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Managing Director
Wortham, Houston

Standing Up When it is Right

One of the oft-quoted lines from the first Harry Potter book and film is "it takes courage to stand up to your enemies, but even more to stand up to your friends." Substitute "underwriters" for "enemies," and "client" for "friends," and the challenge that faced George Adkins, managing director with John L. Wortham & Son in Houston, comes into sharp focus.

A client of his was paying "exorbitant" property rates because the market did not believe the company had sufficient fire protection at its facilities.

Property/casualty underwriters also felt that the client lacked adequate natural catastrophe coverage, specifically against wind losses.

After going around and around with the carriers at his client's behest, the client said Adkins came back to him with a mixed message: the market was correct, the client was not practicing the best possible risk management. However, the good news was that the problems could be resolved. The client agreed, indeed, once the topic had been broached. The broker and risk manager worked together to convince management to set aside funds for upgrading the fire protection systems.

The client said Adkins gathered fire protection recommendations from half a dozen engineering firms that provided the largest gain in risk mitigation. With the home front secured, so to speak, the broker went back to the market with an improved risk profile, and sought new quotes.

When the placement was completed, the client netted a premium savings of $500,000, yielding a return-on-investment for the fire-protection upgrades of a neat four years. The risk manager adds that, based on the favorable outcome of the first initiative, management is taking up other risk management recommendations.

The reason Adkins is so effective is the background he brings to his job. Within the industry, he's progressed from a power plant operator in a nuclear submarine, to a plant and boiler insurance inspector, to a claims adjuster, to an underwriter, and finally, now, to a broker. This progression has given him a huge base of knowledge from which to draw, and he's how in a position to bring all that knowledge to bear in the interest of his employer and his clients. It's not for naught that his motto is to "make the risk manger look good to his superiors."

Managing Director
Marsh, New York

Executing on the Fundamentals
With earthquakes, tsunamis, tornadoes, hurricanes -- all kinds of tragedies -- there are some extraordinary stories among the Power BrokerŪ winners this year. But sometimes, the essence of a great broker is how he or she executes the fundamentals better than anyone else. Such is the case for Marsh's Jonathan Ball, managing director with Marsh in New York.

Ball was given the chance to compete for a big and growing energy company tied to the boom in domestic oil and gas production and transportation. He won the business, secured a favorable renewal -- and then really started to work.

The client's insurance manager said that Ball carried on after the placement to work closely with the operator's in-house risk management team, moving seamlessly from outside expert on policy endorsements and market preferences to being an inside consultant on operations, corporate structure and management practice.

All that work paid off for the next renewal when the owner and the broker were up against a skittish market. There had been several large losses in the sector in the past year or two. Capacity had shrunk, terms were tightened and premiums increased. As a result, the renewal of the expiring excess liability program limits at reasonable premiums was very challenging.

The client said that under Ball's guidance, they started the renewal process early, meeting with carriers almost informally to review the program, and then found the comfort level for each underwriter. In all it was a lot of work, said the insurance manager, essentially a perpetual repackaging as they worked through the whole program.

The final stroke of success was to take the parts of the program that could not be readily placed with traditional markets out to new ones. Those new markets included U.S. domestic markets beyond the industry mutuals AEGIS and EIM, as well as Bermuda and London.

The new markets were highly receptive and were happy to diversify their own portfolios with what they perceived as a manageable sliver of what could be a strong growth market.

Ball's renewal was successful and the broker and his team found the broader coverage the client was looking for at a premium level that was very competitive in a tightening energy insurance market.

Senior Vice President
Marsh, Houston

Getting Clever with Hydrocarbons

Most people think of the oil industry as being comprised of galactic companies like Exxon and Shell, but there are thousands of small to mid-sized operators, many of them family owned or otherwise privately held, bringing oil and gas out of the ground. There are also hundreds of small to mid-sized companies involved in the many facets of gathering, transporting and processing hydrocarbons: And all of them need insurance.

Marsh's Karen Crespin, senior vice president working out of the brokerage firm's Houston office, earned her Power BrokerŪ kudos by pulling together a program with more components than three-dimensional chess.

This particular coverage program centered on a nearly century-old midsized refinery on the Gulf Coast that had already changed hands several times in its long service life. The refinery switched from public to private companies, and back to public ownership again. The refinery had recently completed a major overhaul but had some obvious legacy issues.

When the most recent new owner acquired a controlling stake, the plant's coverage needed its own revamp. As a further complication, the rising price of crude oil against stagnant fuels markets made refining an extremely low margin business during the time period.

In addition, this was a time when most energy markets have been pushing to increase the deductibles on this class of business as the refinery business has proven to be unprofitable to the marketplace for the past several years. At the same time, carriers and regulators had sharply increased their requirements as a result of several high-profile losses, including the BP refinery disaster at Texas City in 2005, which claimed 15 lives and left 170 people injured.

In the face of all those obstacles, the risk manager for the facility said Crespin was able to get three quarters of a billion-dollar loss limit placed at a 30-day wait, and the remainder placed at a 45-day wait. In a clever twist, Crespin was able to find a deductible buyback based on the facility's total projected business interruption values, which brought the wait back to a net 30-day period.

In this instance, Crespin was able to exceed Marsh's strict service standards by having policy certainty at binding. The broker was then able to deliver all the policies within 60 days after inception, with all certificates of insurance issued prior to binding.

Vice President, Placement Specialist
Marsh, Philadelphia

Risk Managing the Merger
In recessional times there is something of a cold-blooded mindset about acquisitions. The company or division or plant taken over is literally just that, and lucky to be still operating. All that talk of melding corporate culture and building team spirit seems to go out the window. But wise managers and the brokers who serve them know that operational efficiency and effectiveness are still strongly affected by unit cohesion. Such was the case when Marsh's Robert Sweeney handled a renewal for a client that was its first after a major acquisition.

"The new operation was a discrete group within its former organization," the risk manager for the acquirer said, "and they preferred to remain a separate operating subsidiary with us. That extended to their insurance program. Our corporate executives preferred to roll everything together because they believed they could realize significant premium advantages that way.

"Rob put together a win-win-win," the client said. "We did roll in the new division to our program, but he was able to significantly reduce its retentions, as compared to the previous program. He got a great deal for the whole corporation, and was able to show the new group how they came out ahead, and they were happy. It really set a new tone for everyone, way beyond just the terms and premiums."

To accomplish that, Sweeney, vice president and placement specialist with Marsh in Philadelphia, and the risk manager developed specific goals around pricing, policy limit, catastrophe sublimits and deductibles. They felt that making carriers comfortable at the outset with the inherent risks of a combined program would not only create market interest but also perhaps strengthen their negotiating position.

In another example, shortly after binding coverage on a new, large quota share property program for another his utility clients, it was discovered that the lead insurer -- which also served as the program's engineering provider -- had entered into an agreement with prior ownership to award the client premium credits for implementing certain loss control recommendations. Sweeney was not familiar with this agreement nor was it disclosed to him while negotiating the program renewal with the other two insurers on the program.

After the initial request, he followed up with each insurer and provided them with details on the implemented loss control recommendation.

Once he had the opportunity to communicate the value of the improvement to each insurer Sweeney was able to obtain full agreement on the credit and process for his client the six-figure return premium they felt they had earned.