Marsh, Washington, D.C.

Paul C. Whitstock, CPCU
Managing Director
Marsh, Washington, D.C.

“Paul has done so many things beyond the call for us that it is hard to pick on one issue,” one client said. “He has rescued us from the perception created from a recent loss by explaining to our carriers that such incidents take place fairly frequently in our industry.

“More to the point, such incidents do not constitute a forced outage. He has helped us battle what could be characterized as a poor operational year by correctly explaining the circumstances and how we have actually beaten industry standards. In short, Paul is invested in our success and really understands our business space very well.”

Another client noted, “Paul orchestrates the reinsurance placement for our captive insurance program. During our last renewal cycle, Paul convinced me of the potential value we could derive from an analytics study on our program and risk.

“The study provided the marketing team with a deeper understanding of our risk profile and an ability to counter conclusions in insurer models. The result was favorable and — more importantly — Paul helped move us to the next level in understanding our risk.”

Whitstock’s expertise is stochastic analysis, in which random variables are used to model or test possible risks. Notably, clients laud the use of that approach in captive insurance to determine optimal inflection points for captive participation, risk-transfer structure, and attachment points.

In several cases, Whitstock helped clients diversify their approach to placements among captive, mutual, and commercial markets using stochastic models.

More from Risk & Insurance

More from Risk & Insurance

4 Companies That Rocked It by Treating Injured Workers as Equals; Not Adversaries

The 2018 Teddy Award winners built their programs around people, not claims, and offer proof that a worker-centric approach is a smarter way to operate.
By: | October 30, 2018 • 3 min read

Across the workers’ compensation industry, the concept of a worker advocacy model has been around for a while, but has only seen notable adoption in recent years.

Even among those not adopting a formal advocacy approach, mindsets are shifting. Formerly claims-centric programs are becoming worker-centric and it’s a win all around: better outcomes; greater productivity; safer, healthier employees and a stronger bottom line.

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That’s what you’ll see in this month’s issue of Risk & Insurance® when you read the profiles of the four recipients of the 2018 Theodore Roosevelt Workers’ Compensation and Disability Management Award, sponsored by PMA Companies. These four programs put workers front and center in everything they do.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top,” said Steve Legg, director of risk management for Starbucks.

Starbucks put claims reporting in the hands of its partners, an exemplary act of trust. The coffee company also put itself in workers’ shoes to identify and remove points of friction.

That led to a call center run by Starbucks’ TPA and a dedicated telephonic case management team so that partners can speak to a live person without the frustration of ‘phone tag’ and unanswered questions.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top.” — Steve Legg, director of risk management, Starbucks

Starbucks also implemented direct deposit for lost-time pay, eliminating stressful wait times for injured partners, and allowing them to focus on healing.

For Starbucks, as for all of the 2018 Teddy Award winners, the approach is netting measurable results. With higher partner satisfaction, it has seen a 50 percent decrease in litigation.

Teddy winner Main Line Health (MLH) adopted worker advocacy in a way that goes far beyond claims.

Employees who identify and report safety hazards can take credit for their actions by sending out a formal “Employee Safety Message” to nearly 11,000 mailboxes across the organization.

“The recognition is pretty cool,” said Steve Besack, system director, claims management and workers’ compensation for the health system.

MLH also takes a non-adversarial approach to workers with repeat injuries, seeing them as a resource for identifying areas of improvement.

“When you look at ‘repeat offenders’ in an unconventional way, they’re a great asset to the program, not a liability,” said Mike Miller, manager, workers’ compensation and employee safety for MLH.

Teddy winner Monmouth County, N.J. utilizes high-tech motion capture technology to reduce the chance of placing new hires in jobs that are likely to hurt them.

Monmouth County also adopted numerous wellness initiatives that help workers manage their weight and improve their wellbeing overall.

“You should see the looks on their faces when their cholesterol is down, they’ve lost weight and their blood sugar is better. We’ve had people lose 30 and 40 pounds,” said William McGuane, the county’s manager of benefits and workers’ compensation.

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Do these sound like minor program elements? The math says otherwise: Claims severity has plunged from $5.5 million in 2009 to $1.3 million in 2017.

At the University of Pennsylvania, putting workers first means getting out from behind the desk and finding out what each one of them is tasked with, day in, day out — and looking for ways to make each of those tasks safer.

Regular observations across the sprawling campus have resulted in a phenomenal number of process and equipment changes that seem simple on their own, but in combination have created a substantially safer, healthier campus and improved employee morale.

UPenn’s workers’ comp costs, in the seven-digit figures in 2009, have been virtually cut in half.

Risk & Insurance® is proud to honor the work of these four organizations. We hope their stories inspire other organizations to be true partners with the employees they depend on. &

Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]