Risk And Insurance - Power Broker®

Construction

2010 Power Broker^® Winners

Joellen Mendoza

Director
Aon, Chicago

Capacity Expansion Key to Surety Success

Not putting all your eggs in one basket is a cliche that can apply to any number of situations, including surety coverage. Joellen Mendoza, a director with Aon Risk Services in Chicago, saw the risks of that approach for a large global manufacturer of escalators and elevators. She diversified their program by adding two carriers for an additional $200 million of surety capacity. One industry executive found that Mendoza's expertise in Aon's personnel and technology services helped make for a more efficient use of those services.

"She has the ability to tap into the strong relationships that she has built with surety providers on behalf of her clients, facilitating a healthy and open dialogue between the insurer and the insured," he said.

Another executive recalled that his own surety program was under siege when he arrived on the job with issues coming from both frontline operations and markets.

"Joellen and her team immediately attacked our issues on both fronts, and today, our internal customers are very pleased with our surety program. Our standing with the markets has improved to such an extent that we have been able to add several new carriers to the program, and added much needed capacity."

Best of all, Mendoza has freed this executive from dealing with the grind of surety vexations to allow more time for long-term strategic thinking.

Phil Norton, LRS (Bermuda)

Managing Director, Management Liability Forum
Arthur J. Gallagher, Chicago

Limiting the Damage

The collapse of the real estate market in housing-centered downtowns has taken a heavy toll on the construction industry. As a result, directors' and officers' (D&O) liability carriers are treating the construction industry much like financial services when it comes to the intense scrutiny of the balance sheets of industry players.

For one construction client, Norton, managing director in the Management Liability Forum of Arthur J. Gallagher Risk Management Services Inc., faced the challenge of significant claims, and the potential for a huge renewal increase. He accelerated the claims mediation process while at the same time negotiating the renewal premiums. The high-pressure timing led to a favorable claims settlement and smoother premium discussion.

Norton met with the carrier, who had just paid the claim, to explore total premium requirements for multiple layers prior to determining how to allocate the premium among the layers. His approach preserved the structural integrity of the coverage, while at the same time reducing cost. The remaining carriers bought into the future for this client based on in-person detailed conversations, and in the end the renewal was closer to a 10 percent increase as opposed to the initial expectations of 100 percent.

In the financial services arena, Norton faced the challenge of obtaining renewals for a longstanding Fortune 100 risk emerging from a change in control. Four incumbent carriers declined to renew. Norton met with executives at seven new potential underwriters to the table. The renewal ended with a premium decrease and coverage restrictions removed.

Sarah Finn

National Surety Senior Vice President
IMA of Colorado Inc., Denver

No Company Without Finn's Guidance

Saving a company from drowning is all in a day's work for IMA's top producer Sarah Finn, who recently completed a term as the first woman president of the National Association of Surety Bond Producers. By his own admission, one Denver minority-owned company president was not able to take full advantage of the breaks the law provided for his business. Securing bond credit seemed an impossible dream due to the inability of his preceding broker to provide the right guidance to this arcane world.

Enter Finn, who coached the company on things such as best practices for financial statements and capital planning strategies and soon the dream became a reality. "I would have had to close my doors without Sarah's help," the contractor whose business is now thriving said.

Andrew Gonzales, president of the St. Andrews Construction Services Corporation, credits Finn with taking a company "from a business disaster to a company that is confident in a business environment that has many small businesses afraid of the next day."

Finn's 30 years on the job include experience as both a surety underwriter and broker. This has allowed her clients access to the kind of insights into financial and job cost reporting crucial for success in an economy that is providing challenges not seen in a generation.

"A small company should never enter into a surety-bonding relation without having a solid, honest and ethical partner in their corner," said Gonzales. "With Sarah and IMA we are confident we have that kind of partner."

Susan Wells Carson

Managing Principal
Integro, San Francisco

An Excess Program to End Sleepless Nights

Sue Carson led her team in designing and placing a unique excess program that acts as umbrella coverage over 18 previously placed owner-controlled insurance programs (OCIP). Such a program involved presentations to clients' senior management, multiple contract reviews, massive data collection, form manuscripting and continual negations with underwriters.

Mark Humphreys, director of risk management for the Santa Monica, Calif.-based Watt Companies, described the program as "one of the most creative I could possibly imagine." "It not only had limits that were more than adequate, but also terms that we never expected we could have gotten," he said. The program has broader applications to other clients who are concerned about previously purchased project insurance with inadequate coverage and or inadequate or impaired limits. Carson also set up an a brokerage service protocol to review all of the commercial subcontractors' construction contracts in which they are involved.

Foreclosed or distressed residential construction projects present their own unique set of challenges. Carson recognized that many of these distressed projects have the characteristics of a merger or acquisition and designed risk analysis matrices and due diligence for checklists to determine the risks prior to the actual closure of the deal.

"She accomplishes all she does just by being diligent and not giving up," Humphreys said.

Mark McGinnis, ARM

Managing Director
Marsh, Los Angeles

No Better Expectation Manager in the Business

Reliance Steel and Aluminum, The Ryland Group and the Parsons Corp. are just some of the many Fortune 1000 companies who have depended on Los Angeles-based Marsh broker Mark McGinnis for risk guidance.

McGinnis, managing director for Marsh, has more than 35 years of insurance experience, 15 of which have included providing coverage for contractors and construction projects. He has also been project director for several major wrap up and builders' risk insurance programs for the Metropolitan Water District, the Metropolitan Transit Authority and the Southern Nevada Water Authority.

The construction of a new tunnel under Lake Mead to provide water for a thirsty Las Vegas metro area presented unique risks that McGinnis and his team devised a specially tailored program to cover.

Alan Lieban, director, risk management for the Ryland Group, said in the four years they have worked together, McGinnis has shown himself to "manage expectations as well or better than any client executive or equivalent individual that I have ever worked with."

"Mark is an active listener," Lieban said. "Whether we are speaking in reaction to his ideas/proposals or presenting ours, Mark always hears us out and I know this through the consistent restatements of what has been said."

His high level of respect for his clients can be seen in his making sure that the client always gets the first and last word in every situation, Lieban added.

Thomas J. Bennett Jr.

Senior Vice President
McGriff, Seibels & Williams, Atlanta

Eradicating All Uninsured Risks

Buying large and costly quantities of liability insurance does not make much sense if you get hit with a claim for some aspect of your business that escaped the notice of the original underwriter or broker. Industry veteran Tom Bennett's eagle eye caught a previously uninsured liability for foreign subsidiaries of an environmental consulting firm and made sure that hole was plugged. In addition, he replaced coverage to pick up prior bad acts and in doing so earned a new client.

For these and other reasons, Zurich North America executive Michael Esposito, puts Bennett, senior vice president with McGriff, Seibels & Williams in Atlanta at the top of his list of brokers who go the extra mile for their clients. "Tom does an excellent job at consulting with customers. He communicates clearly their business needs and offers win-win outcomes for all the parties involved."

Bennett's 15 years with Palmer and Cay followed by his current stint at McGriff have given him the kind of savvy that have led him to negotiate large casualty program minimums after expiration to generate return premium to clients in a down year. In addition, he facilitated a claims closure and reserve reduction project to reduce collateral by more than 30 percent.

Esposito said that Bennett's belief and support of the team assisting him makes him that more effective in delivering the kind of services his clients have come to expect.

"Even in situations, where Tom does not know the answer, he will work quickly to identify the right resources to give proper counseling," he said.