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Managing Principal
Integro Insurance Brokers, Boston

Challenging the Status Quo

Ethan Crain had his work cut out for him. His new client, a New England hospital, wanted a complete review of its medical professional and general liability self-insurance trust and umbrella program, even though its prior broker had said that alternative structures and markets were not possible.

The expiring program, which had not been changed in 20 years, included a shared retained limit for medical professional and general liability provided by the self-insurance trust and a shared limit of liability for umbrella coverage above the trust--all with one carrier.

Crain, managing principal with Integro Insurance Brokers, marketed the excess umbrella program to domestic, Bermuda and European carriers. He restructured the retained limits in the self-insurance trust to create separate limits for professional liability and general liability coverage, thus protecting the medical malpractice risk from the general liability risk and lowering the retained limit for general liability in the trust.

Within the retention, physician liability was sublimited, which not only protected the covered physicians with limits similar to those in the commercial marketplace but also protected the hospital against a single large claim. Two separate towers of insurance limits were also created above the restructured self-insurance trust, doubling the limit of liability coverage. The previous umbrella limit also was divided into three layers of liability; one of them as a quota sharing structure with multiple carriers to promote price competition. "He did a really nice job in using an innovative approach," the hospital's CFO said.

Senior Vice President
Willis, Cary, N.C.

Turning Experience into Results

Knowing both sides of the picture has helped Cherif Hafez, a senior vice president with Willis in Cary, N.C. serve his clients well.

Like some other brokers, Hafez began his insurance industry career on the company side, working up to a management role within a claims unit and directing the defense of litigated claims in court. Now he is a broker and risk advisor and that experience adds compelling value to his clients.

Take, for example, the case in which he and his team assisted a healthcare system client with a medical professional liability coverage dispute. The potential loss was huge, but after deconstructing the insurer's argument for declining coverage, Hafez identified several mistakes of fact--and the insurer overturned its initial decision to decline coverage.

"It was a bizarre case and it could have been a large claim," said the vice president of quality and patient safety at the Raleigh, N.C.-based health system involved in the suit. "He was a very strong advocate for us, very low key but very effective, and in the end, they agreed to pay."

Hafez is also creative and innovative, his clients said. This was especially true when he alerted clients to emerging concerns about cybersecurity, privacy liability, environmental liability and special contingency risk such as kidnap, ransom and extortion, including infant abduction.

In the past, only one or two of his clients chose to address those exposures. Following educational sessions last year, however, all of Hafez's healthcare clients purchased these coverages, and most also introduced additional controls following reviews of their exposures.

Managing Director
Beecher Carlson, Houston

A Broker Delivers Magical Results

A large academic medical institution stopped buying excess insurance last year after its analysis indicated that it could retain the risk in its captive by funding the excess layers instead of transferring the risk at a substantially surcharged premium.

Ida Havens understood the thought process, but was not satisfied. She continued to meet with her client and, as the market softened, began to introduce the client to various underwriters. She insisted the client describe its highly effective risk management program, including a detailed discussion of the credentialing and peer review process.

Havens, managing director with Beecher Carlson in Houston, also asked the client to discuss its in-house claim handling capabilities and litigation management protocols.

As the weeks went by, the underwriters became more comfortable with the risk, specifically the manner in which excess losses were being contained, and underwriters re-evaluated the methods they had been using to price the risk. Much to everyone but Havens' surprise, she was able to place three excess layers as reinsurance of the client's captive, above a self-insured retention. The cost of the total placement was highly competitive and the client was beyond pleased.

"She is the best broker I've ever worked with," said the corporate director of risk management and claims services for a large health system headquartered in Baton Rouge, La. "Her knowledge base is so significant and because the underwriters respect and trust her, she is able to get unusually great results for her clients."

Senior Vice President
Marsh, Denver

A Go-To Broker on the Move

Only days after relocating from New York to Denver, Chris Kakel unseated two incumbent brokers and picked up a new client whose annual casualty insurance costs, including premium and losses, totaled some $90 million.

The new client, based in Dallas, is the parent company of a large, national emergency response company and a large, national medical outsourcing company. The chief compliance officer of the company said Kakel's presentation during the RFP process was "a key factor in our choosing Marsh."

"I was very impressed," the compliance officer said. "I liked his intelligence and his ability to think outside the normal realms of being a broker."

Kakel's leadership led to restructuring, consolidation, creative collateral solutions, enhanced coverages and extensive marketing and, within nine months, a total cost of risk savings of $8.3 million.

An existing client, a medical center in the Northeast with reportedly high case severity, kept Kakel despite his move west. Kakel undertook an extensive global marketing effort for them. He facilitated face-to-face meetings with each of 20 markets and helped the client articulate its turnaround story, which painted a much better picture of the client than the markets had perceived. The net result of program changes that followed was almost $3 million in savings. "When it comes to insurance," said the medical center's risk management director, "Chris is definitely the go-to person."

Senior Vice President
Alliant, Houston

Making the Complex Seem Easy

Negotiating a loss portfolio transfer (LPT) is a complex and time-consuming brokerage transaction. Negotiating two LPTs for the same client is that much more complex and time-consuming.

Lorraine Lewis, senior vice president with Alliant Insurance Services in Houston, did just that last year for one of her large physicians group clients with significant catastrophic risk.

The client began self-funding its risk through a rent-a-captive facility several years ago, and continued that funding vehicle even after Lewis and her group helped it create its own captive several years later.

But, with the soft rate environment, Lewis and her team determined it could transfer the risk into the commercial market for less than the client was paying for the rent-a-captive and regular captive programs.

Lewis and her team worked tirelessly and within 60 days negotiated two LPTs--one for the rent-a-captive program and one for the client's own captive.

The result was outstanding: The client transferred all liabilities out of the rent-a-captive and realized a return premium of some $2.3 million. Separately, it transferred the liabilities out of its own captive and realized a dividend of some $5.4 million.

"You can imagine the number of people Lorraine had to engage in the process," said Micky Humphry, vice president, risk & quality management for iMed Group.

Vice President, Health Care Practice
Aon, Miami

Delivering Innovative Solutions

Some clients just want their brokers to follow the straight and narrow, to get them the best coverage at the lowest price, and to be at the other end of the telephone line whenever summoned. Period.

Others don't want their brokers to fit the traditional mold. They want them to think differently, be willing to consider even offbeat ideas and to come up with innovative solutions to difficult problems.

For clients like that, Giselle Lugones, executive vice president with Aon Risk Services in Miami, garners high marks.

Lugones recently finalized a hospital professional liability program structure in Florida, a highly litigious venue where reinsurers are less keen to provide capacity, with impressive results.

Because of Florida's record of huge medical malpractice verdicts, many physicians there prefer employment to independent practices, so more and more hospital systems are finding themselves with larger employed physician populations. This creates a more complex risk to insure since primary carriers and reinsurers must underwrite doctors as well as the hospitals' traditional exposures.

Such was the case with one of Lugones's clients, a multihospital system with an increasing primary physician employee model as well as increasing severity and frequency of large claims.

Lugones aggressively remarketed the entire placement, which consisted of various carriers and quota share arrangements. She leveraged existing long-term relationships and asked for "look back" revisions on expiring layers. The result was more than 20 percent in savings.

Vice President
Marsh
Chicago

Vice President
Marsh
Cleveland

Resident Managing Director
Aon
Washington, D.C.