Chubb Brings Ground Zero Flag Back Home
Hours after the World Trade Center towers fell, newspaper photographer Thomas E. Franklin hitched a ride on a rescue tug boat to Manhattan and stood on the West Side Highway.
Across the wide road, atop the towers’ smoldering rubble, three dusty firefighters were affixing an American flag to a pole jutting skyward.
Franklin pointed his telephoto lens and snapped a picture that would appear not only on the front page of his paper, “The Record” of Bergen County, N.J., but in newspapers around the world.
The breathtaking image aptly captured a moment of unimaginable loss, resilience and hope, and echoed the famous photo of the flag being raised on Iwo Jima in World War II.
The flag at Ground Zero, which had been purchased at a boat show 10 months earlier for $50, was the centerpiece of one of the most memorable photos from one of the worst days in American history. In a snap, it became an invaluable national treasure.
But hours later, the flag disappeared. And no one seemed to know who removed it or where it went.
After a few twists and turns, and 15 years, the iconic 4-by-6-foot American flag finally returned to New York City, courtesy of an insurance company.
“The raising of this American flag was a powerful symbol of hope, strength and resilience at one of the most trying moments in our nation’s history,” said Evan Greenberg, chairman and CEO of Chubb, at a ceremony on Sept. 8.
Chubb got involved when a claim was filed after the flag was initially lost.
“As we prepare again to pay tribute to those who were lost, this flag is a timely reminder of the spirit of our heroes and the resolve of a great city and great nation.
“Chubb is honored to donate the flag to its new, permanent and proper home in the 9/11 Memorial Museum,” Greenberg added.
Flag on Yacht Caked in Debris
When the World Trade Center’s twin towers came under attack, the flag was flying on the Star of America, a charter yacht docked nearby. The 130-foot-long, three-level boat with ivory-colored suede ceilings was owned by Shirley Dreifus and her late husband Spiros E. Kopelakis. It was insured by Chubb.
New York firefighter Dan McWilliams spotted the flag flying on the debris-caked yacht about 5 p.m. the day of the attacks, according to news stories published at the time. McWilliams removed the flag along with its pole from the deck, carried it toward West Street and with help from firefighters Billy Eisengrein and George Johnson, hoisted it.
While they have never met in person, the key players in the photo were linked again six month later when Dreifus and Kopelakis tracked down the three firefighters through a lawyer and asked them to sign affidavits stating that yes, they did remove their flag from their yacht.
The “New York Times” reported in March 2002 that Dreifus made the request as a legal formality that would allow her and her husband to donate the flag officially to the city, and perhaps claim a charitable deduction on their taxes.
The now-historic flag was invaluable. Chubb paid the full limit of the owners’ rental insurance to cover the claim.
But, what no one knew at the time was that the wrong flag was recovered.
When Dreifus prepared to formally donate the flag, a size discrepancy was discovered: While the yacht’s flag measured 4-by-6 feet, this flag was 5-by-8 feet. Dreifus started a website in an effort to get the historic flag back.
After the mystery was featured in an October 2014 episode of “Brad Meltzer’s Lost History” on the History channel, a man who wished to remain anonymous turned over the true original flag to police in Everett, Wash.
Police contacted representatives involved in the documentary and together they began a forensic investigation that overwhelmingly determined that the flag was the Ground Zero Flag.
The story of the flag’s recovery and journey back to New York was retold in a television movie, “Ground Zero Flag Found,” which aired Sept. 11 on the History channel.
“We had always hoped this special flag and its story would be shared with our millions of annual visitors coming from around the world, and for that, we are thankful to Shirley Dreifus, the City of Everett, History, A&E Networks, and Chubb,” 9/11 Memorial President Joe Daniels said in a statement.
“In the darkest hours of 9/11 when our country was at risk of losing all hope, the raising of this American flag by our first responders helped reaffirm that the nation would endure, would recover and rebuild, that we would always remember and honor all of those who lost their lives and risked their own to save others”
On Sept. 8, Chubb joined with the flag’s original owner, Shirley Dreifus, and donated it to the National Sept. 11 Memorial & Museum in honor of Dreifus’s late husband.
Representatives from Erich Courant & Co., the insurance brokerage which handled the renters insurance claim on behalf of the owners, were also at the ceremony with their client.
“Never in my life have I handled a claim of this cultural magnitude,” said Howard Bergstein, Erich Courant’s owner and president.
“The photograph of this flag being hoisted by firefighters caused this flag to become an iconic symbol of American patriotism and unity. We are at once thrilled to be a part of it and also hope never to be part of something so devastatingly tragic ever again.”
It was “a once in a lifetime claim in terms of its cultural significance,” he said.
“Have I ever had another claim where the client was paid the full amount of their coverage because the lost product was deemed to be invaluable?
“No, I never have been in that situation,” he said, noting that “the notoriety, the excitement of the flag’s recovery, the history, the sentiment,everything that has accompanied this claim has been extraordinary and I am hoping we never have to deal with something arising out of a tragedy again.”
The museum where the flag is now on display honors the 2,983 people killed in the horrific attacks of Sept. 11, 2001 as well as the car bombing at the WTC on Feb. 26, 1993.
It displays more than 10,000 personal and monumental objects linked to the events of 9/11, while presenting intimate stories of loss, compassion, reckoning and recovery that are central to telling the story of the attacks and aftermath.
Chubb has played an ongoing role in the museum since conception. ACE, which merged with Chubb to form the current company, was a founding member of the 9/11 Museum & Memorial. Additionally, Chubb North America’s general counsel, Kevin M. Rampe, sits on the 9/11 Memorial’s board of directors.
The Fine Print
When insurance buyers seek out hard-to-place risks — coastal property-catastrophe insurance in coastal Florida, for instance — they turn to a retail broker who in turn seeks coverage from a wholesale broker with access to surplus lines insurers or other specialty markets.
Trouble may ensue, however, if the agreement between the retailer and wholesaler are unwritten or otherwise unclear. Too often, that is the case.
Mark Robinson, co-founder of national law firm, Michelman & Robinson, LLP, and chair of the firm’s insurance industry group, said that “it is alarmingly common for wholesale insurance brokers to not have formal written agreements in place with their retail producers, which exposes the wholesaler to potential liability.”
“While some of the key points that should be included in a written agreement are rather obvious — commission rates, payment of premiums, etc. — other essential terms such as the scope of binding authority, special cancellation provisions, and ownership of expirations can be much more nuanced, and should be spelled out in detail so as to mitigate the risk of conflicting interpretations,” he said.
Robinson noted that “it is critical that wholesaler/retailer agreements contain a mutual indemnification provision as a safeguard against third-party claims resulting from one party’s negligent acts, errors or omissions, or breach of duties under the agreement.”
In terms of commissions, for instance, “It’s pretty obvious [the rate should be spelled out], Robinson said, but contracts also need to spell out whether there is a right to change the commission rate paid to the retailer by the wholesaler at some stage.
Bernie Heinze, executive director of the American Association of Managing General Agents (AAMGA) in King of Prussia, Pa., agreed.
“In an age where lawsuits are quick to follow on the heels of many adverse coverage determinations, it is extremely important that these specific roles and responsibilities and expectations are specifically delineated, and it’s necessary that each party to the transaction understands their legal and contractual responsibilities,” said Heinze.
“It’s important to understand that it’s the carrier that has expressly conveyed and delegated its authority to bind risks in accordance with its underwriting guidelines and its risk appetite to the wholesaler, which serves the role of the defacto branch office of the insurer,” he said.
“In order to be in compliance with the statutory obligations of the insurer and its duties to the market,” he said, “the wholesaler has to be sure and the retailer similarly must be certain that the lines of demarcation between them have been established and understood.
“This would also include the issuance of certificates of insurance and endorsements to the policy, which are derived specifically from the authority the carrier has conveyed to the wholesaler,” Heinze said.
These certificates and endorsements can essentially change the coverage grants of the policy, Heinze noted.
Robinson said that “if the retailer thinks they have binding authority and represents to the risk manager, ‘This is bound. No worries,’ it could turn into a complicated legal issue.
“The agreement should expressly provide that the retail producer has no authority to bind, make, alter, vary, issue or discharge any insurance policy, extend the time for payment of premiums, waive or extend any policy obligation or condition, or incur any liability on behalf of the wholesaler or the insurers,” he said.
An attorney/consultant who has worked with insurance brokers for more than 25 years, and requested anonymity, said that in the 1980s, representatives of both retail and wholesale tried to address concerns over these sorts of agreements, with some organizations proposing a model contract.
Nothing came of the various initiatives, the attorney noted, due to the disparate nature of the wholesale universe, which includes small independents, national firms and boutiques.
Particularly problematic issues related to wholesale/retail broker contracts are commission, regulatory and licensing requirements, and the fulfillment of premium tax payment obligations.
Another area of complexity was that wholesale brokerage community agreements can vary widely between individual organizations, he said.
Particularly problematic were commission, regulatory and licensing requirements, and the fulfillment of premium tax payment obligations, he said.
Some of these difficulties may have been eased or resolved by the passage of the Nonadmitted Reinsurance Reform Act in 2010, he said. The NRRA states that only one state, the home state of the insured, can regulate and tax a nonadmitted transaction.
That’s not to suggest that conflicts cannot still emerge if the correct contract language is not in place. Quite the contrary in fact, he said.
Using Data to Get Through Hail and Back
4,600 hailstorms have rained down on the U.S. as of the end of July according to the National Oceanic and Atmospheric Administration. And these storms have left damage behind, cracking unprotected skylights, damaging exterior siding, dimpling rooftops and destroying HVAC systems.
While storm frequency is almost on par with last year’s 5,400, the rest of the picture isn’t quite the same. For example, the hail zone seems to be shifting south. San Antonio, Texas, a “moderate” hazard hail zone area, typically sees four or five hail storms a year, on average. Year to date, more than 30 storms have been reported. Overall, Texas has suffered nearly 20 percent of all hail storms this year.
Liberty Mutual’s Ralph Tiede discusses the risk hail poses to large commercial property owners.
The resulting damage is different too, with air conditioning (AC) units accounting for more than a third of the insurance industry’s losses, a greater proportion than in previous years. “In some cases, we’ve seen properties that sustained no roof damage but had heavily damaged AC systems. This may be a result of smaller hail stone size coupled with high winds,” noted Ralph Tiede, Vice President of Commercial Insurance and Manager of Property Risk Engineering at Liberty Mutual.
Despite the shifting trends, however, these losses are largely preventable if commercial property owners understand their exposures and take steps to mitigate them. By partnering with the right insurer, a company can gain access to the industry-leading resources and expertise to make it happen.
Understanding the Risk through Data
A property owner might know that his property is located in an area prone to hail, but could underestimate the extent of damage a storm could cause. Exposed skylights, solar panels, satellite dishes and other roof-mounted equipment can translate to serious losses.
Three trends that have emerged this hail season.
This is where Liberty Mutual’s property loss control engineers offer critical guidance for customers with large property exposures.
“Our property loss control engineers go out and inspect locations to develop loss estimates,” said Tiede. “They’re looking at the age and condition of the roof, the material it’s made of, and whether equipment is exposed or if there are adequate safeguards in place.”
Liberty Mutual can combine this detail with the hail data it has collected for more than 14 years and use this extensive library to help customers understand their exposures. The company’s proprietary hail tool looks at customer-specific factors, such as roof type, age, condition and geocodes, to better identify potential losses from hail. The tool provides a more detailed view of hail exposure on a micro level, as opposed to more traditional macro views based on zip codes.
“This way, we’re not just looking at a location’s exposure, we’re looking at an account’s cumulative hail exposure and providing a better understanding of where the risk is concentrated,” Tiede said.
Having a good understanding of a company’s specific exposure helps the broker, buyer, and insurer develop an effective insurance program. “Two customers may be in the same area, but if one’s building has a hail resistant roof, protected skylights, and hail guards for HVAC equipment and the other’s has unprotected sky lights and no hail guards or screens on rooftop equipment, they are going to have different levels of exposure. In both scenarios, we can design an insurance program that fits the customer’s situation and helps control the total cost of property risk,” said Brent Chambers, Underwriting Consultant for National Insurance Property at Liberty Mutual.
A Liberty Mutual property loss control engineer consults with the customer on ways to reduce or mitigate the exposure from hail so that the customer can make an informed decision as to where to deploy capital. “It’s not just about protecting a building’s roof and rooftop equipment. Roof damage can lead to extensive water damage inside a building and in some cases disrupt service, both of which can be costly for a business. By focusing on locations with the most exposure, a risk manager is better able to mitigate future losses,” said Tiede.
Actions commercial property owners can take to mitigate the risk of hail-related damage.
Liberty Mutual property loss control engineers also provide recommendations specific to each location. “We know that hail guards work, so we encourage clients to use those to protect HVAC equipment,” said Ronnie Smith, Senior Account Engineer for National Insurance Property at Liberty Mutual. “Condenser coils in air conditioning systems are fragile and easily damaged, and units don’t necessarily come with built-in protection. It’s important for property owners to take this step proactively to prevent a loss.”
The average cost to fix a condenser coil is $500, but replacing a coil can run at least $500 per ton of cooling, a measurement of air conditioning capacity that refers to the amount of heat needed to melt a ton of ice over a 24-hour period. As one ton of cooling typically covers about 250 square feet of interior space, replacement costs can quickly add up.
Replacing an entire AC unit can run more than $1,000 per ton of cooling. In a 250,000 square foot property, the replacement could easily reach $1 million. Given the increase in hail-related AC damage this year, these are numbers worth knowing.
Other risk mitigation recommendations include regular roof maintenance, such as inspections and repairs to small damages like blisters and installing protective screens over skylights.
“If a roof needs replacing, we also suggest using materials that have been tested and approved by an independent certification laboratory and are durable enough to fit the location’s exposures,” Tiede said. “The last thing a commercial property owner wants is to replace a roof again six months after it’s installed. Experience has shown that ballasted-type roofs are the most resistant to hail damage.”
Using Data to Develop Solutions
When a property owner has an understanding of the size of its exposure and potential losses, it is better able to work with its agent or broker and insurer to develop an insurance program to manage and mitigate potential risks.
“The data and advice we provide help clients focus on the largest risks and better mitigate that exposure,” Smith said. “The more data you have, the more you can understand your risk on a granular level and manage it.”
This data-driven approach to preparedness makes Liberty particularly well-suited to serve large commercial properties with multiple locations in high risk areas.
Prices for roof and air conditioning repairs and replacements have risen over last year, Tiede said, and are likely to grow more expensive as older equipment becomes obsolete. Property owners will be forced to buy newer, pricier replacements than perhaps they had originally planned for.
And if this year’s storm trends are any indication, hail is sometimes an unpredictable foe.
Amidst these shifting trends, the value of an insurer’s expertise in identifying, mitigating and managing hail exposure will be immeasurable to large commercial property owners.
For more information about Liberty Mutual’s commercial property coverage, visit https://business.libertymutualgroup.com/business-insurance.
This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Liberty Mutual Insurance. The editorial staff of Risk & Insurance had no role in its preparation.