Risk And Insurance - Power Broker®

Public Sector

2009 Power Broker^® Winners

John G. Chino. ARM-P

Area Senior Vice President
Arthur J. Gallagher, Aliso Viejo, Calif.
john_chino@ajg.com

The Pain Killer

Could this happen to you?

You've been hit with a huge lawsuit due to the actions of a rogue employee, a university professor, who invited a pregnant student seeking remedial help to his home instead of his office. But it's worse than you think. The professor used a stun gun on her and raped her.

The county board that oversees its self-insured law enforcement pool had a conniption, especially because there had been other lawsuits. "We had court decisions that freaked them out a little bit," said the risk manager of the Western state's association of counties. "These had ramifications for all the county cases," he said.

Enter John Chino. The board trusted him because he had been the broker for the association for more than 20 years, so he jumped right in and moved two of their self-insured pools, the law enforcement and the multiline pools, into the county reinsurance limited captive, using Munich Re.

"He went to the market and came up with excellent options, such as looking at the Bermuda and London markets." said the risk manager. In the end the board kept the third self-insured pool, the workers' comp pool.

Law enforcement risk was a like a migraine that wouldn't go away, so working with the Gallagher team, Chino helped develop the law enforcement advisory committee, among other suggestions. "He checked out various software programs to manage our data for our due diligence," said the association's assistant risk manager.

Michael Croke, ARM

Area Senior Vice President
Arthur J. Gallagher, Tacoma, Wash.
michael_Croke@ajg.com

Reassurance and Reinsurance Rolled Into One

A few months back, Washington state got slammed with incredible torrents of rain and snow that caused record flooding, closed the interstate highway and resulted in a multimillion-dollar loss for a risk pool covering several Washington counties. The executive director of the pool said the original estimate of covered losses ran as high as $30 million.

The chances of such a natural disaster were only once in every 250 years. But Michael Croke made the executive director feel much better about the huge loss. The broker was concerned that the insurance pool's program would not be renewed, or that it would suffer a large increase in its premium or its deductible. So Croke put together a strategy to demonstrate to the underwriters how both the state and county authorities were developing plans to mitigate similar losses in the future.

As a result, the account was renewed with no increase in rate or deductible. Plus, limits on catastrophic perils were increased to $250 million from $200 million. "He's very understanding of self-insured public entities, the program and the maturation that such an entity undergoes," the executive director said.

That truly impresses the executive director because he pointed out that, within the past 30 years, public entities have changed their way of doing business, and, in turn, have changed their relationships with their underwriters. Croke introduced the pool to reinsurance. "Using reinsurance was at the forefront of public entities at this time, to balance some of the risk."

Dorothy M. Gjerdrum, ARM-P

Executive Director, Public Entity & Scholastic Division
Arthur J. Gallagher, St. Paul, Minn.

Thumping Her ERM Drum

Dorothy Gjerdrum's middle name should probably be ERM--enterprise risk management--because you'd be hard-pressed to find a broker anywhere who's more knowledgeable. "She's the guru of ERM," said the risk manager of a county association in a Western state. "She was the instigator in introducing the pilot program to our boards and pointing out the benefits." She explained "how the world's looking at it, and now we're ahead of the curve."

The risk manager said the boards bought into the ERM concept. Working with John Chino of Gallagher, another Power Broker -- who also works with this association, Gjerdrum helped identify the association's risks, prioritize them, rank them "and now we own them," said the risk manager.

Even though ERM has been around for many years, "it can be overwhelming to work your way through."

One method Gjerdrum used was to ask the board members and professional staff to think about their top five risks; what risks keep them up at night?

For example, their law enforcement pool insures 22 detention facilities in the state, and they've had numerous claims, such as those involving strip-search problems. "That could have bankrupted us," said the county association risk manager.

Using Gjerdrum's advice, the association hired detention and legal experts to review all policies and procedures and set up an advisory committee.

Mark A. Goode, CIC, CPCU

Senior Vice President, Regional Director
Willis, Charlotte, N.C.

One Creative Cat

Unfortunately, (or perhaps fortunately) Mark Goode has gotten a great deal of experience these past couple of years dealing with catastrophic losses and with the Federal Emergency Management Agency. For example, prior to the Hurricane Katrina disaster, the state of Mississippi was self-insured, but FEMA mandated that the state secure property insurance before it would release several hundred million dollars in relief funds.

Due to the state's previous self-insured status, underwriting information--such as an accurate statement of values to include property locations and addresses, loss history, type of construction and occupancy--was not available. Of course, the state was given a very tight timeframe. It had to secure the data and place the insurance in less than three months.

Despite a hard property market, Goode worked with the reinsurance market and put together a program within three months with the full limits, $500 million, required by the state.

That experience was one of the elements that attracted another Southern state's budget and control board insurance, a pool, to Goode.

"He had a creative way of suggesting ways to obtain secondary insurance and what we could do," said the director of the pool. She was most concerned with the state's exposure to catastrophic losses by major hurricanes or even earthquake losses, where it had significant exposures.

Goode looked at their current insurance and how it protected buildings. He added reinsurance "as part of his creative way to provide property insurance," she said.

Karen L. Graham, CIC, ARM, RMPE, CRM

Area President
Arthur J. Gallagher, Greenwood Village, Colo.
karen_graham@ajg.com

Historic Coverage

You may recall that during the presidential campaign there was a lot of talk about "reaching across the aisle." That action was going on well before the political conventions started, because Karen Graham and her client, the attorney for the city of Aurora, Colo., had to work closely with the city and county of Denver, another client, to secure coverage for the Democratic National Convention.

As the attorney pointed out, "She had a real challenge because Denver is a Democratic-run administration and Aurora is Republican.

"She was walking a tightrope, performing a high-wire act for something we didn't historically know anything about," he said. Denver was the smallest city to ever host a convention of this size.

"Denver is such an unsophisticated entity, Karen and I ran into such traumatic obstacles, I don't know how we pulled if off," said the attorney.

Graham was charged with putting together a creative risk transfer and risk financing solution for the security part of the coverage. One of the first hurdles--Denver's police chief wanted 3,000 officers to secure the outside perimeter, yet the city only employs 1,100 officers.

"We contributed over 600 officers and brought them in from Wyoming, the Colorado state patrol, the Sheriff's office and anywhere else we could think of," said the attorney.

Ultimately, after numerous meetings, Graham convinced ACE to provide a quote for a first-dollar policy that covered 3,000 officers and 45 jurisdictions.

Dot Hedman, CPCU

Senior Vice President, Partner
Roach Howard Smith & Barton, Dallas
dhedman@rhsb.com

A Dollar Savior

A board member of a major Texas independent school district really, really is impressed with Dot Hedman. It doesn't hurt that she saved the district hundreds of thousands of dollars during its most recent renewal cycle for its property/casualty coverage.

"She is awesome," said the board member. "In fact, I moved her with me from my previous job at another school district," he said. "She's very conscientious and service-oriented."

At the board member's previous position, Hedman reorganized the risk management duties and recast its property/casualty coverage as well as its workers' comp program. "She did the same thing at (his current school district) over four years," he said. "I wouldn't have let her in the door if I didn't think she was capable."

This past year, when the district's CFO called Hedman less than a month before the renewal of the property/casualty program, he wanted her to improve their risk management program as well. They had written through an assessable self-insurance pool for the past five years. It was a tall order, but within two weeks Hedman coordinated a comprehensive marketing initiative, which included pricing and coverage negotiation with carriers.

Ultimately, she offered the district a program that saved the schools $400,000 for the 2008-2009 policy year, including broader coverage in several areas such as employment practice liability and school board liability. "Because of her expertise, she was able to come in the door and help the CFO," the board member said.