The Best Intentions
Disclaimer: The events depicted in this scenario are fictitious. Any similarity to any corporation or person, living or dead, is merely coincidental.
Workers with the O’Hanlon Construction Company are used to seeing the white pickup truck with the green municipal seal driven by Yakima County code inspector Ty Davis on the job site. Davis is a 25-year veteran of the position. So when Davis drives up to the site of a municipal tunneling project being run by O’Hanlon, no one is particularly surprised or concerned.
Affable, fit and seemingly inseparable from his mobile device and a Styrofoam cup of coffee with cream and sugar, Davis made his way from the pickup truck, waving a friendly hello to the foreman on the job, Hector Lopes.
“Hector my man, how are we today?” said Davis, walking up to the where Lopes was overseeing a crew of three that was building the forms to lay an asphalt hiking and biking path on the floor of the tunnel.
“I’d be a lot better if those Seahawks would play some run defense,” said Lopes, pausing from his work to shake Davis’ hand.
“Ahh, they’ll get it together, it’s early yet,” Davis said.
Davis nods to the crew doing the concrete work in the tunnel.
“How’s it goin’ down there?” he asked.
“Oh, it’s goin’,” said Lopes. “The rain ain’t helpin’, but we’re trying to get it done on time.”
“You mind if I go down and have a look?” said Davis.
“Sure thing,” said Lopes. “It’s break time, anyway.”
“Hey guys!” Lopes called to the crew. “Break. Ty’s comin’ down for a look, too.”
The crew complied, following Lopes up to the food trucks across the street.
Davis walked carefully down the existing bike path to the tunnel floor. Lopes no sooner got to the other side of the street when a horrendous noise shattered the calm of the morning. Lopes sprinted back to the site and couldn’t believe what he saw when he looked down to the tunnel.
“Ty!” Lopes screamed.
A portion of the tunnel wall had given way, burying Ty Davis under two tons of concrete, mud and water.
John O’Hanlon, the son of the company founder and a close friend of Ty Davis, was overwhelmed by Davis’ death. Even though the culpability for a faulty soil analysis could lie with many parties, O’Hanlon felt he must formally communicate his grief and his commitment to do the right thing by sending an e-mail to county officials.
“We will do everything in our power to see that Ty Davis’ family is provided for,” the e-mail read, in part.
“Words cannot express my shame and horror that mistakes our company made played a part in the death of my beloved friend,” the distraught e-mail concluded.
The same evening the e-mail is received, the head of the Yakima County Board of County Commissioners was interviewed on television saying that executives with long-time county contractor O’Hanlon Construction Company were devastated at their “failure” and had vowed to do what they could to make things right.
Sharon Holmes, the retail broker with whom O’Hanlon placed their professional liability coverage, was working on a renewal when something she saw in her e-mail inbox caused her to stop. It was a construction risk newsletter that contained news of the latest legal findings, settlements and other developments in the construction risk management world.
“What?” Holmes said as she clicked on the e-mail, her attention having been caught by the word “O’Hanlon” in the subject line.
“Contractor admits fault in death of county employee …” Holmes said, reading aloud.
“They can’t be serious,” she said out loud, reaching for her phone and hastily dialing a number.
“John, it’s Sharon Holmes,” Holmes said.
“I’m sorry … who?” John O’Hanlon said.
“Sharon Holmes, I’m your professional and general liability insurance broker,” Holmes said after a pause.
“Oh … yeah … what can I do for you, Sharon?” O’Hanlon said.
“What you can do for me …” Holmes began, and then stopped herself from saying something she might regret.
“Ummm …” she said, collecting her thoughts.
“John, I’m looking at an industry newsletter in my inbox that refers to you making a statement to public officials that seems to take responsibility for the death of a code inspector at one of your job sites.”
“Huh? Well, yeah. I had to say something, Ty was my friend. We’ve been working with Yakima County for more than 20 years,” O’Hanlon said.
“John, that may be true, but I wish you had consulted with me before you made any statements,” Holmes said.
“The truth is the truth, he died in our tunnel,” O’Hanlon said.
Holmes again composed herself, seeking the right delivery.
“John. I’m sorry you lost a friend. I’d be upset too if I lost a friend. But I need to meet with you and Billy [O’Hanlon, John’s brother and the company CEO] on this. We need to go over the insurance coverage implications as soon as possible.”
“Well, Ty’s funeral is today, so today is out,” O’Hanlon said.
“Tomorrow then, can you do it tomorrow?” Holmes asked.
“Sure … tomorrow,” O’Hanlon said weakly.
Holmes hung up with O’Hanlon and immediately dialed the Seattle offices of a major national construction risk carrier.
“Hey, Brian, it’s Sharon Holmes.”
“Hey Sharon, I had a feeling I’d be hearing from you this morning,” said Brian Snyder, the regional claims executive for the carrier.
“So you saw it,” said Holmes.
“Yep. Just hit my inbox this morning. I can check the policy … as can you … but I’m pretty sure what it’s going to say,” Snyder said.
“We go four days without being notified of a job site death, I’m pretty sure coverage will be denied,” Snyder said.
“I’ll check the policy,” Holmes said weakly.
“Suit yourself. Sorry about this,” Snyder said in conclusion.
A Direct Hit
Ty Davis’ widow and children filed a lawsuit against O’Hanlon Construction, Yakima County and three subcontractors alleging that their failure to conduct competent soil testing resulted in the inspector’s death.
An investigation commissioned by the Davis family concluded that the soil study ordered by O’Hanlon on behalf of the county failed to take into account possible shifts in the water content of the project soil due to variations in rainfall and the municipal water table.
Upon notice of the lawsuit, O’Hanlon’s carrier told the company that it had no plans to provide for the company’s defense. A recorded, broadcast admission of guilt and a failure to notify the broker or the carrier in a timely manner effectively voided the company’s professional liability coverage, said the carriers’ attorneys, in a letter to Sharon Holmes and the O’Hanlons.
“We should sue them! How were we supposed to know?” Billy O’Hanlon said to his brother John, after the grief of Ty Davis’ death faded and they started taking a more pragmatic assessment of their situation.
“Besides, being transparent in our dealings with the county has been a hallmark or our relationship. There’s no value in that?” Billy thundered.
At his older brother Billy’s urging, John O’Hanlon called Sharon Holmes and broached the topic of O’Hanlon disputing the carrier’s refusal to pay for a legal defense.
“I don’t see how you could win, and I think you’d be throwing good money after bad,” Holmes said.
“I strongly advise against it. I’m not trying to be harsh, John, but you should not have said what you said without A, talking to me or B, talking to an attorney,” Holmes said.
O’Hanlon’s attorneys mount a game defense, pointing to the contractor’s long, and nearly blemish-free service record with the county and good documentation of transparency being a hallmark of the company’s business dealings.
All to no avail.
A jury found O’Hanlon, the three subcontractors, and the county liable for the death of Ty Davis to the tune of $8 million in loss of income, pain and suffering.
O’Hanlon, which thought it was doing the right thing by apologizing, and was the only entity to apologize, is the only defendant uncovered by insurance.
O’Hanlon is out of pocket to the tune of $4 million, not including court costs.
Risk & Insurance® partnered with XL Group to produce this scenario. Below are XL Group’s recommendations on how to prevent the losses presented in the scenario. These “Lessons Learned” are not the editorial opinion of Risk & Insurance®.
1. Contact your broker first: At the first sign of trouble on any project, promptly contact your broker to report the circumstance. Late, or non-reporting of an incident, large or small, can result in your Professional Liability coverage being denied.
2. Be mindful of your actions post-incident: Understand that taking actions to explain, admit fault, mediate, finger point, or recommend fixes or alternatives to a circumstance prior to notifying your broker may also result in your coverage being denied.
3. Have a communication plan:Create a circumstance reporting protocol within your organization to be followed by all employees, including designating a “quarterback” to coordinate external communications.
4. Align your philosophy with your coverage: Ensure your own best practices are not in conflict with the terms of your insurance coverage.
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The Spirit of Giving
By September of 2013, Aspen Insurance CEO Mario Vitale was a 37-year veteran of the insurance industry and a successful one at that.
All it took was one week visiting the village of Kiwoko, in Central Uganda for Vitale, back at home in New York, to wonder what he was doing with his life.
“I remember putting a tie on and looking at myself in the mirror and somehow everything I do every day, which I love — the insurance business — didn’t seem as important anymore,” Vitale recalled.
That September, Vitale had acted as the lead ambassador for a group of Aspen staff members who visited Uganda as part of Aspen’s work with the ISIS Foundation.
The Foundation originated in 1998 with the goal of bringing medical and educational support to poor villages in Uganda and Nepal.
Every year since 2007, Aspen Insurance has made contributions to the ISIS Foundation and a group of “Aspen Ambassadors,” numbering between seven and nine people, visits Kiwoko and spends time getting to know the village members Aspen’s contributions help to support.
Video: This video from the ISIS Foundation describes some of the work it has done in Nepal and Uganda.
To date, Aspen has contributed a substantial amount to the ISIS Foundation’s efforts in Uganda. Of which, $640,000 has come directly from Aspen employees in the UK and the United States.
“The Aspen-ISIS Foundation partnership is unique in the financial services sector, both in its depth of engagement with local communities and in the degree to which it has become embedded in Aspen’s corporate culture,” said Anubha Rawat, communications and partnerships director for the ISIS Foundation.
“It has shown us the exponential power of linking the business sector with those in need in the developing world,” he said.
It’s not easy for Westerners to visit Uganda and keep their emotions in check. Although discouraged, tears are commonplace as insurance sector employees used to living in relative comfort confront the harsh conditions Ugandans live in.
During his week-long September trip, Vitale visited the neonatal center and maternity ward that Aspen’s support has made possible. He played with the village children, participated in daily prayers and otherwise immersed himself in a culture that almost automatically becomes beloved to those Aspen staff members that visit there.
“Nothing prepared me for the fact that this was really Ground Zero for the worst and the best of everything.” — Mario Vitale, CEO, Aspen Insurance
All in all, he said, he came away a changed man.
“Nothing prepared me for the fact that this was really Ground Zero for the worst and the best of everything,” he said.
By the best of everything, Vitale meant the boundless hope that Ugandans bring to their daily lives.
“I’ve never seen so much hope. They call Uganda the Pearl of Africa, and I think some of it has to do with the spirit. The spirit of the people is one of hope,” he said.
By the worst of everything, he meant the poverty and health challenges Ugandans face.
Those include high infant mortality and the ravages of more than a million citizens infected with HIV.
Expanding Crucial Medical Services
The Kiwoko Hospital started as a clinic under a tree in 1986 by an Irish missionary, Ian Clark, in the aftermath of one of Uganda’s devastating civil wars, which killed and displaced hundreds of thousands of people.
The hospital is now a 25-acre compound employing more than 350 staff, with 270 patient beds and offering medical services to a region of 500,000 people.
Funding from Aspen led to a three-fold increase in the size of the hospital’s maternity ward and its neonatal center.
When Aspen first started working with the ISIS Foundation, fewer than one-third of the prematurely born babies in the Kiwoko Hospital survived. Now, the survival rate of premature babies is more than 80 percent.
“We saw the babies,” Vitale said. “We got a chance to hold them and interact with them. And we got to meet the doctors and the nurses and the skilled staff,” he said.
“I walked back a different person.”
Vitale likes to go on safaris, and when he traveled to Uganda, he brought with him a new set of clothing, boots and equipment with the intent to use them recreationally.
Once there, though, he decided to give them all away to the Ugandans.
“I felt guilty to own it and so I left it there in a basket. Nobody wanted to accept them. They said, ‘You can’t do this.’ I said, ‘Yes I can,’ ” Vitale said.
“I know that somebody there needed it a lot more than I did and there was no possible way that I could keep that stuff and leave there with a good conscience,” he said.
Taking Further Action
When he returned from Uganda, the first thing Vitale did was take a long, hot shower.
But then he started thinking about how he could involve others in the insurance industry to become involved with the ISIS Foundation and make a difference in East Africa.
Last October, Vitale and Aspen organized a black-tie gala fundraiser for the ISIS Foundation at the St. Regis Hotel in New York.
“We invited my friends in the industry, the brokers, the reinsurers, even competitors, and asked them to give generously to the cause and it was overwhelmingly supportive,” Vitale said.
The event netted more than $163,000 for the foundation.
Consider that in poverty-stricken Uganda, $4 buys a food package so that a destitute mother can feed her children; $75 covers a child’s school fees for a year and $50 pays for caregiver assistance for a child orphaned by HIV.
Aspen Re employee Susan Cannarella, who took an initial trip to Uganda in 2008 as an Aspen ISIS Foundation Ambassador, is now the largest individual contributor to the ISIS Foundation’s work with the Kiwoko Hospital.
Inspired by the need and her drive to help, Cannarella founded Beads4Dreams. The nonprofit buys paper beads from the Women’s Craft Group at Kiwoko and turns them into necklaces, bracelets and other works of art, which are then sold at craft fairs, church bazaars and the like.
As of the end of 2013, Cannarella’s nonprofit returned 100 percent of those proceeds to the people of Uganda, more than $63,000.
“As I sit here on the plane on my way home from Uganda, I am flooded with emotions ranging from great joy to deep sadness,” Cannarella wrote in a recent blog post on the ISIS Foundation website about her most recent visit to Kiwoko.
“I am very happy to be heading home as I have missed my family and friends, but at the same time, I am also sad to leave my new friends and ‘family’ from Aspen and Kiwoko Hospital,” she wrote.
Making an Impact
From its founding in Bermuda 16 years ago by Audette Exel, Sharon Beesley and a small group of friends and supporters, the ISIS Foundation has gone on to make an important impact in Uganda and Nepal.
It is a common practice in Nepal for child traffickers to trick parents in remote rural villages into sending their children away to what they believe will be boarding schools.
In 2006, the ISIS Foundation located 136 children in a basement in Kathmandu who had been trafficked from their homes in the remote mountain district of Humla.
The foundation initially found safe housing and rehabilitation services for the traumatized children.
Through a painstaking process, the foundation treated the children and worked around political strife in Nepal to return the children to their families by 2009.
In addition to the contributions of Vitale and Aspen, the ISIS Foundation connects to the insurance industry in another substantial way.
Audette Exel is vice chairman of the board of the Steamship Mutual Underwriting Association Trustee. Steamship Mutual is one of the world’s largest P & I (Protection and Indemnity) clubs for the shipping industry.
Video: Audette Excel talks about why she started the ISIS Foundation.
Her history in financial services is illustrious. Before establishing the ISIS Foundation, Exel was managing director of Bermuda Commercial Bank and one of the youngest women in the world to run a publicly traded bank.
During 1995 and 1996, Exel was chair of the Bermuda Stock Exchange and served a six-year stint — 1999 to 2005 — on the board of the Bermuda Monetary Authority.
In 1995, Audette Exel was elected a “Global Leader for Tomorrow” by the World Economic Forum. She has certainly lived up to that billing.
For more information on the ISIS Foundation and its supporting company the ISIS Group, including ways to contribute, click here.