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CEO
Pricelock Inc.
Redwood City, Calif.

Price-Protection Insurance

The innately entrepreneurial Robert Fell was in the middle of working on a project with Andre Agassi back in the fall of 2006, helping to provide healthy foods for school kids in blue-collar areas in Los Angeles, when he stopped to fill his tank at a gas station. He overheard a debate between two plumbers over just how high gas prices could go.

"I remember it like it was yesterday," he said, and the story, like all great stories about the start of companies or landmark projects, is now part of his new firm's lore.

Back at the gas station, Fell went over and asked the gentlemen whether, if they could buy 1,000 gallons at the day's price, they would do it. Absolutely, they said. How would they pay for it? Credit card, they replied. That's when Fell, chief executive officer of Pricelock Inc., realized how emotional an issue it was.

"Much to the chagrin of my wife ... I began to do this anecdotal research," Fell recalled, kidding about how he continued to ask everyday folks about how they would mitigate the risk of fuel-price fluctuation.

Remember, this was back when the price of gas was spiking toward $4. SUVs suddenly went from being the darling vehicles on the road to being left on the side of the road. Even in 2009, with fuel costs "stabilized" around $3, fuel prices swayed back and forth 67 percent. Large, sophisticated companies like Southwest Airlines fought back against the uncertainty of fuel costs by setting up hedges. But how about small and midsize companies?

The problem "gnawed" at Fell, as problems do to entrepreneurs, and then the solution galvanized him. He contacted a powerful team of allies to make the solution a reality. First, bankers at Goldman Sachs, then investors among friends and acquaintances in the Santa Barbara, Calif., area. Leadership from the ranks of E*TRADE. And intuitively, he contacted Jay Fishman, chairman and CEO of Travelers.

Why insurance? Fell viewed the fuel-price solution--what was to become his newest company Pricelock--as "price protection insurance," a financial product that serves an insurance purpose. With Pricelock's fuel-price protection, businesses can get a payout when national average fuel prices rise above their set protection price.

"You really look at it as, this gives me predictability on my expense line," was how Fell described what Pricelock offers.

It was a fortuitous turn to reach out to Fishman at the time because, as it turns out, Travelers had been exploring a similar type of product, without avail.

"We couldn't make the numbers work," said Maria Olivo, executive vice president and treasurer with Travelers.

But Fell with Pricelock has been able to hedge and package the product, in large part because of his sophisticated team of commodities and financial experts, explained Olivo.

"You have to be able to find the right relationship ... so you're not overexposed," she said.

Olivo also pointed to Fell's innovative approach to marketing and selling the product.

In 2007, he completed deals with Chrysler and Hyundai, allowing the carmakers to offer a promotion for new car buyers to lock in fuel prices. Since the start of 2010, Fell has turned to the insurance world.

"The most exciting part of it now is really with the insurance agents," Fell said.

Travelers is exploring the option of distributing the product through its independent agents.

Fell was also able to reach out to Assurex Global, the global network of independent agents and brokers.

Jim Hackbarth, president and CEO of Assurex, said the network vets prospective partners "pretty hard."

"Let's put the dog food in front of the dogs," he said.

But when he put Pricelock in the hands of Assurex's independent brokers, it took off immediately, with 15 to 20 of the leading, most creative North American brokers jumping on the gas hedging product within four to five months of the partnership having started.

"It's a great idea, it works and their support team is second to none," Hackbarth said, adding that he's never seen anything like it.

For small to midsize clients of Assurex brokers, he said, it allows them to play a "game everyone thought only the big boys could play," protecting their assets and their income statements. For the brokers, in such a competitive climate, Pricelock is an unprecedented value-added product to offer clients.

Fell reported that Assurex agents have had 27 referrals and are now working to matriculate them into deals.

Since Pricelock's online platform went live in January, it's protected more than 100 million gallons of fuel.

--Matthew Brodsky

Fueling the Ability to Innovate and to Lead

Many of the industry's most innovative leaders, according to industry veterans, come out of the entrepreneurial ranks. Robert M. Fell fits that profile to a T.

He launched Pricelock almost by accident, after overhearing a discussion about gasoline price volatility at--where else--a gas station.

That was back a few years ago, when the price of gas was hovering around $4 a gallon.

Billed as the world's first company to offer online fuel price protection for businesses of all sizes, the purpose of Fell's company is to help small and midsize business owners by protecting them from huge swings in the price of gasoline. Fell may sound like a self-made man, but he's really a product of some of the nation's best schools, Dartmouth College and the Wharton Business School at the University of Pennsylvania.

Now he's putting that high-powered education to use in the service of small business owners, many of whom either weren't so lucky or never had the same educational opportunities but who need some price protection in their struggle to survive.

ERM Steering Committee
Point Lisas, Trinidad

Building ERM From the Ground Up

Phoenix Park Gas Processors Ltd. is not new to winning. In Trinidad and Tobago, the utility has been recognized as a champion of safety for two decades. On the international stage, Phoenix Park has won first place in safety performance in its category from the Gas Processors Association for the last 11 years.

It's been possible because, as Dominic Rampersad, vice president of finance and information technology for Phoenix Park, said, the company has 160 safety officers among its 160 employees.

In other words, the company's safety procedures have transcended mere policy and have come to permeate the company's culture, from the boardroom down to the first-year trainee.

Safety was just one piece of the company's overall risk management picture however. The company has had key elements of risk management in place for years, according to Laura Taylor, global leader of enterprise risk management (ERM) for Aon Global Risk Consulting. "They already had amazing building blocks in place," Taylor said.

Until recently, though, Phoenix Park hadn't linked these elements together as much as they would have liked. "This is a company that really strives for excellence in all that it does," Taylor said.

In other words, this is a company that decided to strive to link all of its risk management pieces together. "We said that the company has matured sufficiently to extend that safety culture," Rampersad said.

For a company with 160 safety officers out of 160 employees, that meant developing 160 risk management officers.

"Because we already have a mindset that employees look out for each other ... it required very little for employees to get on board," Rampersad said.

Phoenix Park already had the resources and attitudes in place, so their chances of success with ERM were maximized, according to Taylor. It helped that the company also has "extreme" leadership.

Rampersad was the project owner for ERM. The company right off the bat also established an executive-level risk management committee, including each business unit leader. The project champion was the president of the organization.

But perhaps what makes this ERM initiative special, innovative even, is that the ERM working committee--the true implementation committee--was made up of employees at the functional level.

"That creates a lot of innovation," Rampersad said about getting employees involved on the ground level.

For instance, it was Phoenix Park's own information technology department that created the risk register database. It built into the ERM system risk assessment tools such as process hazard analysis, layer-of-protection analysis, and project development and management functions. Not only does information technology now have an intimate knowledge of enterprise risk, the in-house risk register has made it easy to integrate ERM consistently with other critical business processes such as internal audit, budgeting and corporate governance.

The effects are already being seen, Rampersad said, as simply evidenced by managers using the risk registers and considering risk mitigation when doing their 2011 budgets.

"Which kind of indicates that the culture is building," Rampersad said.

Aon was brought in in 2009 to help Phoenix Park integrate all of its risk management "building blocks" into an ERM program, and Taylor now has the perspective on the utility's achievements in leveraging its existing safety culture and integrating risk into the decision-making process. The global ERM professional was impressed by the "clear and unwavering support" of Phoenix Park's leadership, the ability and commitment to build on existing success.

Of course, something that also makes Phoenix Park stand out is that it has only 160 risk management officials, er, employees. ERM is generally something reserved for large multinational corporations. Let's not forget that even the all-powerful banks of Wall Street had some difficulties with ERM as of late.

But a small utility from Trinidad? That's breaking some ground at home and on a global basis.

"Absolutely, for the size of the company, they have such a sophisticated view and maturity around risk in the organization," Taylor said.

"Sometimes these limitations bring out the innovativeness in people," Rampersad said.

--Matthew Brodsky