RISK & INSURANCE®
POWER BROKER® 2012
A
Critical
Link in
the Chain
BROKERS STEP UP IN ALL SORTS OF WAYS AND HELP
THEIR CLIENTS THROUGH A YEAR OF HUGE LOSSES FOR THE
INSURANCE AND REINSURANCE INDUSTRIES.
BY CYRIL TUOHY
Shortly after 2: 46 p.m. local time on March 11, 2011,
Japan trembled as massive undersea plates shifted.
Civilians ran for cover or sought higher ground in
expectation of the devastating tsunami spawned by
the 9.0 quake, a temblor so powerful that it moved
the entire island of Japan 13 feet to the east.
More than 6,000 miles away, in Chicago, Shawn
Ram reacted. “My first thought was that a few very
specific companies we work with had exposure in
Japan,” said Ram, a technology broker with Aon.
“I thought of all the exposures associated with the
flash memory space.”
Ram was acutely aware that Japan supplies about
25 percent of the world’s computer chips and about
40 percent of the world’s flash memory. Soon after
he heard the news of the tsunami, and how far
inland it had swept, Ram’s thoughts began to drift.
What impact would the quake—dubbed the
Great Tohoku Earthquake—have on the retail
environment? What effect would the quake, the
tsunami and the dramatic events at the Fukushima
nuclear plant have on the launch of the hotly
anticipated iPad 2? How were all these events going
to affect the ability of suppliers to deliver crucial
parts to high-technology manufacturers?
From straight-forward property/casualty claims,
to complex business interruption claims, to even
more convoluted contingent business-interruption
claims, brokers found themselves on the first
available flights to Tokyo.
Overnight, it seemed, the weekly volume of
conference calls with Japanese clients doubled, even
tripled. Client losses are in the hundreds of millions
of dollars because of the magnitude of the events in
Japan. “Lives changed because of this
experience in Japan on 3/11,” Ram said.
In the immediate aftermath of
3/11, brokers were called on to help
manage assistance programs, and the
large brokerage firms assembled rapid
response teams. “The first question
was, Are you OK?” recalled broker
Thomas Whitenight, senior vice
president of Wells Fargo Insurance
Services Inc.
One of Whitenight’s Japan-based
clients, Rackable Systems Inc., had
just completed the integration of the
Japanese assets of another computer
company 48 hours before the quake
struck. In this case, Whitenight
literally found himself playing the
role of ad hoc psychologist, a sort of
empathizer-in-chief.
“He was just so calm,” said one of
Whitenight’s clients. “We didn’t know
what the implications would be. We had people
in Sendai, people in Tokyo. It was just chaos.”
(Whitenight was selected as a Power Broker® winner
this year in the technology sector. Whitenight’s
profile appears on Page 64.)
As corporate risk managers overcame the initial
shock of the quake-tsunami-meltdown triple-whammy, they began to document what remained
intact, what suffered damaged and what was still
missing. Assessing the property damage was a
relatively straightforward exercise, brokers said.
Japan has the strictest earthquake construction
codes in the world and many of the plants and
buildings performed well, said Robert Gall, a
communications, media and technology expert with
Marsh in San Francisco. Still, “once I got in to the
high-technology manufacturing facilities, even with
the bracing it wasn’t enough,” he said.
