Farmington Hills, Mich. (November 8, 2022) – RB Jones, a leading Managing General Underwriter in specialty risk coverage solutions for brokers, agents and wholesalers, today announced the launch of its new professional liability division, RB Jones Professional.
RB Jones Professional will be led by Michael Muglia, who previously served as Burns & Wilcox National Underwriting Director, Professional Liability. In addition to Muglia, Tameka Livatino, Amber Browning, and Jonathan Lucken have also joined RB Jones. With the new title of Director, Muglia now reports to Mark Engel, Managing Director, RB Jones.
The team will immediately launch several programs including their flagship product ProConstruct, an exclusive program that provides professional liability coverage to a broad range of professionals within the construction lifecycle. Further expansion of professional products is planned for the coming months.
“We expect these programs to thrive by pairing Mike’s team of experienced underwriting specialists with the sophisticated underwriting systems currently in place at RB Jones,” said Engel. “Additionally, RB Jones distribution allows access to a wide range of business and will continue our track record of producing strong underwriting profit and long-term program success for brokers and clients.”
“We remain bullish on the opportunity for RB Jones to serve as a distinct destination for highly specialized capabilities and operate as a major growth driver for H.W. Kaufman Group,” said Jodie Kaufman Davis, Executive Vice President, H.W. Kaufman Group, parent company to RB Jones. “In 2022 alone, we rebranded Global Excess Partners to RB Jones Property, acquired the Smart Cargo portfolio from Corvus, and added highly technical energy and solar product solutions to further enhance the capabilities of RB Jones.”
Founded in 1905, RB Jones is a leading Managing General Underwriter providing specialty risk coverage solutions to brokers, agents, and wholesalers, including: Commercial Marine, Excess Energy, Commercial Property, Large Property Schedules, Middle Market Property, Flood, Professional Liability, Specialty General Liability, Commercial Umbrella/Excess Liability, and other unique products. More information can be found at www.rbjonesinsurance.com.
RB Jones is a member of H.W. Kaufman Group, which has over 60 offices across the United States, Canada, Europe, and South America and employs more than 2,000 professionals. More information can be found at www.hwkaufman.com.
October 11, 2022 –RB Jones, a leading Managing General Underwriter in specialty risk coverage solutions for brokers, agents, and wholesalers, today announced its new, exclusive Solar Commercial Insurance Program (SCIP).
Over the past decade, the solar energy market has experienced an average annual growth rate of 33 percent, according to the Solar Energy Industries Association. Declining costs, tax incentives and expanded storage capabilities have contributed to this increase in demand and usage.
“Partnering with a company that has renewable expertise for Commercial Solar opportunities allows RB Jones to support owners and operators of small to mid-sized commercial operations, such as schools, parking structures and boutique hotels,” said Brad Nehring, Director of Energy, RB Jones. “This clean energy solution also provides much-needed coverage options for developers, independent power producers and small utility companies.”
Coverage is offered at each stage of the renewable energy lifecycle, from site preparation and transportation, to installation, operation and decommission. Energy coverage options within the program include utility ground mount, rooftop commercial, community solar, carports, and Battery Energy Storage Systems (BESS) that are ancillary to a solar project. It can be tailored to individual projects as well as large scale portfolios and can be offered as a package or a standalone product. The coverage limits are up to $10 million for property and up to $5 million for umbrella.
“We continue to explore growth opportunities that further establish RB Jones’ capabilities and reputation as a preferred partner, especially those that bring relevant, impactful solutions,” said Mark Engel, Managing Director, RB Jones. “By pursuing this exclusive Commercial Solar program, we are able to underwrite and add another much-needed product to our growing portfolio of specialty insurance solutions.”
Farmington Hills, Mich. (Sept. 19, 2022) – RB Jones, a leader in providing specialty risk coverage solutions, today announced its Marine & Energy division acquired the Smart Cargo Insurance® business from Corvus Insurance, a specialty insurance MGA. This acquisition allows RB Jones to expand its comprehensive solutions for brokers, agents, and wholesale partners.
This Ocean Cargo product offers a custom solution for temperature sensitive cargo such as food and pharmaceuticals. As part of the transaction, RB Jones will have exclusive access to underwrite cargo insurance policies through Skyward Specialty Insurance Group Inc.TM, a specialty property and casualty insurance company that provides capacity to the Marine Cargo industry.
“RB Jones is pleased to add this new business to our portfolio of growing specialty products,” said Mark Engel, Managing Director, RB Jones. “Beyond deepening our capabilities within Ocean Cargo, the acquisition showcases our intention to expand RB Jones into a destination for highly specialized insurance solutions. This strategic acquisition increases RB Jones’ offerings and holistically enhances our expertise, operations and performance.”
This technology utilizes proprietary risk models built on a multitude of data points from cargo sensors to better inform underwriting, coverage, and rates. Additionally, the technology can be used to minimize or prevent cargo damage during transportation. The analysis and application of temperature stability data will assist RB Jones and its Marine Cargo clients in optimizing shipping methods and routes.
“Corvus has found an ideal buyer for our Smart Cargo Insurance® product line in RB Jones,” said Madhu Tadikonda, CEO of Corvus Insurance. “With a long history in marine insurance, we are confident their team will provide the support needed for our ocean cargo policyholders and underwriters to thrive.”
John Gambino, Underwriting Manager, Marine, RB Jones, leads the integration of the Corvus offering into the RB Jones portfolio alongside Engel. In addition, the company will welcome talent from Corvus to its Marine & Energy division as RB Jones associates. Zandra Brown joins as Head of Specialty Cargo and Kevin Kempf joins as Product Leader of Specialty Cargo.
“We welcome Zandra and Kevin to RB Jones and look forward to their work in launching this new product solution and business,” said Gambino. “Bringing in top talent and expanded product offerings is part of the company’s strategic plan to further grow the RB Jones brand.”
Both Brown and Kempf report to Gambino.
“Earlier this year, we rebranded Global Excess Partners as RB Jones Property, which was the first step in our long-term growth plan for the brand,” said Jodie Kaufman Davis, Executive Vice President, H.W. Kaufman Group, parent company to RB Jones. “We are continuing to pursue that path now with this business acquisition for our Marine & Energy division.”
About RB Jones
Founded in 1905, RB Jones is a leader in providing specialty risk coverage solutions to brokers, agents, and wholesalers, including: Commercial Marine, Excess Energy, Commercial Property, Large Property Schedules, Middle Market Property, Flood, Professional Liability, Specialty General Liability, Commercial Umbrella/Excess Liability, and other unique products. More information can be found at www.rbjonesinsurance.com.
RB Jones is a member of H.W. Kaufman Group, which has over 60 offices across the United States, Canada, Europe, and South America and employs more than 2,000 professionals. Founded in 1969 and headquartered in Metro Detroit, Michigan, H.W. Kaufman Group also includes: Burns & Wilcox, Burns & Wilcox Brokerage, Burns & Wilcox Canada, Atain Insurance Companies, Afirm, Stonemark, Minuteman Adjusters, Kaufman Institute, and Noremac Marketing Group. H.W. Kaufman Group International includes: H.W. Kaufman Group Europe, Chesterfield Group, Chesterfield LatAm, Lochain Patrick, Burns & Wilcox United Kingdom, Node International and Cranbrook Underwriting. More information can be found at www.hwkaufman.com.
About Corvus Insurance
Corvus Insurance is building a safer world through insurance products and digital tools that reduce risk, increase transparency, and improve resilience for policyholders and program partners. Our market-leading specialty insurance products are enabled by advanced data science and include Smart Cyber Insurance® and Smart Tech E+O™. Our digital platforms and tools enable efficient quoting and binding and proactive risk mitigation. Corvus Insurance offers insurance products in the US, Middle East, Europe, Canada, and Australia. Current insurance program partners include AXIS Capital, Crum & Forster, Hudson Insurance Group, certain underwriters at Lloyd’s of London, R&Q Accredited, SiriusPoint, and Skyward Specialty Insurance. Corvus Insurance, Corvus London Markets, and Corvus Germany are the marketing names used to refer to Corvus Insurance Agency, LLC; Corvus Agency Limited; and Corvus Underwriting GmbH. All entities are subsidiaries of Corvus Insurance Holdings, Inc. Corvus Insurance was founded in 2017 and is headquartered in Boston, Massachusetts with offices across the US, in the UK, and Germany. For more information, visit corvusinsurance.com.
About Skyward Specialty
Skyward Specialty is a rapidly growing specialty insurance company, delivering commercial property and casualty products and solutions on a non-admitted and admitted basis. The Company operates through eight underwriting divisions — Accident & Health, Captives, Global Property, Industry Solutions, Professional Lines, Programs, Surety and Transactional E&S.
Skyward Specialty’s subsidiary insurance companies consist of Houston Specialty Insurance Company, Imperium Insurance Company, Great Midwest Insurance Company, and Oklahoma Specialty Insurance Company. These insurance companies are rated A- (Excellent) by A.M. Best Company. For more information about Skyward Specialty, its people, and its products, please visit skywardinsurance.com.
Champions & Charities is our company’s signature philanthropic initiative to give back to the communities where we live and work.
The program champions causes important to our associates.
As part of Champions & Charities, RB Jones associates are provided paid volunteer time off to support nonprofit organizations close to their hearts. The company also makes monetary donations to various charities and matches employee donations during our annual Harvesting Hope Against Hunger campaign.
To date, Champions & Charities has supported dozens of non-profit organizations through associated-driven volunteering and fundraising, as well as company donations.
Harvesting Hope Against Hunger
Food banks around the world continue to experience an increase in demand.
Harvesting Hope Against Hunger is an associate-driven initiative to raise funds for hunger relief charities in their communities. Each policy bound or financed, claim closed, or job completed with a participating H.W. Kaufman Group company throughout the United States and Canada during the month of September results in a donation. Furthermore, all employee donations are matched dollar-for-dollar by Kaufman.
Associates are also encouraged to use their volunteer time off hours in September to support local food banks and distribution centers.
For September 2022, RB Jones will support City Harvest in N
Millions of honeybees tragically died on a hot airport tarmac in Atlanta after a series of mistakes that occurred while the bees were being shipped from California to Alaska. According to reports, the 800-pound shipment of bees could not be accommodated on its original Delta Air Lines flight due to an aircraft change that rerouted the bees to Atlanta, where a delayed connection meant the 200 crates of bees were left outdoors in the heat and removed from their coolers. While some of the bees were rescued by local beekeepers, most had already died when help arrived, the Atlanta Journal-Constitution reported.
On April 29, a spokesperson for Delta Air Lines told the Associated Press in a statement that the company had apologized to the beekeeper who sent the bees and took “immediate action” to prevent future incidents. The loss comes at a time when commercial pollination services have become more important amid a dwindling population of honeybees, TheNew York Times reported.
“It is quite tragic, in all honesty,” said Michael Dearness, Senior Underwriter, Freight Services Leader, Burns & Wilcox, Toronto, Ontario. “Shipment delays or an airline changing or re-routing a flight is something that I certainly do see happening more and more often, just given the state of the supply chain currently.”
These changes can have disastrous consequences, particularly when live animals are involved, said John Gambino, Cargo Manager, RB Jones, Marine & Energy, New York, New York. Anyone shipping animals or involved in their transit should have special expertise in this area and ensure they have the right insurance policies to address the risks.
“Animals are much more sensitive to transit than luggage, and they cannot communicate their discomfort,” he said. “It is really about picking the right shipping company and an insurance broker and carrier that have the expertise.”
Insurance can cover cargo damage, loss; may exclude live animals
Typically purchased by the owner of the shipment, Ocean Cargo Insurance can cover the loss or damage of cargo due to external forces such as fire, severe weather, water intrusion, or theft. When a cargo ship carrying luxury vehicles caught fire and sank in February, total damage to the vehicles was estimated at about $335 million, CNN reported in March.
Cargo theft in the U.S. hit a five-year high in 2020, Heavy Duty Trucking reported last April, and was also on the rise in Canada, with the Canadian Trucking Alliance estimating that total cargo theft losses cost about $5 billion per year, Global News reported in September of 2020.
“We have seen quite an uptick in theft and pilferage claims,” Dearness said. “We also see a lot of water damage, especially with ocean shipments, and also things like truck rollovers, train derailments, and rough handling.”
Ocean Cargo Insurance often covers the value of the cargo itself, the insurance and freight costs, and an additional 10% of the valuation for any unforeseen costs that may be incurred. “It is meant to put the cargo owner back into the position they were in prior to that loss taking place,” Dearness explained. “Absolutely any goods that are in transit on a truck, rail, plane or boat have some exposure to loss or damage, and all of that cargo has the ability to be insured on an Ocean Cargo Insurance policy.”
Live animals may be excluded from a standard Ocean Cargo Insurance policy, but an insurance broker specializing in cargo can tailor solutions for these situations, Dearness said. “In this specific [honeybee loss] situation, the bees were being transported as cargo and certainly could have been insured on an Ocean Cargo Insurance policy that would be taken out by the cargo owner themselves,” he said.
These owners should be especially careful when selecting a shipping provider, Gambino said. “When you are shipping animals, you have to take into consideration the temperature in the cargo hold, the humidity, and the level of carbon dioxide,” he said. “It takes an expert. The most important thing is you want your animal to arrive safely, so you should not be cutting corners. You want to interview the individuals in charge of it, and talk to those in logistics to make sure they know what they are talking about and are in compliance with international regulations on the shipment of animals.”
Shippers can face liability for damage to cargo
While Ocean Cargo Insurance is the most important policy for the owner of cargo to carry, those involved in the shipment process may need to purchase Cargo Liability Insurance or Errors and Omissions Insurance. These policies can cover damage or loss of cargo that is directly linked to a company’s shipping mistake. Liability for the honeybees killed due to shipping errors, for example, could fall back on the airline or any freight forwarder that may have been hired to manage the shipment.
“They certainly could have some liability,” Dearness said. “The Cargo Liability Insurance policy or Errors and Omissions Insurance policy would protect them in the event they are liable for the loss to the cargo or if they made an error. The Ocean Cargo Insurance protects the owner of the cargo, and the Cargo Liability Insurance is to cover the liability another company is accepting in either arranging or transporting the cargo.”
Problems outside of a transportation company’s control, such as delays at a port, would not typically be covered by these policies.
“If they cannot get into a port because the authorities will not let the ship in, that is not their fault and they just happen to be at the wrong place at the wrong time. If a vessel runs out of fuel, causing the electricity to go out, and it is because they did not stop for fuel when they could have, that is clearly an error,” Gambino explained.
Even if a shipping provider is liable for a loss of cargo, however, they may not pay for the full value of the goods. An airline, for example, may only cover cargo based on a dollar amount per pound, limiting the amount an owner could get back in the event of a loss.
“If you own something, you need to find out who is providing the all-risk first-party Ocean Cargo Insurance: the seller or the buyer,” Gambino said. “It is really never going to be the carrier. That is where they have to look at the terms of purchase. If it is silent on the insurance, you have to ask about it.”
Dearness agreed, explaining that the greatest potential for an uninsured loss in this industry is when a cargo owner assumes the shipping carrier is responsible for their goods in the event something goes wrong. “Far too often, we see situations where the cargo owner has an expectation that because they have given the goods to a reputable company, they will be made whole, when in fact that is not the case,” he said. “Too many individuals across all industries believe that.”
Delays can put cargo at greater risk for theft, other issues
Overall, shipping delays are currently “way up” and getting worse, Gambino pointed out. Today’s ongoing supply chain challenges are unlikely to resolve soon, with continued pandemic-related lockdowns in China, and issues related to the war in Ukraine, expected to disrupt global trade into the summer months, Bloomberg recently reported. New data shows that shipping delays between China and major ports in the U.S. and Europe have quadrupled since late March, CNN reported on May 6.
While Ocean Cargo Insurance policies often exclude lost revenue due to shipping delays, these hold-ups could put cargo at greater risk for theft and other perils that can be covered by insurance.
“Cargo at rest is cargo at risk,” Gambino emphasized. “As long as it is moving, chances are a thief cannot get their hands on it. If it is sitting in a yard for a month waiting for a truck to show up, there is much more time for something to happen.”
The same goes for temperature mistakes that may arise during a prolonged wait. In 2018, a study in the peer-reviewed journal Pharmacy and Therapeutics reported that billions of dollars of pharmaceutical products are stored improperly in shipment or delayed beyond their shelf life.
It is more important than ever for companies to stay closely attuned to the state of international politics and to consider diversifying their supply chain, Gambino noted. “As a shipper, you always need to follow international politics; something could be legal today and illegal tomorrow,” he said. “There is also always the logistics risk that goes along with the politics. If China shuts down because of COVID or there is a fire or earthquake, the importer may need to source their imports from more than one place. They should have a diversified supply chain.”
Understanding your purchase and shipping agreements, and where you stand with insurance, is “a good place to start,” Dearness added.
“There should be no issue as long as everybody understands [what is covered by insurance] and has the opportunity to seek an Ocean Cargo Insurance solution,” he said. “For any businesses that have not suffered losses previously and may not think they require insurance, even in the last two years or so there have been several instances in the news, including the Suez Canal situation, where your cargo can get damaged even if you do everything correctly. Goods in transit are susceptible to damage. A cargo owner can do everything right to protect themselves, but there is still risk and unfortunate things do happen in the shipping industry.”
Farmington Hills, Mich. (May 4, 2022) – H.W. Kaufman Group announced today the rebranding of its New York-based Global Excess Partners (GEP) as RB Jones Property, creating a new division within the RB Jones brand. GEP combines its Property Insurance business with RB Jones to expand its comprehensive solutions for brokers, agents, and wholesale partners.
“H.W. Kaufman Group is pleased to add RB Jones Property to our portfolio of growing specialty products given its unique ability to place challenging property risks,” said Alan Jay Kaufman, Chairman and CEO of H.W. Kaufman Group, parent company of RB Jones and Global Excess Partners. “This strategic transition not only expands RB Jones offerings, it also further strengthens GEP through the RB Jones brand and holistically enhances their expertise, operations, performance, and capabilities.”
H.W. Kaufman Group acquired Global Excess Partners in 2013 to deepen its property capacity and expertise. RB Jones will continue to service and focus on areas of growth such as Large Property Schedules, Middle Market Property, and Flood. Its Midtown Manhattan office remains key to the company’s market positioning and regional talent strategy.
“RB Jones has been in business for more than 115 years and is known as a staple in the specialty risk business,” said Brendan Cook, Vice President, Managing Director, Global Excess Partners. “Rebranding Global Excess Partners as RB Jones Property is an excellent opportunity to increase our market positioning as a preferred partner and to continue to bring our exclusive products to insurance brokers and agents.”
As part of the H.W. Kaufman Group family of companies, RB Jones has access to exclusive products through Atain Insurance Companies. Rated “A” (Excellent IX by A.M. Best), Atain is dedicated to serving niche programs and excess and surplus markets.
Brendan Cook, Vice President & Managing Director, and Carolyn Reiter, Associate Managing Director of GEP, will remain in their existing leadership roles in RB Jones heading the new Property Division.
About RB Jones
Founded in 1905, RB Jones is a leader in providing specialty risk coverage solutions to brokers, agents, and wholesalers, including: Commercial Marine, Excess Energy, Commercial Property, Large Property Schedules, Middle Market Property, Flood, Professional Liability, Specialty General Liability, Commercial Umbrella/Excess Liability, and other unique products. More information can be found at www.rbjonesinsurance.com.
RB Jones is a member of H.W. Kaufman Group, which has over 60 offices across the United States, Canada, Europe, and South America and employs more than 2,000 professionals. Founded in 1969 and headquartered in Metro Detroit, Michigan, H.W. Kaufman Group also includes: Burns & Wilcox, Burns & Wilcox Brokerage, Burns & Wilcox Canada, Atain Insurance Companies, Afirm, Stonemark, Minuteman Adjusters, and Kaufman Institute. H.W. Kaufman Group International includes: H.W. Kaufman Group Europe, Chesterfield Group, Chesterfield LatAm, Lochain Patrick, Burns & Wilcox United Kingdom, Node International and Cranbrook Underwriting. More information can be found at www.hwkaufman.com.
The shortage of marine construction workers is at a critical mass. And the impact of that shortage has far-reaching reverberations throughout the industry from dredging contractors to bridge builders to dock builders.
This labor shortage in the marine industry started a few years ago, long before the COVID-19 pandemic. As with many other industries, professionals retired without younger workers in place to fill those open positions. Whether because of the aging of Baby Boomers, the unwillingness of younger workers to enter the field, or both, there are similarities to the employee shortage experienced in marine construction with what we have seen in the manufacturing/CDC, truck driving, and related fields.
The demand for the expertise of marine construction workers of all levels is only expected to increase. Hurricanes Harvey, Ida, and Maria left significant damage to the infrastructure along the Gulf Coast and elsewhere as the storms headed inland. Also, the United States aging transportation infrastructure has risen to the forethought of many with the new bill recently passed by Congress which will also increase the need.
Industry requirements and risks present staffing challenges
A marine construction worker takes a certain individual, one that doesn’t mind working from a moving surface, one that doesn’t mind working over water, and one that doesn’t mind less than ideal working conditions on a stormy day. “Working on water is simply a scary proposition for some workers, especially if they are unable to swim or are uncomfortable around it,” said Tracy Markowski, Manager, Marine Hull & Liability for RB Jones.
Some other factors to consider which can make it hard to recruit:
One can’t just “walk away” from the jobsite if they are offshore
Inconsiderate recreational boaters that cause large wakes near a jobsite
Unsecure barges may bump into each other, possibly resulting in injuries
Labor intensive and dangerous work
Training can be expensive and time-consuming
Because of the very specialized nature of the marine construction job, specific training is required. It can take up to seven months to become a certified commercial diver or even longer to become an engineer involved in dredging operations plus the continuing education. A crane operator can take a two-day course but then will require another 3 to 6 months before becoming fully certified. Filling marine construction positions can require continuing education for trained employees or an investment by the employer to train new employees.
This is needed not just to help the employee complete the job, but to adhere to industry requirements to support safety initiatives for themselves and the workplace.
“From an insurance perspective, showing a comprehensive training and safety plan, which is proven effective, helps to control insurance costs,” Markowski said.
The impact of labor shortages risks the reputation of employers
Improper training and shortage of employees can all lead to reputational issues for marine construction companies. The inability to finish a job on time and the usual financial penalties for such delays can potentially lead to serious financial problems. These problems not only create a financial impact but an adverse reputation could have long-reaching effects. Future jobs may be lost plus the ability to attract quality employees also suffers.
Therefore, the need to find the properly trained employees that contribute to the company’s reputation in a positive way in part through training is critical.
Tips for dealing with labor shortages
We do not know what the future will hold for filling marine construction positions.
However, there are strategies that employers can implement to help them improve their chances of meeting client needs. The first is to broaden your definition of demographic hiring – this can include recruiting more minorities and women.
“Changing one’s mindset of the “typical marine construction worker” opens a much larger qualified pool of workers,” Markowski said.
She added that promoting a positive corporate culture keeps employees engaged. “Investing in state-of-the-art tools can make it clear to potential and current employees that the company looks to improve working conditions and cares about their wellbeing,” Markowski said.
These investments and efforts to engage and train employees may cost money. But they may also preserve your business’ reputation and revenue stream during trying times.
Water is necessary for all of us. Unfortunately, too much of it in the wrong places at the wrong times are one of the biggest reasons for financial and coverage challenges in the insurance market today.
Whether big (from a hurricane) or small (a leaky roof for a business or homeowner) we see more claims because of water issues than just about all other reasons combined. Water causes real damage to structures and costs the insurance industry upwards of $13 billion per year in the U.S. alone based on a Verisk Analytics’ IO unit study released in 2019.
When most commercial or residential property owners think about water-related insurance claims, the most common events that come to mind are catastrophic storms like hurricanes or floods, or even more mundane but common events like a pipe burst or a leaky plumbing valve.
Yet according to Brendan Cook, vice president and managing director of Global Excess Partners, some of the most expensive water-related claims can be prevented by scheduling inspections or simply paying attention to details.
The Big Freeze in Texas
The Freeze Event that cost Texas businesses, homeowners and insurers over $30 billion in February 2021 was more than just an ice storm. If it had occurred in other parts of the country, it likely would not have turned into such a serious event for so many people. One of the factors that caused such significant damage was how buildings in Texas had been constructed. Most structures weren’t built for ice and winter weather, which accelerated the freezing of pipes.
Texas’ legislative decision to not connect with other nationwide power grids played a significant role in that length of the ensuring power loss and hampered communications for many days exacerbating damage. ‘It made a difference,” Cook said. “Bordering or nearby states like Oklahoma and Kansas who do participate in national power grids experienced similar weather but not the power outages in Texas.”
Preparation is a key to prevent such significant outages and issues
This 2021 “freeze” event in Texas shows a significant lack of preparation from state and local governments and property owners throughout the state. As an example, the failure of commercial or residential building owners to leave a faucet open or drain the water from pipes caused freeze and ensuing pipe bursts and significant structural damage.
“The feeling was that If local government officials provided earlier warnings and advice to residents, individuals may have been able to better protect their property,” Cook said. Once the storm hit, travel on roadways became difficult if not impossible (due to the lack of machinery to clear the roads) and the failure of the state’s basic communications systems grid made it difficult to take the necessary prevention measures needed for a faster recovery.
Hindsight provides us the opportunity to review and improve our preparation and response to the next event. “We need to learn more our mistakes or the mistakes of others,” Cook said.
Insurance claims rise significantly following a catastrophic event
The insurance industry was inundated with claims from this event, which is typical after a catastrophic loss.
Loss adjustments are always a difficult and often complicated but in this instance the inspection process took weeks or even months due to the size of the event and the nature of the damage. Once power was restored, every pipe in every structure needed to be inspected to determine if there was damage that required repairs.
Proper maintenance and inspections help lessen your risk profile
The damage water can cause doesn’t just lurk behind the walls. If not properly maintained, a leaking roof can cause damage to foundations and roof support structures increasing the risk of a structure collapse. Untreated water damage can lead to mold, not just damaging the structure but threatening the health of residents and employees.
Whether it is a two-bedroom house in Texas or a 1 million square-foot commercial building in the Upper Midwest, property maintenance and regular inspections can help prevent some of these disasters from occurring, and many insurance claims from needing to be filed, Cook said. Commercial operations often have a risk manager who can help assess and strategize. Inspections of the roof, walls, foundation, attic, and any other place where issues are likely to occur should be regular, either by a professional, or someone with an idea of what to look for.
“Simply paying attention to your surroundings on a weekly basis can help,” Cook said. “Look for issues around your home or property.”
If homeowners or landlords pop their head into the attic now and then or pay close attention to any water marks on ceiling tiles, a significant crisis can be averted. “You don’t need to be a professional inspector to notice an issue that needs to be fixed.”
Other tips can reduce future issues as well
The bottom line is to prevent claims, property damage and potentially higher premiums or policy denials down the line. Water isn’t prejudiced. Building and homeowners need a plan that can be executed. According to Cook, these tips include :
Understanding the coverage you have, including the deductible. For example, some policies have sewer backup or mold coverage limits but its policyholders won’t even know.
Draining water out of pipes before the winter starts (check with your insurance advisor first)
Schedule regular inspections – with professionals if needed.
Business or building owners should consider working with a risk manager.
Pay attention to the little details – do your own checks monthly. Don’t ignore warning signs.
Having to file a claim is never a pleasant experience. There will always be some out-of-pocket expenses. But water is a different animal.
“Be smart, be prepared and your insurance carrier will thank you,” Cook said. And that’s good business for all parties.
The supply chain issue we are now facing is delaying the delivery of everything from manufactured goods to raw materials. This issue manifested itself in the early days of the COVID-19 pandemic when plants were shut down and workers were completely unavailable. As we near two full years into the pandemic, the impact of these supply chain issues on the Cargo Insurance industry remains multilayered and complex.
For well over a year now, demand for finished items has been very high while supply remains low because many have chosen not to return to work or would prefer to work in other industries. Other members of the labor force have decided to work for themselves from home. Meanwhile the collective retirement (or in some cases early retirement) of Baby Boomers has exacerbated the labor shortage.
We should know in the coming months whether these supply chain challenges will directly lead to higher premiums at renewal for Cargo and related policies, said RB Jones Marine Cargo Manager John Gambino. “In all likelihood, the answer is yes,” Gambino said. “Inflation alone has already had an impact and although there is some opening up of the supply chain, shortages will have an adverse impact on pricing until it returns to normal.”
Cargo policy prices were already rising before COVID
Supply chain issues at a macro level are not new to the Cargo industry. When Just in Time (JIT) manufacturing was introduced roughly three decades ago, the marine industry as a whole had to react to the needed increased speed of transits that reduced importer’s reliance on warehouse storage which in turn reduced their overall costs. Goods in transit are more difficult to steal than goods in storage so insurance rates dropped due to less risk.
Over time though, storage risks and values increased on Ocean Marine Underwriters’ books of business as the stock found its way back into those policies from the standard property markets.
Prior to the Covid-19 pandemic, policy rates were rising simply because many Marine portfolios were not profitable, Gambino said. “We saw double-digit premium increases for many clients because there was a need for the market to readjust to the trends of higher risks and an increase in claims.” He expects premiums will increase slightly in 2022 because of these trends and the pandemic’s influence.
Operating a business in COVID comes with new challenges
We have all had to learn to live with COVID both personally and professionally. Yet some of the outcomes from COVID were not anticipated: early retirements with a Stock Market run-up from April 2020 through November 2021; fits and spurts of lockdown activity globally and ships being stuck in port for weeks or even months at a time. Even the truck driver shortage which started long before the pandemic, has become worse, further stalling delivery times for products, components, and raw materials as the shipping and container delays grew exponentially.
“There are recent signs that these delays have gradually become more manageable but time will tell,” Gambino said, adding that these examples may signify a “new normal.”
Logistics and shipping company Maersk estimated in November that the supply chain issue will more noticeably ease in the third quarter of 2022 at the earliest. So, it may be some time before some of the adverse outcomes of the supply chain backlog will lessen.
Thefts, accidents, and higher prices
The supply chain delays have caused liability to increase within the Cargo industry, Gambino said. The extra time that containers have been sitting at ports while waiting for “final mile” trucks has led to an increase in theft of products and materials. “Product at rest is product at risk so we have seen thefts increase because of not just more accessibility for criminals but a higher demand and more overall volume of containers.”
Between having less available labor, and the delays that more often leave containers unattended after unloading, cargo theft is on the rise. For example, theft of PPE equipment early in the pandemic was common at shipyard and docks because these products were so high in demand. The pandemic has made other products even more valuable than ever, making them a bigger target for thieves.
Vessel size has increased over time and that too has led to more physical stress on the vessels and the containers they carry. So, the Marine Cargo industry has seen more accidents involving containers falling overboard and being lost at sea. The “Covid” effect has been seen with the MV Zim Kingston which lost over 100 shipping containers while anchoring in the Strait of Juan de Fuca near Alaska in October awaiting a berth at a West Coast port. It is believed that the lost cargo includes hazardous materials and could lead to environmental issues.
The increased cost of product and freight costs realized by the importer which leads to higher valuations and limits that insurance companies must provide on these products, Gambino said. “Large companies like Costco and Apple have been forced to buy more in bulk than ever before at higher prices,” he said. These prices are then passed down to consumers which in turn increases the valuation when there is a loss.”
What comes next
It is hard to know what the short or long-term effect will be on the Cargo industry, Gambino said. While the supply chain backlog is improving, a new variant of COVID and unnecessary lockdowns could set things back further. He believes that labor will continue to be a challenge, especially if the flow of new immigrants into the U.S. continues to slow down.
Meanwhile many Marine and Cargo portfolios are still not profitable and the rising tide of rates will affect all boats – or in this case clients.
“I expect we’ll see carriers push for higher rates to ensure a necessary return for investors, but those prices could get even higher if the supply chain is not “back to normal.”
Of course, we may never really know what the “new normal” for the global supply chain will be. So, until then expect the unexpected. “My advice is to stay in close touch with your insurance broker to review your limits, valuation, and market trends,” Gambino said. “With so many factors changing the market, you want to be prepared for anything.”
The impact that the move toward instituting Environmental, Social and Corporate Governance (ESG) policies has on energy companies is significant. This attention on socially responsible behavior is important to consider, but no industry bears a bigger brunt of the cost and publicity challenges as upstream oil and gas drillers, extractors, contractors, and the like.
These companies are not protesting the sustainability efforts, often driven by investors, activists and boardroom politics and discussions. Yet the extent that these companies are having to go through to be compliant is extensive to say the least, said RB Jones Marine Director of Energy, Brad Nehring. He feels it is one of the biggest trends impacting energy companies in today’s industry.
“Many energy companies are spending millions of dollars on new staff, programs, auditors, and lawyers,” Nehring said. “Most importantly they are having to spend on infrastructure projects as well.
Plus, there are other costs associated with ESG compliance, that can include research and development, creating new platforms and instituting new processes, Nehring adds.
“The closest comparison I can produce is when Sarbanes-Oxley was instituted in 2002 as a mandate of certain practices in financial record keeping and reporting for corporations,” Nehring said. “It also placed requirements on all U.S. public company boards of directors and management and public accounting firms.”
Let us look on the impact that ESG is having from an insurance standpoint.
Flaring gas is no longer viewed as an acceptable environmental practice
Take the example of flaring gas, or the controlled process of burning natural gas, which is seen by some ESG proponents as harmful to the environment. Energy producers routinely flare, or burn, natural gas during well or processing disruptions and when they lack access to pipelines. One of the solutions is to build more pipelines to prevent gases from escaping into the atmosphere as a way to better adhere to widely accepted environmental practices.
The pipelines of course are a capital expenditure, and a large one at that. But there is a hidden cost on the insurance side too.
“With more pipelines come the potential for more explosions,” Nehring said. “This is an exposure that is new for many upstream oil and gas companies.”
More exposure means higher costs and often together capacity. That is on top of the infrastructure costs, Nehring adds.
Extracting carbon out of the ground is a unique process
Actions to support ESG should be meaningful. But there is a difference between a company like Amazon committing to sustainable process compared with an upstream energy firm whose job revolves around extracting carbon out of the ground. And Nehring asks whether the impact really that different, with Amazon’s ubiquitous delivery vehicles emitting carbon dioxide around the world?
“So far, we have not seen underwriters using ESG as a requirement for policies but if there is enough social pressure, it is a possibility in the future,” he said. Energy companies are already becoming more diversified with efforts at supporting renewable technologies but the nature of the work means some of those efforts is limited. If costs rise too much, survival could be at stake.
Some carriers are setting boundaries
The pressure on energy firms to adhere to ESG guidelines or sustainability practices is increasing from within the insurance industry. Nehring points out that Lloyd’s, the world’s biggest insurance market, has bowed to pressure from environmental campaigners and set a market-wide policy to stop new insurance cover for coal, oil sands and Arctic energy projects by January 2022, and to pull out of the business altogether by 2030.
While these are still extreme examples that target a very specific type of company, it represents an initial salvo in the effort to force the hand of upstream energy extractors.
Fewer policy options is never good news for a business and given the current climate of ESG support (no pub intended), it is likely that the trend is not turning around anytime soon. Whether more carriers follow suit in 2022 is the question.
Other challenges remain
An additional challenge for energy companies is that governmental guidelines come and go depending on who is in power or how the political winds are blowing. “This makes it difficult to plan and budget for the long-term, much less to adhere to current laws,” Nehring said.
It is well known that GHG greenhouse gas is one of the more significant contributors to climate issues.
Methane, a potent greenhouse gas (GHG), has become a major focus of GHG reduction initiatives. Of the many sources of natural and anthropogenic methane, emissions from the oil and gas (O&G) industry have received special attention. In Canada for instance, commitments have been made to cut methane emissions from the O&G sector by 40-45 percent below 2012 levels by 2025, according to the Canadian government.
Natural gas (NG) consists primarily of methane and is invisible and odorless in most upstream settings. Within regulatory and operational contexts, releases of NG to the atmosphere are often classified as either vented or fugitive emissions. Vented emissions are intentional releases of hydrocarbons, typically in a controlled manner, resulting from normal process conditions. In contrast, fugitive emissions, also called ‘leaks’, are unintentional releases of hydrocarbons from sources that should not be emitting.
The bottom-line for energy companies
What we recommend at RB Jones is that oil and gas companies should prepare for more financial pain. Nehring said.
“Some of the actions in support of the ESG movement actually can have an adverse effect on the amount of exposure that these companies will face,” Nehring said. Plus, the threat of not taking steps may lead to brand burdens and PR issues that expose a negative light on the company, leading to additional exposures such as lawsuits, he added.
It will be an interesting line to straddle in the years ahead. So now is the time to prepare. Be sure to review your renewal options with your broker and ask which carriers may be sensitive to ESG trends. The more educated you are about market trends, the smarter decisions you will make, positioning you even further as a leader in the oil and gas field.