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   * Critical Risks
   * Risk Management
   * The Insurance Industry
   * Claims & The Law
   * Workers’ Comp Forum
   * Risk Insiders
   * Sector Focus
   * .
   * Risk Central
   * Power Broker
   * Risk Matrix
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OAKBRIDGE INSURANCE’S JOSEPH WILLIS FINDS OPPORTUNITY IN THE CONSTRUCTION
SECTOR’S CHALLENGES

“Relationships are certainly important, but how well you serve your customer and
help them solve their problems is how your level of success is defined.”
By: R&I Editorial Team | October 10, 2024
Topics: Come See the Stars! | Construction | Q&As | Rising Stars



Come see the Stars! As part of our ongoing coverage of the best brokers in the
commercial insurance space, Risk & Insurance®, with the sponsorship
of Philadelphia Insurance, is expanding its coverage of the Rising Stars, those
brokers who represent the next wave of insurance brokering talent.

Look for these expanded profiles on the Risk & Insurance website and in your
social media feeds throughout the year.

For this edition, we spoke with Joseph Willis, principal at Oakbridge Insurance
and a 2024 Construction Power Broker.

Risk & Insurance: In which commercial lines are your clients struggling to put
together adequate coverage? 



Joseph Willis: The property market continues to be a challenge given the
condition of the overall economy. Inflation, material cost and carrier
profitability play primary roles in the hard market, and we are seeing this
greatly impact carrier capacity.

Commercial auto also remains a hurdle for contractors with larger fleets,
partially due to the similar economic woes of the property markets. The big
question is, how do we deal with the potential for record-high settlements if we
find ourselves in an at-fault auto accident? With commercial fleets, this can be
especially troubling for business operators who know that having the company
name on the side of a truck means you have a target on your back. These cases
serve as a reminder of the importance of a comprehensive fleet safety and
management program, which can position business owners to build a defense. If
you can’t provide a defense, you have to settle.

R&I: On the claims side, what’s working well and what’s not? 

JW: Claims management can make or break the relationship with a client, since,
of course, this is the most basic function of the transaction they entered in
the first place.

Most commercial insurance buyers present similar basic requirements: appropriate
settlement amounts delivered in a timely manner. Easier said than done, given
the complexity many claims situations can evolve into.

We are finding that the key to a positive claims experience for our clients is
having a dedicated team of professionals that can consistently deliver on this
regardless of the situation. Having the right people with advanced knowledge and
diverse experience in the claims space is imperative.

R&I: Where do you see generative artificial intelligence making a difference in
your team’s work? 

JW: Being able to predictably model and make decisions based on historic trends
is huge in any business. Artificial intelligence is changing the way we approach
risk, giving us the ability to predict an outcome with more confidence.

AI is already playing a role in how carriers underwrite business, as well as
helping insurance buyers deal with their risk based on performance data. I see
the role of AI growing in our teams work as we continue to learn how to use it
to our clients advantage.

R&I: What advice would you give to a younger person that is seeking to break
into this industry? 

JW: The brokerage market is as tough to break into now as it has ever been, but
is equally rich with opportunity for those willing to take on the challenge. The
ever-expanding service capabilities of firms combined with mass consolidation in
the M&A market creates an environment of stiffening competition where earning
market share can be a hard-fought battle.

The simple key to success in this business is to have a well-defined and
repeatable process that delivers results for your clients. Relationships are
certainly important, but how well you serve your customer and help them solve
their problems is how your level of success is defined. &


The R&I Editorial Team can be reached at mediacontact@theinstitutes.org.





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ENERGY AND CYBER RISK

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Finding the talent, technology and reinsurance support to take advantage of them
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SPONSORED: AXA XL



MAKING THE CONNECTION: ARE YOU PREPARED FOR RISING PROPERTY AND EQUIPMENT
BREAKDOWN COSTS?

Property’s biggest risk factors can directly impact the price of equipment
repairs. Risk management and loss prevention start when insureds make the
connection with valuations and work with the right partner to mitigate their
potential impact.
By: AXA XL | October 1, 2024

The commercial property insurance market has had its ups and downs in recent
years. The good news is that property rates seem to have stabilized in the
second quarter of 2024, though businesses are still seeing single-digit
increases. It’s a reminder for businesses to keep an eye on their property
exposures, especially when it comes to the large equipment they use to keep
their operations running.

Equipment breakdown can lead to property damage, business interruption, and
additional expenses for repair or replacement. This can increase the overall
cost of property risks, as organizations need to account for the potential
consequences of equipment breakdown when assessing their property risk
management strategies.

Today’s business equipment is more high-tech and specialized than ever before,
making unforeseen breakdowns, malfunctions or damages a substantial risk, should
they occur. Even the most well-maintained piece of equipment can experience
mishaps and cause significant financial loss.

“The changing nature of property risks, especially with high-tech equipment in
distribution centers and electronic sorting equipment, is a significant factor
contributing to an increase in insured property losses,” said Michele Sansone,
CUO property, Americas, AXA XL.

“The equipment breakdown aspect is critical. If specialized machinery is the
only source and there is no backup, it creates significant exposures for the
business,” added Cheryl Geidel, vice president, equipment breakdown, AXA XL.

The value of complex equipment continues to climb alongside the cost of fixing
it, as more expensive replacement parts and specialized diagnostic technicians
contribute to an uptick in pricing. Coupled with the recent strain on property
insurance, this is one risk businesses can’t afford to overlook.

For those operating large machinery and other equipment that requires regular
maintenance, it is imperative to get ahead of potential breakdown and
disruption, and to make sure they have the right risk mitigation tools in place.


TWO KEY FACTORS IMPACTING PROPERTY RATES

Michele Sansone, CUO Property, Americas, AXA XL

The first piece of the equipment protection puzzle is the need to understand
exactly what is affecting property rates and, consequently, pricing.

Verisk’s 2024 Global Modeled Catastrophe Losses reported that the average annual
loss from global natural catastrophes has reached a new high of $151 billion. In
the past five years, the actual annual insured losses from natural catastrophes
averaged $106 billion, compared with less than $83 billion in the preceding
five-year period.

“The pricing in the catastrophe insurance market is highly dependent on the
specific peril being insured. With the increased frequency and severity of
catastrophic events, insurers are seeing a significant uptick in activity in
this segment,” said Sansone.

“As a result, pricing is being adjusted to account for the heightened risk
exposure. The specific rates will vary based on the particular catastrophe being
covered, such as hurricanes, wildfires or floods.”

That can place rates at the mercy of Mother Nature — a challenge that’s led some
insureds to take on their own risk.

“To control pricing, customers are increasingly retaining more risk through
captives or larger deductibles, removing exposure from the market,” Sansone
explained.

Supply chain disruption is another big factor: “Supply chain issues and long
lead times for components and equipment have created challenges, often extending
business interruption periods to 15 to 18 months while waiting for critical
parts to arrive,” Geidel said.

Supply chain delays aren’t the only things causing strife; the rising cost of
materials and labor do as well. These factors continue to impact property
insurance, driving up the frequency and cost of claims and drawing attention to
contingent business interruption risks.

“Insureds often don’t fully understand the origin of their equipment, products
or stock. We view this lack of information as a significant risk — one that must
be addressed,” Sansone said.


ACCURATE VALUATIONS ARE EVERYTHING

Cheryl Geidel, Vice President, Equipment Breakdown, AXA XL

Another element businesses have to understand is that accurate valuation of
property goes a long way in managing the cost of equipment breakdown. Even with
rates showing a slow decline, it’s essential to have accurate values for
property, including equipment value.

“Regardless of whether the rate is two cents or ten cents, the starting point —
the values — must be accurate. There seems to be a misplaced sense of relief in
the industry that as pricing declines, the valuation issue will resolve itself.
However, the fundamental importance of getting the values right remains
unchanged,” Sansone explained.

If a business and its equipment are underinsured due to an incorrect valuation,
the insurance payout may not cover the full cost of repair or replacement.

Further, because of today’s higher rebuilding, repair and replacement costs,
businesses must be particularly wary about their policy limits. A loss could end
up costing significantly more than anticipated, causing insureds to quickly
erode any sublimits in place.

“It’s a challenging discussion, especially as the market softens and the focus
on values diminishes,” said Sansone.

However, this is one area where all insureds can get ahead. Partnering with
insurance professionals will ensure the right questions are being asked and
accurate values are being reported. Risk managers, brokers, the account
executive and producer all have a role to play in helping the insured to
understand their exposures.

Valuating individual equipment can be tricky, noted Geidel, especially as more
technology is incorporated into the machinery being used.

Breakdowns or failures often involve individual pieces of equipment rather than
an entire building. Insurance partners that ask questions, review and compare
values year-over-year on equipment types and rely on risk engineering reports to
better understand the equipment being used are a boon to the underwriting
process.

“Values are the basis of everything an underwriter does, so focusing on values
should be the starting point of the process,” Geidel said.


AN EMPHASIS ON PROTECTING PROPERTY AND EQUIPMENT

Technology is enabling property owners to place a larger emphasis on protection.
The unpredictability of hurricanes, earthquakes, wildfires and other Nat CATs
can’t be controlled, but technology offers some control over their impact.

Advanced weather modeling, wildfire modeling, drone inspections and other
innovations help to predict and assess damages more quickly and accurately than
ever before.

Sansone also said that data-sharing can build resiliency into the market,
putting clients in an even better position should an incident arise.

“There’s an unfortunate perception that data is proprietary and sharing it could
undermine one’s competitive advantage. However,” she said, “this reluctance to
share data can hinder the industry as a whole.”

Collaboration and data-sharing among carriers could open the door for better
risk assessment and improved underwriting practices, in addition to resiliency.

“Transparency is a game changer in risk management. Sharing data can greatly
improve how organizations handle and reduce risks,” said Sansone.


PROPERTY RISK ENGINEERING AT ITS FINEST

Effective risk management makes clients better, which ultimately improves their
overall risk profile. At AXA XL, the team takes this philosophy and brings it
into everything it does. It’s not about a transaction; it’s about maintaining
relationships with customers in order to best protect them.

“When we commit to a piece of business, we aim to maintain that relationship.
Our focus is on risk improvement rather than just transactions so that we may
build lasting partnerships with our clients,” Sansone said.

AXA XL has done this by building a team of more than 400 risk engineers who work
closely with underwriting in order to provide the most accurate and detailed
insights about each client’s needs.

“Our underwriters rely on the data and insights that our property risk engineers
collect on site to price the risk we assume. But we also share the data they
collect with our clients to help them in their loss control efforts as well as
our own,” Geidel said.

“Our approach to underwriting and risk evaluation streamlines the claims process
in several ways. By engaging in bespoke underwriting and thoroughly assessing
each risk, we gain a deep understanding of the potential claims scenarios from
the outset,” Sansone added.

This comprehensive risk evaluation allows AXA XL to anticipate and prepare for
potential claims more effectively. As a result, when a claim does occur, the
team is well-equipped to handle it efficiently, because its process has
established a clear understanding of the underlying risk factors and policy
details.

 To learn more, visit:
https://axaxl.com/insurance/products/machinery-breakdown-insurance.




This article was produced by the R&I Brand Studio, a unit of the advertising
department of Risk & Insurance, in collaboration with AXA XL. The editorial
staff of Risk & Insurance had no role in its preparation.

AXA XL, the property & casualty and specialty risk division of AXA, provides
insurance and risk management products and services for mid-sized companies
through to large multinationals, and reinsurance solutions to insurance
companies globally. We partner with those who move the world forward. To learn
more, visit www.axaxl.com.







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