2016 Power Broker
Aviation & Aerospace
A Driven Change Agent
Lockton’s Christopher Keith, president of the Philadelphia office, is the real deal: a thorough and driven client advocate with the knowledge and relationships to make things happen.
Keith proved that recently for an airline that was on a large-deductible program for its workers’ compensation coverage.
The airline didn’t have a good handle on the fixed expense or collateral components of its program. Keith and his team did a comprehensive analysis of the program and identified where several high-impact changes could be made. At renewal, dramatic cost reductions were realized.
“It was Chris’ team and their knowledge of what they can do in their market, where we were being overcharged, and the leverage they could use with their marketing and negotiating tactics and skills that really drove that home for us,” the client said.
The client stressed, however, that the savings were only part of the reason he chose to partner with Keith.
“I felt the team he had surrounded himself with was the right fit for what we needed. He truly understands the partnership aspect of the relationship.”
Another client agreed that the experience has been refreshing.
Keith and his team “impressed us with their knowledge and insight on our overall program. … They didn’t just come in and pitch the idea that, ‘We can save you a few bucks here.’ They dug into our policies and really helped us through the renewal process.”
Bringing Value to Clients
When Kevin Life pulls out of a steep dive into his aviation clients’ data, he also typically pulls out stellar results.
For aircraft avionics sales and service provider Tradewinds Engine Services LLC, it was an approximate 15 percent premium savings on its all risks program in 2015, compared to the company’s cost in 2014, when its inventory was lower.
“The method for providing value was completely outside the norm of negotiating with underwriters for favorable rates,” said Chief Financial Officer and General Manager Greg Hartenhoff. “An entirely new way of analyzing risk was identified and was implemented.”
Throughout the year, “Kevin reviews every one of our contracts and agreements for engine acquisitions for the purpose of minimizing risk on the front end,” Hartenhoff said. “This is where the value begins, because the mitigated risk is what motivates the underwriters to consider alternate methods of insurance coverage.”
For Sun Air Express LLC, Life ensured that underwriters had a clear understanding of not only the root cause of a large claim but also the corrective measures the carrier subsequently implemented.
Because of an error in fuel management, a pilot landed short of a runway, resulting in a total loss of the aircraft. Life worked with the insurer to speed along the claims-payment process, said Sun Air President Phil LeFevre. And during the carrier’s renewal this year, Life worked with the underwriter to achieve lower rates in spite of the large claim.
A New Way of Thinking
Calculating losses for business interruption can be challenging in any industry sector, but for the airline industry, establishing a recovery amount is especially difficult.
For one aviation company, Dennis Nevinski was able to find a more efficient approach that helped both the insurers and his client understand the exposure and improve the claims process.
“He drove through a different valuation methodology,” said the insurance and risk manager.
Nevinski worked with a team including his client, forensic accountants and coverage attorneys to come up with the approach, the manager said.
“Dennis did a great job in championing this new approach, managing the details, and framing it in a way that created value,” he said.
“Then he got the team in London and Bermuda on board, and helped drive it through the market so we could get it done.
“He took a lead role in educating the insurers about the exposure and was very successful in implementing the new terms,” the insurance and risk manager said.
In addition, the new methodology improved the claims process, the manager said. Instead of finalizing recovery for losses in months or years as was the case in the past, the company expects to finalize losses on future claims — if any — in weeks.
“Dennis did a great job,” he said.
Resolving Dicey Problems
Richard Terlecki is the kind of broker who finds a way to resolve dicey problems, as well as anticipate them.
In Western Michigan, Terlecki assisted Kent County and Gerald R. Ford International Airport with the creation of an independent airport authority. Leaving the county’s insurance program would have ended the authority’s ability to use the county’s AAA credit rating, resulting in reduced yet costlier coverage, said Stephen Duarte, the county’s fiscal services director.
“In fact, coverage for [power] transmission and distribution would likely be lost due to a dearth of providers,” he said.
Terlecki helped develop a comprehensive coverage strategy for both organizations that met the FAA’s requirements. Even with the airport becoming a separate entity, Terlecki maintained current coverage limits and premiums for the new authority and the county.
An official at another airport authority that undertook a couple of massive capital improvement projects also praised Terlecki for his foresight. For a $1 billion 2014 project, Terlecki arranged two builder’s risk policies and two owners professional protective indemnity policies — all of which were “extremely complex,” according to the authority’s official.
In 2015, anticipating future expansion, Terlecki arranged meetings with London market underwriters to familiarize them with future construction plans.
A Tenacious Fighter
One after the other, aviation clients describe Lou Timpanaro as a tenacious fighter.
The head of a charter airline with about a half-dozen aircraft noted the $200,000 in savings — which had a “significant” impact on company profits — that Timpanaro netted for the operation by fixing a long-term coverage problem.
The charter airline was providing equipment to a European carrier on an aircraft, crew, maintenance and insurance basis, but both operations were paying for full passenger liability coverage.
“The underwriters were effectively being paid twice for the same miles,” the charter airline’s top official said. “The only person that was able to correct this problem was Lou Timpanaro.
“This amounted to a direct cash refund of $200,000, which is significant to a company the size of ours. We have to fly a lot to make a $200,000 profit. Lou refused to take no for an answer and pursued the matter until a satisfactory resolution was finalized.”
On top of that, Timpanaro negotiated a 10 percent reduction in the charter operation’s war risk coverage and other savings that resulted in a net 20 percent decrease in insurance costs for the company.
“Lou has also been instrumental in negotiations for credits due to safety management systems and no-claims bonuses that add up to $100,000,” the company official said.