Building Upon Strengths
Craig Graham secured an unheard-of deal for a contractor that was building a tunnel underneath a rail yard for a railroad, while simultaneously constructing several high-rise buildings that rested on a platform over the yard, for a real estate developer. An owner-controlled insurance program covered the building project, but it was not economically feasible for Graham to roll the tunneling project into that program, as the railroad’s coverage demands did not give consideration to the world’s “most difficult” New York construction insurance market.
Graham, senior vice president at Alliant Insurance Services, then convinced the OCIP carriers to also participate in a “relatively affordable” contractor-controlled insurance program for the tunnel, by demonstrating how the contractor could enhance safety on both projects, and how claims management could be coordinated.
“Craig Graham crafted some really creative solutions to the more problematic markets, such as New York State with its challenging labor laws,” said Bill Buchan, vice president, risk management, at Tutor Perini Corp. “Often the coverages can be very expensive and placing them is a challenge, but he’s been very creative structuring a solution to minimize costs and maximize coverages.”
Graham was able to secure a comprehensive OCIP with “very fair pricing” for the Los Angeles Unified School District, by thoroughly explaining the district’s claims and safety services, said Robert Reider, director of risk finance.
Changing the Game
One of Paul Healy’s clients wanted to bid on construction projects on U.S. military bases in Japan, but the bid specifications referenced the Japan Ministry of Finance approved list of surety companies — which didn’t actually exist, making it impossible for non-Japanese companies to bid on the work. Given the U.S. Army Corps of Engineers was the ultimate owner for these projects and a U.S.-based company with a local office in Japan wanted to bid the work, Healy had to get the agency to change the bid specifications.
To accomplish this, Healy, national practice leader, Construction Services Group at Aon, prompted several U.S. surety companies and their industry trade association to lobby for some political pressure on the Corps’ head office in D.C., to prevail upon the agency’s Japan-based representatives to make the bid requirements reasonable. The agency eventually agreed to change the bid specifications to accept surety bonds from companies on the U.S. Treasury list of approved sureties, in addition to the referenced Japan Ministry of Finance list.
“Paul Healy has been very helpful getting us a bond in Japan,” the client said. “He’s also helped us evaluate various prospective joint-venture partners from a financial perspective.”
“Paul Healy is a strong advocate for us,” said Robert Alger, president and chief executive officer of Lane Construction Corp. “He’s been fabulous to work with and really has the clients’ best interests at heart.”
“Paul was very helpful in placing three new, fairly complex surety agreements for us,” another client said.
Last year, Keith Jurss was hired to help secure a cutting-edge professional liability policy for a Fortune 100 “diversified international family entertainment and media enterprise” that had started to use the integrated project delivery method on its capital improvement projects.
The IPD method, which requires a multiparty contract between the project owner, designer and contractor, incorporates mutual waivers of liability and financial incentives for the parties to work collaboratively to deliver the project on-time and on-budget.
However, because of select contractual provisions, the corporate professional liability policies of the design and construction team would not respond appropriately, thus requiring a project-specific alternative.
Jurss, senior vice president at Willis, was able to help underwriters understand the contractual incentives built into the program, and to convince them that the IPD team was truly committed to working collaboratively. Jurss then customized the project solution utilizing a variety of coverages from select carriers. The result was a solution that gave the design and construction team protection for rectifying design and construction errors without having to bring suit against each other. The solution also incorporated best-in-class professional liability coverage to protect against potential third-party claims.
“The challenging element of an IPD is the lack of a mature insurance marketplace,” the client said. “Since my organization has a very active creative and design process on some pretty unique projects, we had a short timeline to have something in place by May.”
En Route to Top-Notch Service
Jamie Pincus, vice president and account executive commercial at Wells Fargo, goes far beyond the call of duty.
For the Metropolitan Washington Airports Authority — which oversees the Dulles International and Ronald Reagan National airports, the Dulles Toll Road, and Dulles Corridor Metrorail Project in the D.C. area — Pincus helped with the transition of the aviation owner-controlled insurance program and the implementation of a rail OCIP.
On the authority’s projects, Pincus scheduled vendor, contractor and subcontractor information sessions to ensure that “clear, open communication occurs internally and externally.” She has also deployed a Wells Fargo Insurance loss control/safety specialist to ensure protocols are being followed at the authority’s numerous worksites. Pincus and her team provided similar attentive services for the OCIP of the Maryland Transit Administration.
“The scope and size of our projects and the amount of administrative detail is staggering, but Jamie does an excellent job,” a client said. “She’s very adept at coverage analytics and has superior technical abilities.”
For Swire Properties’ Brickell CityCentre construction project in Miami, Pincus advocated for the placement of webcams with 24/7 surveillance and a process to badge contractors for secure worksites. “Jamie Pincus is outstanding — she has been able to put in a very unique insurance program for us and she’s saved us a lot of money,” said David Gross, construction accountant for Swire Properties.
Wells Fargo’s Jamie Pincus is a firm believer that the best insurance policy is the one that you might never need.
“In the construction industry, it’s not just about the insurance placement, it’s about the people working on the construction site, providing a safe environment and seeing something develop that others will benefit from and there must be a business understanding of what our client is looking to accomplish,” Pincus said.
Pincus is a big believer in voice-to-voice communication with clients.
“Email is efficient but a lot gets lost in electronic delivery,” she said.
Pincus serves as a mentor to young professionals, not just handing down instructions but giving them the tools to do their jobs better.
“I lead by example. There is nothing I like better than digging into a policy to learn about what coverage is provided and researching a client’s exposure to have a complete understanding about their risk,” she said.
“I’ll do this as a mentor on a daily basis to demonstrate good service.”
In her community, Pincus involves her family in her efforts to help the less fortunate. Her eldest daughter recently joined her and other Wells Fargo team members to deliver groceries and prepared meals to 77 families in the Washington, D.C. area.
She brought all three of her daughters along for a more recent project, painting and repairing the house of a family in need.
Expertise in Action
One of Susan Schwartz’s clients partnered with two other contractors for a large construction project, but the disparity between the contractors on how to handle insurance for the newly formed limited liability company was holding up finalizing the contract.
To help get the $70 million project started, Schwartz, a director at Aon, discussed the completed operations extension with underwriters, negotiated more favorable coverage and pricing terms, met with the contractors and their brokers to discuss the insurance program, and worked out an equitable broker compensation solution.
Schwartz met regularly with another client to discuss estimates for coverage and pricing of a contractor-controlled insurance program at various loss ratio levels, and detailed the merits of project-specific coverage for various lines including professional liability, pollution liability, builders risk and contractor default insurance, potentially saving the client more than $500,000.
“With short notice, Sue was able to work with my company and team leaders from other companies and brokerage firms to develop a comprehensive strategy and risk solution for a complex joint venture project,” said Kathy Norris, director of risk management at Fred Weber Inc. “Her clear view and analysis of situations coupled with her can-do attitude, professionalism, and her willingness and ability to listen to the opinions of others and share ideas make her a valuable resource.”
“Sue Schwartz is by far the most knowledgeable when it comes to construction issues and coverage,” said Monica Settle, insurance risk manager at Western Construction Group.
Matthew Walsh was tasked to respond to a significant uptick in large, complex construction projects undertaken by both private and public sector clients throughout the world.
Walsh, managing director, brokerage practice leader, global/complex clients, Construction Services Group at Aon, built a unique analytics and brokerage platform to address the risks in these complex global projects, including rapidly changing laws impacting construction risk, geographic challenges from catastrophe, and increasingly complex project delivery methods that blur the lines of responsibility between project owners, designers and contractors. It can be used to address various unique legal challenges in some of the world’s most challenging construction liability jurisdictions, or structured for global responsiveness to a single owner undertaking projects simultaneously.
“Matt Walsh goes above and beyond to meet his clients’ needs,” said Ted Wickenhauser, vice president, risk management at McCarthy Building Cos. “He does a phenomenal job at being a client advocate as well as liaison between the markets and his clients. He is never afraid to confront any challenging situation head-on, take ownership of it and move it toward resolution.”
“Matt is very knowledgeable on construction management, as well as the insurance industry,” another client said. “I also think he’s extremely talented from a people skills standpoint, and he’s highly regarded at all levels of the insurance industry.”
The global upturn in commercial construction is, on the face of it, good news.
But many of our risk management sources caution that there is great risk in this upturn. Geographic challenges in catastrophe-prone areas and rapid changes in laws governing construction risk are just a few of these factors. Aon’s Matthew Walsh has built a unique analytics and brokerage platform tailored to address the risks of stakeholders in complex, global undertakings.
Walsh’s base in his 25 years in the business is Chicago, which as a venue ranks as either first or second in construction liability risk from year to year. He feels he’s learned a lot about the business, which is why he is so passionate about passing his knowledge on to a new generation of brokers.
“What has remained constant is that you need a vast team, with vast knowledge and access to vast resources to deliver in these environments,” Walsh said.
“Going it alone was, and never is, an option; it’s all about our team and always will be,” he said.
“At present, I am privileged to have a talented group of young people recruited from our career development program, and young leaders from the construction risk management community, to develop a new generation of construction risk tools delivered through a web portal environment.”
Power Broker Rising Stars
Judging the talent employed by commercial insurance brokers leads us to one conclusion; optimism is the order of the day.
As we discovered this year, not only are the ranks of high-achieving younger brokers as strong as ever, they are increasing in number.
We’ve renamed our Power Broker® “Under 40” category to “Rising Stars” to better celebrate this wave of talent and to focus on an important point. Yes, this is a younger group of professionals, all of them under 40, but it’s more on point to think of them as the future leaders of this profession.
As Power Broker® winners and finalists, this set of Rising Stars demonstrated a superior level of creativity in finding solutions for their clients, unflagging customer service and a devotion to learning more about their industry.
Just four years ago, the number of brokers honored by this designation hovered around 40. Last, year, there were 54 Power Broker® winners and finalists recognized in the Under 40 category.
Over the next few pages, you will see the names and affiliations of 77 brokers we recognize as Rising Stars. Since the launch of this category in 2009, more than 250 brokers under 40 received the designation.
The average age of the Rising Stars designees is 36. They represent a powerful wave of talent that is bolstering a profession, which like many other professions will be challenged to replace talent as the baby boomers retire.
For this group of Rising Stars, a career in commercial insurance brokerage is a compelling challenge that results in rich rewards.
“I really enjoy telling ‘the story’ on behalf of my client to the insurance carrier, to pique their interest in an account,” — Ashley De Paola, assistant vice president, Alliant
We first came to know Lockton’s Christopher Keith when he broke into the Power Broker® ranks as a winner in the Workers’ Compensation category in February 2013.
In those days, Keith worked for the Philadelphia-based Graham Co. Keith, 39, said it’s the “entrepreneurial” nature of the business that he finds so rewarding.
“I like the fact that I am managing my own profit and loss statement,” said Keith, who this year achieved Power Broker® status in the Aviation category.
At Lockton’s annual President’s Dinner, he was recognized as the “prototype” Lockton producer.
“I’m very proud of that,” he said.
Alliant’s Ashley De Paola, 33, a 2016 Power Broker® in the Real Estate category, said it’s the quick-paced, evolving atmosphere of commercial insurance brokerage that excites her.
“I really enjoy telling ‘the story’ on behalf of my client to the insurance carrier, to pique their interest in an account,” De Paola said.
Earlier in her career, a client expressed his concern over her age and experience. Her review of his insurance program changed his mind.
“It was very rewarding when he later asked me to work on his business,” she said.
Beecher Carlson’s Joe Roberta, a 2016 Power Broker® winner in the Private Equity category, has several reasons he likes working in this industry. Top of the list is that this is a very “social industry.”
“I truly enjoy working with people that I’ve been fortunate enough to build long-term relationships with,” he said.
Justin Wiley, 32, Power Broker® winner in the Public Sector category, works for Arthur J. Gallagher & Co., which prides itself on its mentoring efforts.
The company sent Wiley to Orlando, Fla., to work with veteran Rich Terlecki, himself a multiple Power Broker® winner.
“My goal was to learn and gather from him as much intellectual capital as possible,” Wiley said.
Clearly, Terlecki taught him well.
The 2016 Power Broker® Rising Stars
Electronic Waste Risks Piling Up
The latest electronic devices today may be obsolete by tomorrow. Outdated electronics pose a rapidly growing problem for risk managers. Telecommunications equipment, computers, printers, copiers, mobile devices and other electronics often contain toxic metals such as mercury and lead. Improper disposal of this electronic waste not only harms the environment, it can lead to heavy fines and reputation-damaging publicity.
Federal and state regulators are increasingly concerned about e-waste. Settlements in improper disposal cases have reached into the millions of dollars. Fines aren’t the only risk. Sensitive data inadvertently left on discarded equipment can lead to data breaches.
To avoid potentially serious claims and legal action, risk managers need to understand the risks of e-waste and to develop a strategy for recycling and disposal that complies with local, state and federal regulations.
The Risks Are Rising
E-waste has been piling up at a rate that’s two to three times faster than any other waste stream, according to U.S Environmental Protection Agency estimates. Any product that contains electronic circuitry can eventually become e-waste, and the range of products with embedded electronics grows every day. Because of the toxic materials involved, special care must be taken in disposing of unwanted equipment. Broken devices can leach hazardous materials into the ground and water, creating health risks on the site and neighboring properties.
Despite the environmental dangers, much of our outdated electronics still end up in landfills. Only about 40 percent of consumer electronics were recycled in 2013, according to the EPA. Yet for every million cellphones that are recycled, the EPA estimates that about 35,000 pounds of copper, 772 pounds of silver, 75 pounds of gold and 33 pounds of palladium can be recovered.
While consumers may bring unwanted electronics to local collection sites, corporations must comply with stringent guidelines. The waste must be disposed of properly using vendors with the requisite expertise, certifications and permits. The risk doesn’t end when e-waste is turned over to a disposal vendor. Liabilities for contamination can extend back from the disposal site to the company that discarded the equipment.
Reuse and Recycle
To cut down on e-waste, more companies are seeking to adapt older equipment for reuse. New products feature designs that make it easier to recycle materials and to remove heavy metals for reuse. These strategies conserve valuable resources, reduce the amount of waste and lessen the amount of new equipment that must be purchased.
Effective risk management should focus on minimizing waste, reusing and recycling electronics, managing disposal and complying with regulations at all levels.
For equipment that cannot be reused, companies should work with a disposal vendor that can make sure that their data is protected and that all the applicable environmental regulations are met. Vendors should present evidence of the required permits and certifications. Companies seeking disposal vendors may want to look for two voluntary certifications: the Responsible Recycling (R2) Standard, and the e-Stewards certification.
The U.S. EPA also provides guidance and technical support for firms seeking to implement best practices for e-waste. Under EPA rules for the disposal of items such as batteries, mercury-containing equipment and lamps, e-waste waste typically falls under the category of “universal waste.”
About half the states have enacted their own e-waste laws, and companies that do business in multiple states may have to comply with varying regulations that cover a wider list of materials. Some materials may require handling as hazardous waste according to federal, state and local requirements. U.S. businesses may also be subject to international treaties.
Developing E-Waste Strategies
Companies of all sizes and in all industries should implement e-waste strategies. Effective risk management should focus on minimizing waste, reusing and recycling electronics, managing disposal and complying with regulations at all levels. That’s a complex task that requires understanding which laws and treaties apply to a particular type of waste, keeping proper records and meeting permitting requirements. As part of their insurance program, companies may want to work with an insurer that offers auditing, training and other risk management services tailored for e-waste.
Insurance is an essential part of e-waste risk management. Premises pollution liability policies can provide coverage for environmental risks on a particular site, including remediation when necessary, as well as for exposures arising from transportation of e-waste and disposal at third-party sites. Companies may want to consider policies that provide coverage for their entire business operations, whether on their own premises or at third-party locations. Firms involved in e-waste management may want to consider contractor’s pollution liability coverage for environmental risks at project sites owned by other entities.
The growing challenges of managing e-waste are not only financial but also reputational. Companies that operate in a sustainable manner lower the risks of pollution and associated liabilities, avoid negative publicity stemming from missteps, while building reputations as responsible environmental stewards. Effective electronic waste management strategies help to protect the environment and the company.
This article is an annotated version of the new Chubb advisory, “Electronic Waste: Managing the Environmental and Regulatory Challenges.” To learn more about how to manage and prioritize e-waste risks, download the full advisory on the Chubb website.
This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Chubb. The editorial staff of Risk & Insurance had no role in its preparation.