Case Studies

Risk Management Consulting

A large North American real estate developer was worried about their insurance program/costs and whether their agent of 25+ years had the requisite skills to handle their current needs. Working in concert with the agent, we restructured the entire program — consolidated coverage/policies and eliminated unnecessary insurance placements. Risk financing costs were reduced by 60% in the first year alone. Coverage and limits were dramatically increased and administrative economies realized. As a result of that engagement, RMC became the focal point of their entire risk management strategy. This relationship has lasted, uninterrupted for nearly three decades.

A large real estate and marina investment company with 100% catastrophic wind exposure was struggling with their insurance. The initial fractured structure included 26 policies, three brokers, four separate renewal dates, and insurance costs in excess of $6 Million dollars. The structure was inefficient and an administrative nightmare. The company was told that this was the only option for their unique exposure. RMC saw things differently. Having been in tune with the insurance market for over 25 years, RMC intuitively understood that a more concise and less expensive program was possible. Over the course of 12 months, RMC was able to consolidate the 26 property and casualty/liability policies into one master program. The insurance premium was reduced by nearly 50%, while doubling the wind and liability limits. The coverage was enhanced in nearly every term and condition INCLUDING the wind, flood, earthquake and all risk deductibles.

A long standing real estate client of our firm strongly enforced the sound risk management and contractual procedures that we provide throughout their 100+ locations. After many years of proven risk management performance, carriers were seeing the loss performance go from limited to loss free, year after year. However, premiums appeared to reach a minimum threshold while still being extremely profitable for the carriers. RMC worked with the carrier to design a policy that returned premium to the insured each year for continued good loss performance. As a result, the insured has received a return premium of approximately 30% for 5 consecutive years.

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Audit Existing Risk Management and Insurance Programs

One of the world's largest hotel chains believed their insurance program to be competitively priced. For some reason, their franchise owners were not reaching the same conclusion. Untold opportunities were lost and the program served an unreasonably small segment of their potential market. We were retained by senior management to determine if the master program could be made more competitive. A study was commenced. Existing vendors attempted to "stonewall" the effort at nearly every opportunity. Not to be discouraged, we completed the assignment and issued a report systematically discrediting the placement strategies. The client requested help in implementing our recommendations. In the end, the hotelier saved $5+ million in the first year alone.

A few months before a building collapse caused by the negligence of a contractor, we were consulted by the property owner to review and advise on coverage terms for a new acquisition. Critical "Insured" language was needed on their liability policies in order to capture full protection for a host of owner interests. The contractor responsible for the collapse had limited coverage as well as other claims that eroded what limit was available. The property owner's insurance was therefore pulled in to respond to a multi-million dollar claim, which was only covered because of the corrected insured language that we had implemented months before.

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Insurance Procurement Assistance/Advice

A well run, beautifully built group of hotels had an unexpectedly poor loss record. Predictably, they became demonized by the underwriting community. Their broker blamed their onerous renewal terms on market trends and the client's disastrous claims experience. The Board of Directors retained RMC to review the renewal negotiation and offer advice on the best means of improving the perception of the risk in the marketplace. At the same time, they asked us to review the broker's service team, the renewal specifications and the process used by the broker to seek renewal terms. Ultimately, the broker was replaced, new specifications drafted and an effort was made to explain why a single bad year does not refelect the character of the risk. The ensuing broker competition led to a premium saving of $7M. The next year an additional $2.5M was pared off of their costs.

A large real estate investment firm which used a common practice of forming separate ownership entities for each asset had dozens of insurance policies with renewal dates which were spread sporadically throughout the year. Informed by their insurance brokerage team that maintaining separate policies was the correct way to properly insure each asset and ownership entity, the firm understandably became frustrated with the cost and administrative burden. RMC was consulted, and reconstructed the structure so that one master program existed for all. This provides equally broad coverage terms and limits to each asset and entity at a fraction of the cost. More than 40% was reduced from premium costs alone, saying nothing of the administrative cost savings related to renewing more than 2 dozen policies. It also provided a platform for growth without insurance being a burden.

Competition, when used correctly, can produce cost effective and long standing results. A large global real estate equity investor with nearly $3B invested in Western Europe came to RMC for assistance with a global insurance solution. RMC orchestrated a broker/carrier competition between two of the largest brokerage firms in the world. The result was a global insurance program with extremely broad coverage for all and a 2-year savings of $4 Million dollars for the real estate equity investor.

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Captive Feasibility Studies/Implementation

A fledgling risk retention group was struggling to put together the necessary reinsurance required to properly service their customer base. As a consequence, they were not making much of an impact or writing much business despite the obvious shortcomings of the products offered by the commercial insurance world. Members of the Board retained one of the world's preeminent management consulting firms to assess their options. Sensing that they lacked the expertise to properly analyze the problem, the consulting firm collaborated with RMC; eventually turning over the entire assignment to RMC for implementation. In fairly short order the problems were resolved. Today, that client is the second largest risk retention group in the world.

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Directors & Officers Liability/Executive Risk

A large private equity firm with significant exposures outside the U.S. came to us with concerns about its global operations and the personal exposures of its directors and officers to fines and penalties imposed by the countries in which they resided. At the same time, the firm's independent directors expressed concern about the protection in light of two recent US court rulings and a hostile D&O environment. RMC was engaged to address and successfully expand their program, increase coverage terms and limits, properly implement placement of foreign D&O policies at extremely competitive rates, all while controlling premium increases.

A publicly traded financial institution, active in the CMBS and CDO markets, faced a toxic Directors & Officers Liability market for its fall 2008 renewal. The incumbent lead carrier had formally advised our client that their renewal premium estimate would escalate by 104% and excess carriers were expected to follow suit. RMC responded with a renewal strategy that included an exhaustive market competition of all viable carriers, a preliminary dry run to prepare the CFO for questions from the underwriters, and a round table face-to-face discussion with 13 carriers and the CFO. By successfully differentiating this risk from others in its class, we not only avoided the 104% increase, but achieved a 14.5% reduction on the entire program, while maintaining or improving broad terms and conditions and adding a separate Side A policy for the benefit of the independent directors.

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Environmental Liability

RMC was retained by a large private equity firm to review its pollution insurance and related exposure and to provide advice on ways to improve protection for the firm. We designed a new multi-year Pollution Legal Liability insurance program that afforded extensive coverage not offered in the previous policy, including business interruption and mold and microbial matter cover. Less than one year after inception of broadened coverage, a pervasive mold condition was discovered at one of the firm's locations. The firm was facing a remediation and business interruption loss of approximately $2M which would not have been insured under the prior policy, but is under our new broadened, multi year policy.

Many of our real estate clients had been forced to provide environmental indemnifications to their lenders and carry specific amounts as potential liabilities on their books. When we learned of this, we were able to place environmental liability policies (and portfolio policies) which put our clients in a position to be released from these environmental indemnities by getting lenders to accept the policies in lieu of the indemnities.

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Risk Management Support

A Shopping Mall owner/developer hired a general contractor to build a mall. The contract in place required the GC to carry routine types and levels of insurance and to provide a certificate of insurance adding the owner as additional insured. The contract requirements were missing some key issues that created gaps in the protection offered to the owner thereby giving the GC's insurance carrier an opening to reduce or deny coverage for a variety of claims that arose. The Owner's insurance policy ended up paying part of the losses that could have and should have been fully covered by the GC's policy IF the contract had included the proper requirements. Payment of such losses by the Owner's carrier caused the owner's premium to increase. We were able to implement sound contract and certificate of insurance compliance programs with the client and their legal teams which ultimately allowed claims to be covered where they should be, by the GC's policies. Once these programs were in place and carriers understood the proper transfer of risk existed, the Owner's premiums were reduced.

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Due Diligence

Many clients who include us in their due diligence team have been able to get a firm understanding of potential insurance coverage problems and/or cost implications as a result of our involvement during the due diligence process. Some examples include:

Identified Life Safety System deficiencies by due diligence team members. System did not meet code and could impact cost of insurance and life safety issues as a result. Identifying this issue during due diligence allowed our client to negotiate with seller to adjust the selling price in order to help fund the improvement to the Life Safety System.
Identified inaccurate insured values as presented by seller. This had a direct impact on the correct amount of insurance needed and therefore the ultimate cost. This allowed buyer to have solid grasp on insurance costs during due diligence as opposed to a surprise after the fact.
Recognized a pattern in some historical property damage from seller's loss history which gave rise to further investigation and questions during due diligence. As a result a previously unrecognized potential construction defect was identified in advance and a repair fund established by seller at closing for potential future damages.
Revised closed ended investment fund wording during due diligence and uncovered specific uninsured exposures in advance that allowed RMC to customize insurance policy language to pick up this previously uninsured exposure.
Explained to clients in the course of due diligence on properties located in Europe and Asia the differences in both insurance and the insurance purchasing function in those venues compared to the US. This enabled clients to have clear direction on exposures, coverage issues and costs in advance of presenting final bids.
Asked by a client who was considering purchasing a company to review that company's historic insurance program, RMC recognized that the viability of a captive established in the past was questionable moving forward. This allowed our client to require that the seller at closing either keep the captive funded and viable or place other insurance or indemnify and fund losses. Had this not been done, losses filed after closing could have been uninsured and the responsibility of the buyer.

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Emergency Response and Business Continuity Planning

Following the release of the 9/11 Commission's findings, RMC was tasked by a large real estate investor to assist with the development of an industry-leading initiative to improve and implement a higher level of emergency response procedures for high rise office buildings across the country. The procedures would meet and ultimately exceed jurisdictional requirements, including Local Law 26 in New York City prior to its inception. With our experience in high rise liability mitigation, we took part in several DHS Site Assessment visits. All experiences combined allowed us to set a standard of loss control and emergency response that had yet to be seen. This included getting local officials and services as participants, and RMC has received multiple letters of commendation as a result. These include recognition from San Francisco, Los Angeles, Arlington, VA, Chicago, IL and others. We received the State of Illinois Chairmen's Award from the Illinois Security Chief's Association, as well as the Liberty Mutual Gold Award for loss prevention standards of excellence. The overall emergency response procedures have become the benchmark for the insurance industry with respect to high rise office preparedness. Our clients benefit from this dramatically, including a positive impact to their insurance coverages and costs. RMC is also in the process of seeking Safety Act Certification.

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Loss Control

In an effort to make sure their high rise property management teams and tenants were properly prepared for emergencies, RMC was hired to audit, implement, and provide training for loss control and emergency preparedness in dozens of commercial properties. This included table top training sessions to prepare all. Two weeks following a specific training session regarding a fire in an underground parking garage, an actual incident occurred. Due to the training, the staff and tenants were prepared. The Fire Department was able to enter and address all rapidly and the fire was extinguished without damage to persons or the building. As a result, the Fire Department issued a letter of Commendation to the property, the owner, and RMC in recognition of the outcome being a product of the Loss Control and Emergency Response preparedness.

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Claims Management

Unbeknownst to the property owner, breaks in old, underground piping were slowly eroding soil from beneath a large parking lot and building. After days of heavy rains, the lot collapsed along with a corner of the building. A multi-million dollar loss resulted which was initially denied by the carrier. Due to some customized wording on the property insurance policy that we had previously added, we were able to convince the carrier to reverse the denial and pay the claim.

An Insurance company, being too cavalier with payment of liability claims, had reserved and paid out hundreds of thousands of dollars on routine premises liability claims. Left to their own devices, this claims team was causing the insured's premiums to increase annually and ultimately, many carriers would not even consider underwriting the risk due to the reported loss performance. RMC stepped in to work with the carrier to review all claims, force them to transfer risk to others where contracts were in place, and reduce claims payments to a reasonable level for each respective claim. Left unchecked claims adjusters were paying claims to close files without regard to the justification of such claims. RMC stepped in to manage the process, correct the carrier's activities, get some egregious claim payments removed from the insured's history, and assigned educated, dedicated claims teams to handle the insured going forward. This resulted in a loss reduction of more than 70% in 2 years.

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	Risk Management Consulting Audits Insurance Procurement Captive Feasibility D & O Liability Environmental Liability Risk Management Support Due Diligence Emergency Response Loss Control Claims Management
Risk Management Consulting Audits Insurance Procurement Captive Feasibility D & O Liability Environmental Liability Risk Management Support Due Diligence Emergency Response Loss Control Claims Management	Case Studies Risk Management Consulting A large North American real estate developer was worried about their insurance program/costs and whether their agent of 25+ years had the requisite skills to handle their current needs. Working in concert with the agent, we restructured the entire program — consolidated coverage/policies and eliminated unnecessary insurance placements. Risk financing costs were reduced by 60% in the first year alone. Coverage and limits were dramatically increased and administrative economies realized. As a result of that engagement, RMC became the focal point of their entire risk management strategy. This relationship has lasted, uninterrupted for nearly three decades. A large real estate and marina investment company with 100% catastrophic wind exposure was struggling with their insurance. The initial fractured structure included 26 policies, three brokers, four separate renewal dates, and insurance costs in excess of $6 Million dollars. The structure was inefficient and an administrative nightmare. The company was told that this was the only option for their unique exposure. RMC saw things differently. Having been in tune with the insurance market for over 25 years, RMC intuitively understood that a more concise and less expensive program was possible. Over the course of 12 months, RMC was able to consolidate the 26 property and casualty/liability policies into one master program. The insurance premium was reduced by nearly 50%, while doubling the wind and liability limits. The coverage was enhanced in nearly every term and condition INCLUDING the wind, flood, earthquake and all risk deductibles. A long standing real estate client of our firm strongly enforced the sound risk management and contractual procedures that we provide throughout their 100+ locations. After many years of proven risk management performance, carriers were seeing the loss performance go from limited to loss free, year after year. However, premiums appeared to reach a minimum threshold while still being extremely profitable for the carriers. RMC worked with the carrier to design a policy that returned premium to the insured each year for continued good loss performance. As a result, the insured has received a return premium of approximately 30% for 5 consecutive years. View Related Service Audit Existing Risk Management and Insurance Programs One of the world's largest hotel chains believed their insurance program to be competitively priced. For some reason, their franchise owners were not reaching the same conclusion. Untold opportunities were lost and the program served an unreasonably small segment of their potential market. We were retained by senior management to determine if the master program could be made more competitive. A study was commenced. Existing vendors attempted to "stonewall" the effort at nearly every opportunity. Not to be discouraged, we completed the assignment and issued a report systematically discrediting the placement strategies. The client requested help in implementing our recommendations. In the end, the hotelier saved $5+ million in the first year alone. A few months before a building collapse caused by the negligence of a contractor, we were consulted by the property owner to review and advise on coverage terms for a new acquisition. Critical "Insured" language was needed on their liability policies in order to capture full protection for a host of owner interests. The contractor responsible for the collapse had limited coverage as well as other claims that eroded what limit was available. The property owner's insurance was therefore pulled in to respond to a multi-million dollar claim, which was only covered because of the corrected insured language that we had implemented months before. View Related Service Insurance Procurement Assistance/Advice A well run, beautifully built group of hotels had an unexpectedly poor loss record. Predictably, they became demonized by the underwriting community. Their broker blamed their onerous renewal terms on market trends and the client's disastrous claims experience. The Board of Directors retained RMC to review the renewal negotiation and offer advice on the best means of improving the perception of the risk in the marketplace. At the same time, they asked us to review the broker's service team, the renewal specifications and the process used by the broker to seek renewal terms. Ultimately, the broker was replaced, new specifications drafted and an effort was made to explain why a single bad year does not refelect the character of the risk. The ensuing broker competition led to a premium saving of $7M. The next year an additional $2.5M was pared off of their costs. A large real estate investment firm which used a common practice of forming separate ownership entities for each asset had dozens of insurance policies with renewal dates which were spread sporadically throughout the year. Informed by their insurance brokerage team that maintaining separate policies was the correct way to properly insure each asset and ownership entity, the firm understandably became frustrated with the cost and administrative burden. RMC was consulted, and reconstructed the structure so that one master program existed for all. This provides equally broad coverage terms and limits to each asset and entity at a fraction of the cost. More than 40% was reduced from premium costs alone, saying nothing of the administrative cost savings related to renewing more than 2 dozen policies. It also provided a platform for growth without insurance being a burden. Competition, when used correctly, can produce cost effective and long standing results. A large global real estate equity investor with nearly $3B invested in Western Europe came to RMC for assistance with a global insurance solution. RMC orchestrated a broker/carrier competition between two of the largest brokerage firms in the world. The result was a global insurance program with extremely broad coverage for all and a 2-year savings of $4 Million dollars for the real estate equity investor. View Related Service Captive Feasibility Studies/Implementation A fledgling risk retention group was struggling to put together the necessary reinsurance required to properly service their customer base. As a consequence, they were not making much of an impact or writing much business despite the obvious shortcomings of the products offered by the commercial insurance world. Members of the Board retained one of the world's preeminent management consulting firms to assess their options. Sensing that they lacked the expertise to properly analyze the problem, the consulting firm collaborated with RMC; eventually turning over the entire assignment to RMC for implementation. In fairly short order the problems were resolved. Today, that client is the second largest risk retention group in the world. View Related Service Directors & Officers Liability/Executive Risk A large private equity firm with significant exposures outside the U.S. came to us with concerns about its global operations and the personal exposures of its directors and officers to fines and penalties imposed by the countries in which they resided. At the same time, the firm's independent directors expressed concern about the protection in light of two recent US court rulings and a hostile D&O environment. RMC was engaged to address and successfully expand their program, increase coverage terms and limits, properly implement placement of foreign D&O policies at extremely competitive rates, all while controlling premium increases. A publicly traded financial institution, active in the CMBS and CDO markets, faced a toxic Directors & Officers Liability market for its fall 2008 renewal. The incumbent lead carrier had formally advised our client that their renewal premium estimate would escalate by 104% and excess carriers were expected to follow suit. RMC responded with a renewal strategy that included an exhaustive market competition of all viable carriers, a preliminary dry run to prepare the CFO for questions from the underwriters, and a round table face-to-face discussion with 13 carriers and the CFO. By successfully differentiating this risk from others in its class, we not only avoided the 104% increase, but achieved a 14.5% reduction on the entire program, while maintaining or improving broad terms and conditions and adding a separate Side A policy for the benefit of the independent directors. View Related Service Environmental Liability RMC was retained by a large private equity firm to review its pollution insurance and related exposure and to provide advice on ways to improve protection for the firm. We designed a new multi-year Pollution Legal Liability insurance program that afforded extensive coverage not offered in the previous policy, including business interruption and mold and microbial matter cover. Less than one year after inception of broadened coverage, a pervasive mold condition was discovered at one of the firm's locations. The firm was facing a remediation and business interruption loss of approximately $2M which would not have been insured under the prior policy, but is under our new broadened, multi year policy. Many of our real estate clients had been forced to provide environmental indemnifications to their lenders and carry specific amounts as potential liabilities on their books. When we learned of this, we were able to place environmental liability policies (and portfolio policies) which put our clients in a position to be released from these environmental indemnities by getting lenders to accept the policies in lieu of the indemnities. View Related Service Risk Management Support A Shopping Mall owner/developer hired a general contractor to build a mall. The contract in place required the GC to carry routine types and levels of insurance and to provide a certificate of insurance adding the owner as additional insured. The contract requirements were missing some key issues that created gaps in the protection offered to the owner thereby giving the GC's insurance carrier an opening to reduce or deny coverage for a variety of claims that arose. The Owner's insurance policy ended up paying part of the losses that could have and should have been fully covered by the GC's policy IF the contract had included the proper requirements. Payment of such losses by the Owner's carrier caused the owner's premium to increase. We were able to implement sound contract and certificate of insurance compliance programs with the client and their legal teams which ultimately allowed claims to be covered where they should be, by the GC's policies. Once these programs were in place and carriers understood the proper transfer of risk existed, the Owner's premiums were reduced. View Related Service Due Diligence Many clients who include us in their due diligence team have been able to get a firm understanding of potential insurance coverage problems and/or cost implications as a result of our involvement during the due diligence process. Some examples include: Identified Life Safety System deficiencies by due diligence team members. System did not meet code and could impact cost of insurance and life safety issues as a result. Identifying this issue during due diligence allowed our client to negotiate with seller to adjust the selling price in order to help fund the improvement to the Life Safety System. Identified inaccurate insured values as presented by seller. This had a direct impact on the correct amount of insurance needed and therefore the ultimate cost. This allowed buyer to have solid grasp on insurance costs during due diligence as opposed to a surprise after the fact. Recognized a pattern in some historical property damage from seller's loss history which gave rise to further investigation and questions during due diligence. As a result a previously unrecognized potential construction defect was identified in advance and a repair fund established by seller at closing for potential future damages. Revised closed ended investment fund wording during due diligence and uncovered specific uninsured exposures in advance that allowed RMC to customize insurance policy language to pick up this previously uninsured exposure. Explained to clients in the course of due diligence on properties located in Europe and Asia the differences in both insurance and the insurance purchasing function in those venues compared to the US. This enabled clients to have clear direction on exposures, coverage issues and costs in advance of presenting final bids. Asked by a client who was considering purchasing a company to review that company's historic insurance program, RMC recognized that the viability of a captive established in the past was questionable moving forward. This allowed our client to require that the seller at closing either keep the captive funded and viable or place other insurance or indemnify and fund losses. Had this not been done, losses filed after closing could have been uninsured and the responsibility of the buyer. View Related Service Emergency Response and Business Continuity Planning Following the release of the 9/11 Commission's findings, RMC was tasked by a large real estate investor to assist with the development of an industry-leading initiative to improve and implement a higher level of emergency response procedures for high rise office buildings across the country. The procedures would meet and ultimately exceed jurisdictional requirements, including Local Law 26 in New York City prior to its inception. With our experience in high rise liability mitigation, we took part in several DHS Site Assessment visits. All experiences combined allowed us to set a standard of loss control and emergency response that had yet to be seen. This included getting local officials and services as participants, and RMC has received multiple letters of commendation as a result. These include recognition from San Francisco, Los Angeles, Arlington, VA, Chicago, IL and others. We received the State of Illinois Chairmen's Award from the Illinois Security Chief's Association, as well as the Liberty Mutual Gold Award for loss prevention standards of excellence. The overall emergency response procedures have become the benchmark for the insurance industry with respect to high rise office preparedness. Our clients benefit from this dramatically, including a positive impact to their insurance coverages and costs. RMC is also in the process of seeking Safety Act Certification. View Related Service Loss Control In an effort to make sure their high rise property management teams and tenants were properly prepared for emergencies, RMC was hired to audit, implement, and provide training for loss control and emergency preparedness in dozens of commercial properties. This included table top training sessions to prepare all. Two weeks following a specific training session regarding a fire in an underground parking garage, an actual incident occurred. Due to the training, the staff and tenants were prepared. The Fire Department was able to enter and address all rapidly and the fire was extinguished without damage to persons or the building. As a result, the Fire Department issued a letter of Commendation to the property, the owner, and RMC in recognition of the outcome being a product of the Loss Control and Emergency Response preparedness. View Related Service Claims Management Unbeknownst to the property owner, breaks in old, underground piping were slowly eroding soil from beneath a large parking lot and building. After days of heavy rains, the lot collapsed along with a corner of the building. A multi-million dollar loss resulted which was initially denied by the carrier. Due to some customized wording on the property insurance policy that we had previously added, we were able to convince the carrier to reverse the denial and pay the claim. An Insurance company, being too cavalier with payment of liability claims, had reserved and paid out hundreds of thousands of dollars on routine premises liability claims. Left to their own devices, this claims team was causing the insured's premiums to increase annually and ultimately, many carriers would not even consider underwriting the risk due to the reported loss performance. RMC stepped in to work with the carrier to review all claims, force them to transfer risk to others where contracts were in place, and reduce claims payments to a reasonable level for each respective claim. Left unchecked claims adjusters were paying claims to close files without regard to the justification of such claims. RMC stepped in to manage the process, correct the carrier's activities, get some egregious claim payments removed from the insured's history, and assigned educated, dedicated claims teams to handle the insured going forward. This resulted in a loss reduction of more than 70% in 2 years. View Related Service