Risk & Insurance - January/February 2012

RISK & INSURANCE®
POWER BROKER®: GLOBAL BROKERS

2012

Stephen Alexandris
Mickey Brown, CPCU, ARM

Aon Senior Vice President Dallas Bringing the Bad in with the Good Stephen Alexandris is known for putting big deals together. In the past year alone, Alexandris was the architect of a number of major deals. In one case, he helped a well respected cargo carrier get additional capacity at a time when carriers in that sector of the airline industry wanted to pull back because of several significant losses in favor of giving their capacity to passenger airlines.

“One of the problems we have on the cargo side of the airline business is that carriers
don’t feel like they make enough money off of us to cover their losses,” said the staff
director of risk management at a cargo carrier. “Yet we pay more than our share of premium.
So what’s the solution? For the first time, Steve set up meetings with us and insurers in
Europe, so we could get our aviation experts in front of new markets, so they could really
develop a trust. As a result, Steve has helped pull together more capacity from the insurance
markets. “Said the director of risk management at the cargo company: “Stephen only brings
back things that make sense. It’s not ‘This is new and being used in the industry so you
should use it.”
Added a risk management director at another major: “He has a very straight-forward
approach. He is open and honest, and not afraid to tell you bad news as well as good
news.”
For a client that was looking to divest a major portion of its operations yet maintain risk
management control over the divested portion, Alexandris structured a deal that locked in
the premiums for both entities upfront so that the client didn’t face a price shock later on.

Alexandris’s customer service philosophy is as follows: He believes in putting the right team in place for the right client. He believes that every client is unique and has different needs and so setting up the right skill set is important.

Alexandris and his team develop customized plans for their clients that are focused on the client’s priorities. This approach gives Alexandris and his customers a clear roadmap and gives the client the option of holding their risk management partners accountable for delivering on that plan.

Alexandris believes that to be a truly successful broker, you must be a niche player. He is also dedicated to education, professing that he plans to keep on learning the intricacies of the insurance business until the day he retires.

Kathleen Lynch

Senior Vice President Marsh, Atlanta Identifying the Gaps With more than 25 years in the business, Mickey Brown provides a unique dedication to customer service with a global savvy that is invaluable for his clients. Jim Shaffer, a risk manager for Tosoh America, a foreign-owned manufacturing company serving the technology, medical and pharmaceutical industries, said his insurance needs may not be voluminous, but they are incredibly varied.

“This is further compounded by the fact that some of our parent policies cover portions
of our business but not others, and they may provide cover, yet that cover contains gaps,”
he said. “We operate in the U.S., but sell into China, Taiwan, South Korea, Latin America and
Europe.”
Brown’s value, Shaffer said, comes from his breadth of experience that allows him to
identify these gaps and quickly pair them up with resources. “He doesn’t need to know the
answers. He needs to indentify the problem, and then sift through the crap to get us what is
needed,” he said.

Brown’s team faced a unique challenge early last year for another client when he was given only 30 days to implement local and international insurance programs, with directors’ and officers’ coverage proving to be especially difficult. Adding to the difficulty was that in two of the countries in which the client had facilities, China and Korea, have “cash before cover” requirements.

For primary casualty, including environmental, the team was able to structure global programs covering the United States, Europe, Asia Pacific and South America.

For excess casualty, Brown negotiated a single global program with higher limits than what the client would have been able to obtain on a stand-alone basis in each country, given the hazardous chemical industry and premises liability exposures involved.

Brown and his team also developed alternatives for supply chain risks relating to the New Zealand earthquake, China flooding and contingent business interruption in Europe.

For property insurance, since the due diligence lacked quality engineering data, Brown’s team performed surveys that facilitated capacity for a world-class manuscript property program that included terrorism and other catastrophic perils. The surveys were conducted in five different countries.

For trade credit risks, Brown and his team conducted an analysis that determined that insurance was not the best alternative. So the team focused the client instead on internal controls and strict adherence to contractual risk transfer terms.

Eric Viktorin, AU AIS

Managing Director Aon, Charlotte, N.C. Merger, Quake Creates Challenges When Northwest and Delta merged two years ago the workload of Delta risk manager Gretchen Van Parys nearly doubled, unlike the size of her team, which remained the same. “Risk management is one of those areas where they look for cost-saving synergies,” she said.
But fortunately, Aon Managing Director Kathleen Lynch was there from the beginning to,
With its Northwest acquisition, Delta’s largest concentration of assets resided in Japan,
which suffered great damage from the March 11 earthquake. The event took place at the
time that Delta was negotiating its May renewal for earthquake and property insurance.

“Because Delta’s global property program wraps around the locally placed Japan policies, it was critical that Aon obtain local terms and conditions before the global placement could be negotiated,” Van Parys said.

Within three weeks after the quake and 30 days prior to the global renewal deadline, Lynch, with the assistance of her local Japan office, was able to obtain terms and conditions that were expiring with a small price increase.

In addition, Van Parys said that Lynch’s development of an interactive spread sheet that could be accessed by both broker and client allowed the most current exposure information possible available at any given time.

“As a result of this project, Delta was able to efficiently and cost effectively enhance the
foreign insurance program for the combined company, while ensuring compliance with local
regulations.”
For a major package delivery service, Lynch conducted an analysis of the company’s
current general liability and automobile programs that was almost mind-boggling in its
complexity.

The client’s goals were to retain all predictable “frequency” losses, maintain a consistent global insurance platform and to improve data quality and consistency. Complicating matters was that the client used a captive in the European Union and a carrier program for all other countries. Even further complicating matters was that the auto program is highly regulated and had little flexibility.

As a result of Lynch’s analysis of claims frequency and severity and other metrics, the company stayed with its original program but was given a much better understanding of scenarios for possible changes going forward.

Vice President Aon, Houston Never Give Up “Never give up” just about sums up veteran broker Eric Viktorin’s customer-service philosophy. That served him well when a cement manufacturing company based in Chihuahua, Mexico was hit with a six-figure additional premium audit during a tough business cycle. After months of intense negotiations the carrier dropped the additional premium.

Grupo Cementos de Chihuahua risk manager Alejandro Velo said Viktorin’s expertise went way beyond that incident to assistance when the company added ready mix companies to its cement plants in the U.S.

“We needed a different approach on retention levels regarding casualty,” Velo said.

“Eric and Aon helped us get a better grasp of our capacity for retention based on our historical information, actuarial studies, benchmarks,” he said.

A chemical analysis company serving the petroleum industry had an unconventional casualty program placed overseas on a completely manuscript form due to the highly specific work the client does.

The previous broker, among others, told the client that their program was not marketable and as a result, the program had not been successfully marketed for several years.

After getting multiple declinations on various alternate program structures, Viktorin’s team found a strong, reputable carrier willing to copy the manuscript form and improve coverage.

Finding an alternate market that would provide 50 million Euro primary coverage resulted in a six-figure savings on the premium.

Moreover, the client could not find professional liability coverage at a reasonable price. But Viktorin negotiated it into the general liability program without an additional premium.

Yet another client entered into a new enterprise with new risks that were associated with the local port authority. There was little time given the timeline of the project, to arrive at insurance solutions.

The project also faced resistance from the broker for the port authority who insisted that there was only one solution with one set of costs.

Through hard work, Viktorin and his team were able to find an alternative solution that fulfilled all contractual requirements. The solution provided higher limits and broader coverage at half the originally proposed costs.