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Senior Vice President
Aon, Denver

Absorbing the Bumps in the Road

Working to provide solutions for his clients' specific challenges, Brad McDonald, senior vice president at Aon Financial Services Group in Denver, spent much of his waking hours this past year in overdrive. With two of the three big U.S. automakers, a long with major auto parts suppliers filing for bankruptcy protection in 2009, McDonald spent much of his waking hours last year in overdrive.

He helped diagnose directors' and officers' (D&O) liability programs. He instilled comfort in directors and officers by showing how D&O programs could be made "bankruptcy-proof" during renewal. He assessed the corporate risk and the personal risk of the director and officer groups during distressed and bankruptcy scenarios. He delved into the legal complexities surrounding bankruptcy and mergers and acquisitions (M&A) transactions.

"We went into bankruptcy last May," said one auto industry client. "He was incredibly knowledgeable and accessible. He made sure I got done what needed to be done."

For another client in Chapter 11, McDonald provided "an extraordinary amount of effort and attention to detail to get us through difficult times. "There are not many people who could have done it the way Brad did," he said. McDonald also spent weeks advising clients about their strategic alternatives and the complex intersection of insurance and workout/bankruptcy scenarios. He helped develop policy language to guarantee coverage for all past, present and future directors and officers and implemented creative solutions prepetition in anticipation of the potential unknowns that might occur during a bankruptcy filing or M&A activity.

Vice President, Excess Casualty
Aon, New York

Broker Cements Ties that Bind

When Leonard A. Graziano, vice president of excess casualty with Aon Risk Services in New York, took over the account of one of the largest auto manufacturers last year, he was given daunting orders. They were to: 1) clean up years of errors, including getting policies that the client never had; 2) getting coverage enhancements on the renewal program and; 3) reducing premium by 10 percent throughout.

The fourth order was most daunting of all: Graziano was asked to have the program ready to bind three weeks before its effective date--six weeks from start to finish--because the risk manager was getting married and wanted the renewal completed before then.

Graziano immediately got the outstanding prior policies issued, then quickly got many of the missing policies issued as well, and had a firm grasp of what was required to get the rest.

He also identified no fewer than nine potential coverage enhancements to improve the insured's excess liability program, including two very rare coverage extensions for that class of business. In the end, he provided every coverage enhancement he had identified--with a 10 percent premium reduction to boot.

And it was all done before the risk manager got married.

"I'm nothing but pleased with Len," the risk manager said. "We had a stretch goal to reduce premiums by 10 percent, and figured it would probably be 5 percent. But we saw a 10 percent reduction.

"And best of all, he did it in a very short period of time."

Managing Director, Automotive Practice Leader
Aon, Southfield, Mich.

Broker with the Answer Man's Ear

Last year, as many as seven clients in Michael Stankard's automotive practice declared bankruptcy. By the time they did, their Aon brokers had been well educated on the implications of bankruptcy on all types of insurance programs. That's because Stankard, managing director and Automotive Practice Leader with Aon Risk Services in Southfield, Mich., had organized educational sessions for all of his account brokers with a noted bankruptcy attorney so they could be prepared in providing advice to clients before, during and after bankruptcy.

For one of the largest auto manufacturers facing program expiration/renewal dates while declaring bankruptcy, Stankard helped his team provide the company with answers to fit each of several possible post-bankruptcy scenarios.

The idea paid off when the client announced its own bankruptcy strategy and approach to product liability claims shortly before its bankruptcy emergence date. Coverage was bound quickly.

Stankard also managed very sensitive and confidential issues related to the client's directors' and officers' (D&O) liability program, and educated the insurance markets on a nontraditional approach to post-bankruptcy product liability exposure. "I have worked on the brokerage side," the risk manager of one client auto manufacturer said. "I know what a broker is supposed to do, and Mike is everything you would expect from a broker. He knows the right people, he delivers on what he promises."

Executive Managing Director
Beecher Carlson, New York

Early Warnings Lead to Big Savings

There are few opportunities to grow in the auto industry. But Gregory K. Myers, executive managing director for Beecher Carlson, has a handle on one of them: automobile original equipment manufacturers (OEM).

"Even if the car business declines, we can still capture additional profits," said one client, the general manager of insurance strategy for a major auto OEM. "Few know a lot about this, but Greg is very knowledgeable in this niche. It has huge potential and the specific expertise he brings to the table is invaluable."

As the new broker for the OEM last year, Myers set right to work to reduce the company's overall workers' compensation costs by reducing the actual workers' comp losses. "The actuarial data was very important," the client said. "He knew just how to calculate and analyze it."

Using predictive analytics, Myers, a Power Broker^TM winner in 2006 and 2009, developed a highly accurate early-warning system to determine which of the company's high-cost claims would ultimately become indemnity claims. Eventually, the early-warning system resulted in a reduction of outstanding collateral by $5 million and a reduction in outstanding loss reserves by $2 million.

"Greg has a unique knowledge of the auto industry," said the director of risk management for another client, an auto manufacturer. "He won't 'yes' us to death; he gives us his thoughts as if he were the risk-management person dealing with the situation himself."

Managing Director
Marsh, Detroit

Servicing Clients Here, There and Everywhere

It's one thing to avail your clients of resources close at hand. It is quite another to gather resources from around the world to help global client companies. Mike Kowalski, managing director for Marsh USA Inc. in Detroit, does both.

"Hands down, this is the best brokerage team I've ever worked with in terms of service, access to the global insurance market and finding resources in any part of the world," said the manager of risk management services for a global supplier to automobile manufacturers. "We had a major fire in a country where there were complex local policies and language problems. He helped us resolve the claim very favorably."

Kowalski is known for using creative measures to help reduce the cost of risk for his auto industry clients who are facing significant financial pressures these days.

He has introduced new risk management concepts by utilizing reinsurance mechanisms to facilitate the risk transfer objectives of his clients' traditional exposures; developed and implemented solutions that address his clients' enterprisewide, nontraditional risk exposures and provided new and innovative risk mitigation solutions, including embracing new offerings to reduce his clients' workers' compensation costs.

"This has been a difficult time for our company," said the director of corporate risk management for a major vehicle manufacturer in bankruptcy. "We had a lot to get done in a short period of time."Mike was a good, steady hand at a very high-pressure time for us," he said, "and got a very satisfactory result for us and our board."

Vice President
Marsh, Detroit

Team Ted

In many cases, Ted Cohoon's auto industry clients emphasize the words "creative" and "cost savings" with equal frequency when they talk about their insurance needs. And, according to these clients, Cohoon, vice president for Marsh USA, manages to rise to the challenge.

Last year he managed one of the largest global automotive property placements in the world.

Hunting for capacity from the United States, Europe, London, Asia and Bermuda markets, he managed to structure a program with big sublimits for catastrophic losses, contingent business interruption and critical extensions of coverage, along with broadened coverage terms. And still, he was able to deliver an overall rate reduction for a client with operations in more than 35 countries.

Cohoon also negotiated several multinational, complex insurance programs for automotive suppliers, successfully securing savings in premium, and delivering improved terms and conditions, most significantly with business interruption lines of coverage.

Several restructured programs exceeded the insured's expectations. Contract certainty and delivering signed contracts at binding is always critical but it was especially so for one client with two losses in the previous 12 months. "Ted and his team put together a stellar program for us," said the director of global risk management and reorganization for a global supplier. "They moved quickly and brought it in at a relatively low cost.

Managing Director
Aon
New York

Managing Director, Automotive Practice Leader
Marsh
Detroit

Managing Director
Aon
Denver

Director
Aon
New York