A Hot Hand
They say if you can’t stand the heat, get out of the kitchen.
For some restaurant groups that faced stern challenges with their insurance placements, Arthur J. Gallagher’s Matt Medeiros worked close to the flames and produced three star results.
One restaurant group based in New York was left with a hodge podge of insurance policies from a former broker.
The fast growing company had coverage gaps all over the place, and had so many insurance policies no one could keep track of them.
The chaos was distracting company leaders from what they should be focused on — growing the business.
Medeiros worked like mad to consolidate the programs and produced double digit premium reductions on multiple lines. The capper was a 71 percent rate decrease on the restaurant group’s major food group umbrella policy.
Another restaurant group, based in Delaware, was facing a staggering premium increase due to an adverse loss history. Medeiros rallied the company, took the program to market and limited the premium increase to a quarter of what the company was facing.
The client was also impressed by Medeiros’ actions when the company suffered fire and storm damage in separate locations. That client’s controller said Medeiros’ effectiveness has been invaluable to him.
“He is extremely responsive, that’s an area where he has excelled,” the client said.
“Any time I shoot him an email or give him a call he calls me right back,” he added.
Effective and Comprehensive
All brokers manage through highs and lows. Power Brokers can handle multiple highs and lows at once: High-profile retail client, low-margin business.
High-street address for one flagship store, low likelihood of sustaining long-term lease. High number of small claims, low likelihood of major loss, but imperative to cover all eventualities.
“We have many, many locations, but one single location for us is a very tough placement,” said the risk manager.
“We have had losses, but just because of the location and the traffic and the attention, the store is a tough risk.
“Neil got very creative for us. In particular, he created some stand-alone coverage that was the same as having the risks embedded. By doing that he got us some additional coverage at reduced costs.”
Slattery then conducted a review of the entire program, recommended a restructuring to squeeze out savings wherever possible. Those changes included a stock throughput option, different layering structures, and alternative fronts for their captive.
The total cost reductions came to very large numbers, even in the books of a national company. Further, the client was able to do this while maintaining an important relationship with a valued carrier.
“What was nice is that Neil presented options to us, and also to our carriers,” said the risk manager.
Delivering on Promises
After being acquired, a major national retailer issued a request for proposals for brokerage services.
“Ben and his team won on the basis of what they promised, and then they turned around and delivered exactly that,” said the retailer’s director of risk and insurance.
Given that the RFP was a mandate from the new owners, and not the result of unhappiness with the previous broker, Von Obstfelder had a steep task to win over the director.
He was not shy about bringing fresh ideas.
“Even though he was new to our account, he jumped straight in with our casualty renewal,” said the director.
“The analytical and statistical approach he brought enabled us to approach our program as we had never before done. We came to a fantastic result. We saved 25 percent on our premium and 10 percent on our collateral.
“He restructured the program to better fit our new circumstances under the new ownership, and also enhanced our terms and conditions.”
The collateral alteration in particular was innovative, as it involved company-owned life insurance instead of the usual cash trust that must be in place. The market accepted the alternative for more than one-third of all collateral.
“We had a full marketing effort,” said the director. “Ben and his team had three or four competitive alternatives to our incumbent carrier. What matters is that they delivered what they promised.”
Meeting Challenges With Tenacity
Cyber is scary. If the federal government and major financial institutions can be hacked, what hope do other entities have?
Retail companies that were quite comfortable with point-of-sale data and enterprise-wide supply-chain management are suddenly very uncomfortable with their vulnerability.
“Susan handled what is by far the most challenging placement in recent history – cyber,” said the vice president of risk management for one major retailer.
As a result of several large, high-profile breaches, the market became hard and capacity was scarce, the vice president added.
“Despite starting the process extra early and meeting with underwriters, we struggled to get the capacity we were looking for. Many markets either left the space altogether or no longer wanted to write retail. We explored London markets for the first time.”
The other challenge was pricing.
“I suspect that Susan had to pitch our program to four or five markets for every one that ended up on the program. It was months of work and went right down to the day before renewal to get all layers bound.
“We agreed to retain a layer if needed but we ended up being able to transfer them all in the end,” the vice president said. “The price increased dramatically but was still not as bad as some benchmarking we had seen.”
In addition, Young finalized a placement that was broader than the previous program.