Commercial Insurance Audit Case Studies by Industry
An international hotel and real estate operator came to us with an urgent problem at one of their New York City properties. The property had severe structural damage, and its potential collapse could endanger adjacent buildings. They needed to begin controlled demolition operations at once, but couldn’t arrange the necessary insurance coverage. Our team helped them obtain the necessary coverage while negotiating their General Contractor agreements and monitoring the adequacy of the insurance provided by their subcontractors. The building was safely demolished, with no damage to neighboring properties, and the project was a success.
In 2005, we were engaged to manage the insurance program for a $100 million environmental contractor. After our initial audit and review, we concluded that the company’s casualty and pollution programs did not adequately reflect the company’s operations. MB Davis redesigned the program and expanded the coverage, even including coverage for potential claims from previously uninsured, historic operations. We also saved the company about $600,000 per year on their insurance premium.
A family-owned chemical manufacturer was plagued by multiple claims from one of their signature products. After the company completed an extensive redesign of packaging and product warnings, our team helped them consolidate their insurance coverage and transition from a claims-made to an occurrence-based liability program. Over the next several years, we also helped the company reduce their liability premium by over 70 percent.
Shortly after Hurricane Katrina, we were approached by an investor group under contract to purchase a newly-constructed, beachfront residential development on the Mississippi Gulf Coast. The group wanted to take advantage of special tax credits established to encourage investment in the hurricane-ravaged area, and it was imperative that that coverage be in place to facilitate the closing. We were able to place comprehensive coverage at rates significantly below their original, budgeted estimates, thereby facilitating the deal and enabling the investors to improve their financing terms.
A family-owned real estate company owns several dozen gas stations, and was concerned about the adequacy of their Pollution Liability and Remediation Coverage. When we reviewed their insurance, our team discovered that it did not cover unknown, pre-existing conditions—and since gas stations have large underground storage tanks that may develop undetected leaks—we were concerned that they didn’t have adequate coverage. After thorough review of our client’s environmental reports, followed by extensive negotiations with prospective carriers, we replaced the policy with insurance that covered this previously uninsured exposure.
A New York City residential real estate owner had separate insurance policies for each of his 30 buildings, each renewing at different terms and varying times throughout the year. Administering this program was terribly time-consuming and distracting, and his coverage was inadequate. After undertaking the lengthy process of analyzing his loss and underwriting data, MB Davis managed the placement of a consolidated insurance program. The new program reduced our client’s premium by roughly 20 percent, and added important coverage such as higher umbrella limits and lead paint liability.
In mid-December 2006, a new client was referred to us by one of our long-term real estate clients. This new client was under contract to purchase an apartment complex, but their proposed insurance had fallen through and they had only two weeks to replace it before losing their $400,000 deposit. On top of that, the property was in a hurricane zone, and had aluminum wiring and frame construction. Fortunately, we crafted an economical insurance program on time, and helped our new client to save his deal.
A US-based organization overseeing cyber-security compliance processes for many global companies needed better management of the insurance coverage review process for hundreds of its international service providers. We were engaged to manage this part of their process. We’ve not only improved the quality of their oversight, but have helped companies around the world to reach our client’s insurance requirements.
A private equity client was negotiating the purchase of a $300 million manufacturer of a common electronic device. This device has a long lifespan, and sometimes contributed to very large insurance claims. Since the company’s insurance program had a large deductible, we were concerned that our client, the buyer, would be held responsible for claims arising from products manufactured before the acquisition. After collecting and analyzing claims and manufacturing data during our due diligence process, our team was able to support our client’s contract negotiations by obtaining a valuable indemnification from the seller. This indemnification saved our client millions of dollars in claims costs during the years following their acquisition. Since then, we’ve assisted our client with negotiating lower policy deductibles, and help them manage and reduce their claims.
A North American distribution and retail company with $600 million in sales had two separate insurance programs, one in the US and the other in Canada. Our examination concluded that program consolidation would provide cost and administrative advantages. We conducted a competitive marketing exercise with their two brokers, resulting in a combined program that increased the quality and scope of the client’s coverage. In addition, they fully complied with all state and provincial insurance requirements, and saved about $600,000 in annual premium.
Our client, an international chemical and plastics manufacturer, was purchasing a large plant in Canada for over $100 million. The seller was a Fortune 500 company with an internal risk-management and self-insurance program, and as negotiations continued, it became evident that there was a problem with plant water supply and fire protection. Potential insurers were reluctant to provide coverage, and the necessary improvements would cost millions of dollars. We eased the insurance companies’ concerns by helping our client develop a program to improve plant protection, and we safeguarded our client by supporting their negotiations with the seller about who would pay for the work. At the end of the process, the seller paid much of the cost of the upgrades, the insurance carriers were satisfied with the way our client was going to address the problem, and the purchase was successfully closed.