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Area Vice President
Arthur J. Gallagher & Co., Aliso Viejo, Calif.

Broker Offers an Earthquake Solution

The question confronts every real estate company that owns property in California: Should we buy earthquake insurance? The coverage is not required by law. But, said an executive whose company owns more than 2,000 apartment units throughout the state, he and his colleagues felt the coverage was necessary to protect the investments of their equity partners.

The question then became: How much coverage?

The company turned to Arthur J. Gallagher Risk Management Services Inc.'s Morgan Anderson for help in drawing up a policy that would protect the company's financial health but allow it to remain a competitive bidder in the real estate marketplace.

"We felt like, if we carried too much, we were really going to knock ourselves out of the game," the executive said. "But if we carried too little, we were exposing ourselves to catastrophic loss."

Anderson developed a matrix of the company's properties by earthquake zone, calculated the insurable value, plugged in profits and losses, assessed the company's risk tolerance, and determined the potential impact of a big earthquake in any one part of the state.

"That really helped us understand what our total liability really looked like and the hit we could take," said the executive."

The company is impressed with the broker who delivered it.

"We trust Morgan as if he were an employee of our company," the executive said. "We've found that he truly does have our best interest at heart even when it's potentially at odds with his compensation structure."

Managing Director
Aon, New York

She's Got the Broker Bug

An insurance broker is generally not the first person you'd call during a bedbug infestation. But if your broker is Jacquelyn Bolig, it just might be. Recognizing the perils posed by high-profile infestations, Bolig worked with a specialty insurer and a pest-control company to create a comprehensive insurance product.

The product combines extermination, training and risk transfer for hotels and apartment buildings. It also is available to companies whose employees travel. Benefits include reimbursement for eliminating bedbugs, laundering clothes and finding temporary shelter.

That Bolig, managing director with Aon Risk Solutions in New York City, could find an insurer willing to underwrite the product comes as no surprise to her clients, who value her industry connections.

"She's just got a lot more respect in the industry and just has really good personal relationships," said the risk manager of a commercial real estate company in the Southeast. "And I just think it goes a long way. She's very well-known and very well-respected in the industry."

Bolig's connections, along with her tenacity, have helped several clients survive difficult renewals over the last year and place complex risks.

Another client considers her more of an adviser than a broker.

"She's very responsive, very personable," said the client, an executive at an investment company specializing in multifamily properties. "She guides you along in waters that are not your specialty."

Area Vice Chairman and Managing Director
Arthur J. Gallagher & Co., Glendale, Calif.

Broker Doubles as an Actuarial Navigator

When the real estate executive wanted to talk about his company's struggles with urban mining, he knew he'd find a good sounding board in Alexandra Glickman, area vice chairman and managing director-practice leader.

"She's so well-connected and her practice is so large, that there's little I can dream up that someone else hasn't already had an issue with," said the executive.

The executive's Los Angeles-based real estate company has been looking for ways to foil urban miners -- people who strip copper pipes and wiring from empty properties. "That causes costs for landlords," the executive said.

Glickman has "been figuring out how to minimize that, short of building a moat or finding tenants." Glickman also proved her worth as the company dealt with tornado-related damage over the last year, particularly in Texas.

"She was very helpful in resolving that for us and, at the same time, managing to keep our premiums manageable," the executive said.

For another company, Glickman provided insights on the pros and cons of establishing a captive insurance company. Experience is part of what Glickman delivered, said an executive at the company, a privately held real estate entity that owns, manages and operates commercial real estate in California and Hawaii.

"She's been very instrumental in navigating us through this uncharted territory and, so far, everything is working great," said the executive, noting that Glickman has stood out in her ability to see the world from the client's perspective. "That's what you really want to find in a broker," the executive said.

Managing Director
Neace Lukens, Cincinnati, Ohio

Broker Fosters Growing Partnerships

Uninsured tenants create potential exposures for Phillips Edison-ARC Shopping Center REIT, a real estate investment trust that manages roughly 250 shopping centers anchored by grocery stores. So the company requires tenants to keep their insurance coverage up to date. That means keeping track of roughly 4,000 tenants.

Phillips Edison had been trying to verify coverage internally, said Mark Addy, chief operating officer of the Cincinnati-based company. About a year ago, Richard Lonneman, the company's longtime broker, offered to take over the task at no cost, setting up a new protocol and tapping the resources of Neace Lukens.

"The reason that Rich has grown with us, and we are so loyal to him, he's always out there giving us ideas and looking ahead," Addy said.

One of those ideas helped lower costs for insuring company properties in high hazard wind/hail zones. Phillips Edison had shouldered high deductibles on those 36 properties, creating an unfunded liability with no mechanism to share the risk with tenants.

Lonneman remedied the situation by establishing a segregated captive cell in Neace Lukens' parent captive company and offered a wind buy-down policy that slashed deductibles and transferred some of the risk to tenants. Earthquake and environmental liability exposures were recently added to the captive.

Even as the relationship grows, executives at Phillips Edison never feel Lonneman is pressuring them to add this policy or that coverage.

Account Executive
Aon, Los Angeles

A Risk Shopping List

To get the most out of visits to her company's mall properties, the risk manager at a real estate developer needed more than a shopping list. During on-site discussions with property managers, she needed to have reams of risk-related data at her fingertips.

Jason Peery, a Los Angeles-based account executive with Aon Risk Solutions, is delivering it in the form of a risk management information system that will download information at the push of a button. At the same time, Peery is working with the company to develop environmental coverage for a sensitive project on the East Coast.

"He has a willingness to dive into all of the details and an ability to step back and really look at the landscape," said the risk manager.

"He puts our interests first at times when, quite frankly, it's not financially beneficial for him. But he's very, very dedicated in that regard," said the risk manager, who looked highly on Peery's customer service skills. "Jason is an impossible standard," she said.

Another risk manager praised Peery's role in unveiling a property and insurance risk portfolio across the United States for his company, a new entrant into the market.

"With the work Jason has done, and continues to do, with our portfolio in the United States, we were able to obtain an overall premium rate reduction of 17 percent in a hardening market in 2011-2012," said the risk manager, whose company is based in Australia. "This was critical and a key deliverable for myself and the U.S. team."

Vice President
HUB International, Woodbury, N.Y.

A Clear Thinker

Clients have come to expect clear-thinking solutions from Alex Seaman, a senior vice president with HUB International Northeast. About a year ago, he recommended that Midboro Management Inc., a New York-based apartment building manager, carry homeowner's policies for the superintendents who look after its buildings.

"I thought it was a really effective tool," said Michael Wolfe, Midboro's owner. The company counts on superintendents to serve as its eyes and ears, looking after properties both mechanically and aesthetically. The less they have to worry about, the more they can focus on their jobs, Wolfe said. "If you keep that person upbeat, you're going to have a very well-run building."

Other challenges are more complex. But the solutions devised by Seaman are equally effective. One large real estate company in New York sought his help in blunting an anticipated premium increase of more than 60 percent. The increase stemmed from a series of claims and lawsuits resulting from slip-and-fall incidents, negligence on the part of unit owners and tenants, and faulty work by contractors, who were not providing proper risk transfer documentation.

After an analysis, Seaman recommended steps to reduce exposures to future claims with the goal of persuading insurance carriers to offer better terms. Recommendations included improving the risk transfer process for contractors working on the buildings. Once the recommendations in place, Seaman was able to negotiate favorable renewal terms.

Managing Director
Beecher Carlson
Atlanta, GA

Principal
Integro Insurance Brokers
New York, NY

Senior Vice President
Marsh
Los Angeles, CA