Newsletter Sign-up

Senior Vice President
Willis, Chicago

Assuredness in Surety

If Mark Baechle, a Chicago-based senior vice president with Willis North America, can't find a suitable surety market or fix problems with an existing facility, he'll whip up something new altogether.

In any case, he'll resolve clients¿ bonding problems, beefing up their bottom lines and solidifying their balance sheets.

Recent improvements implemented for one large client included the negotiation of insurance collateral bond language and related pricing, which resulted in an $8 million reduction in the letter of credit.

In addition, Baechle performed a premium analysis, which resulted in the implementation of a revised rate schedule for one of the company's divisions. The move saved that division 15 percent in annual bond premiums.

As one client worked on nailing down a transaction that already was going create some surety problems, Baechle worked with the market to structure a new bonding facility while coaching the client how best to present itself to the market.

"Mark's efforts had a significant positive impact on bond costs and our ability to bond our jobs, both in the U.S. and internationally," the client said. "Without his involvement, we would have incurred additional costs and usage under our financing facilities and potential opportunity costs in passing up bonded projects."

An executive for another client said Baechle brought multiple competitive proposals and helped the client "drill into the details of those proposals" so it could make the best decision.

A third client noted that Baechle took over an existing surety program with many "unrecognized but serious problems" and recognized and resolved them quickly. Clients also give Baechle high marks for his service level and knowledge of the industry.

The client for whom Baechle arranged a new bonding facility said: "I can't imagine a broker taking a more personal approach on setting up a bonding facility and providing management of that facility going forward. He has fostered a continuing dialogue with the surety to make sure they remain supportive and comfortable with our business."

Baechle's approach in mastering the industry sector includes fervent networking among his peers, prospects and other industry professionals, and he's never shy about calling upon his network of accountants, lawyers and bankers with specialty construction industry knowledge.

Senior Vice President
Marsh, London

Scrambling to Provide Solutions

For Adam Davey, senior vice president with Marsh in London with responsibility for the Australia/New Zealand account, the past year has been about one of the busiest of his life and he's learned that placing construction insurance can be a mission with far more import than just arranging coverage for potential future losses.

Davey's placement for New Zealand's Earthquake Commission, for example, played a critical role in allowed the public body to continue aiding residents whose homes were damaged in recent earthquakes.

The EQC's massive home-rebuilding and reconstruction program, already under way to assist victims of the September 2010 earthquake in the South Island, was threatened after an even more powerful 6.3-magnitude temblor there devastated Christchurch in February 2011.

A local insurer that provided construction insurance for the program refused to renew after the later earthquake, and other local insurers could not provide sufficient capacity. As a result, the nation's reconstruction efforts were in danger of experiencing delays due to a lack of insurance protection.

Before the coverage's June 30, 2011, expiration, Davey canvassed more than 40 insurers in the London market and across Europe. The effort required a global marketing strategy, with the coordination of colleagues in New Zealand, Australia and Singapore. On the heels of the New Zealand earthquakes, plus the massive 2010 quake in Chile and the Great Tohoku Earthquake that hit Japan last March, Davey lined up a dozen insurers that provided full capacity for the EQC program -- all of it within a very tight deadline. The extra capacity was finally committed by a 12 insurers in London, France and Switzerland.

For Laing O'Rourke P.L.C., Davey lined up coverage that helped the Dartford, U.K.-based construction company consolidate its insurance and develop a long-term risk-financing program that reflects "the risk management credentials of the business and would be acceptable to the wider business stakeholders," said Keith Bishop, group insurance manager.

"Adam developed an appropriate cross-class insurance solution which was capable of adoption by a number of market participants and received an excellent response from insurers," Bishop said.

If Laing had remained a transactional insurance buyer, "we would be a less flexible organization unable to respond as quickly to the changing needs of our industry and maximize opportunity," Bishop said.

Account Executive
Brown & Brown Insurance, Tacoma, Wash.

Helping Build Businesses

More than finding coverage to protect construction clients against defect claims, Bryan J. Dunn, an account executive working in the Tacoma, Wash., office of Brown & Brown Insurance, helps clients survive and expand.

Many clients' projects involve an exterior insulation finishing system -- a synthetic stucco. But general liability insurers have been reluctant to cover EIFS-related risks since 1999, following some high-profile and costly lawsuits over improper installations that caused mold problems in buildings.

The insurance market's coverage pullback has left many contractors either assuming large self-insured retentions so they can perform that work or passing up large projects. This last year in particular has been especially challenging. Brokers like Dunn have had to deliver policies that are acceptable to the nation's toughest general contractors while keeping prices attractive enough for contractors hurting for business.

Dunn, though, has schooled himself on the root causes of the problem. Working with contractors on proper installation methods and educating insurers about his clients' loss prevention efforts, Dunn has been able to secure EIFS coverage for clients.

"He has been instrumental in providing us competitive quotes for hard-to-get insurance items such as EIFS insurance, occurrence-based mold insurance and errors and omissions insurance which other brokers could not provide," said Michael Weinert, president of Applied Restoration Inc. of Lemon Grove, Calif.

"We would have lost the ability to bid on a large sector of our market," without the coverage Dunn secured, Weinert said.

Carriers have learned to trust Dunn to use his advanced field underwriting skills to determine which contractors are best qualified to work with EIFS processes, a process that results in lower loss ratios and fewer claims.

Dunn's client service in the form of contract reviews, coverage analysis and advocacy is duly noted and appreciated by his clients. They praise his availability and his ability to smooth out wrinkles in short order, while at the same time making sure the answers are not simple Band-Aid solutions or quick fixes.

Tina Rogers, a finance executive with Palace Construction Inc. of Litchfield, N.H., praised Dunn for quickly saving a contract -- valued in excess of $1 million -- that Palace had with the owner/general contractor of a project. Dunn worked with the owner and Palace's insurer to resolve the owner's coverage concern -- within a single business day, Rogers said.

Senior Vice President
Regions Insurance Group Inc., Baton Rouge, La.

Honoring Relationships

To arrange the best coverage for a client, a broker must understand the insurance buyer's particular needs, not just what similar risks typically require. Service-oriented brokers such as Baton Rouge, La.-based Stephen Gaffney, senior vice president with Regions Insurance Group Inc., don't forget their clients until the next renewal but keep apprised of their evolving needs year-round.

Gaffney's attention to client service, for example, allowed the owner of a huge food warehouse to address its own client's cost concerns, solidifying the warehouse owner and client relationship.

Gaffney, who began his career as a direct writer, had placed coverage for the warehouse owner during the period the facility was under construction. During that time, the warehouse owner contracted with a huge poultry food producer to store its product.

Months after the facility had been completed and was in full service, the producer was happy with the operation but was exploring how it could cut costs. Noting the producer's expressed trust in the warehouse operator, Gaffney suggested that the producer contractually hold the 13 million square-foot warehouse operator harmless for the food, which would allow the warehouse operator to cancel its legal liability coverage. The operator then could pass along its insurance cost savings to the poultry producer.

"We modified the lease and business agreement with the company and were able to save the company a substantial amount of money," said Gaffney's warehouse client. "And probably even more important," the client said, Gaffney's "knowledge and abilities actually strengthened (our client's) perception of my company by having his representation. In other words, they viewed Steve Gaffney as an extension of my company and credited us with his findings."

Most of Gaffney's clients are privately-owned businesses and Gaffney knows just how much of their lives clients have put into those businesses. As a result, the broker treats those businesses as if they belonged to him and that's why he pays such close attention to customer service.

Gaffney, who often leans on his prior experience as a direct writer, his professional education and his extensive reading of court cases, also applies his knowledge of real-world exposures to come up with the right insurance solutions for his clients.