A policy binds in Brooklyn

A policy binds in Brooklyn

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Every time Adam Schnell crosses the Brooklyn Bridge, it’s a personal reminder of how he managed to help insure a piece of New York City’s rich history.

Ethos Specialty Insurance Services LLC, a New York-based managing general underwriter, in June bound a policy on the restoration process for the famed bridge, which connects lower Manhattan and Brooklyn.
“The submission hits my desk, and it says, ‘Restoration of the Brooklyn Bridge,’” recalls Schnell – who heads up Ethos’ New York Contractors MGU – in conversation at its midtown Manhattan offices. “It’s the most iconic structure in the world.” 
The world's first steel-wire suspension bridge, the Brooklyn Bridge opened in 1883. In 1964 it was designated a National Historic Landmark, and was designated a National Historic Civil Engineering Landmark by the American Society of Civil Engineers in 1972. It is also a New York City-designated landmark.
In July of last year, the Landmarks Preservation Commission approved renovation of the bridge’s suspension towers and approach ramps, with construction scheduled to begin in 2019. Last December, the federal government granted New York City $25 million in funding for a $337 million rehabilitation of the bridge approaches and the suspension towers.

Which is not to say that most carriers leapt at the chance to insure it.

Despite the project’s high profile, other major insurers quickly declined, says Schnell, and with decades of experience around the construction industry, he wasn’t altogether surprised. Only a limited number of carriers, he says, are apt to insure large construction projects; even fewer would wish to underwrite one as particularly well known as the Brooklyn Bridge.

“It’s a heavy exposure,” he explains, noting that, among other considerations, the labor laws around construction in New York allow for workers who become injured to sue both the owner and the general contractor.  

Additionally, for this project, Schnell knew the exposures were myriad. Scissor lifts, cherry pickers and scaffolds are involved. There are fall hazards, and danger to workers who don’t have the proper eyewear who could catch a piece of flying brick or dust. Traffic control is a major factor, with a steady stream of cars and trucks crossing the 1,595.5-foot, neo-Gothic span 24 hours a day, seven days a week.

Schnell, however, had a plan in mind for mitigating those risks – and it involved serious due diligence via a partnership with The Safety Group, a highly regarded New York-based firm specializing in occupational risk mitigation and compliance in the construction and energy industries.

The Group’s experts – who previously had not yet partnered with an insurer – would serve as Ethos’ eyes and ears on the job, providing daily reports, consistently spotting potential hazards and working with subcontractors to limit the project’s risk profile. Among them: safety specialist Michelle Kotsikonas, the firm’s executive director of construction services, whose oversight is well known in construction-safety circles.

“They take the construction business very seriously,” says Schnell, noting The Safety Group’s reputation in one of the toughest areas in the U.S. for managing building risks. “They’re extremely passionate about it. They’ll forego revenue to do the right thing.”

Meanwhile, when it came to acquiring the appropriate coverage limits, Ethos “can be creative and nimble on a project like this,” he notes. “We can access capacity both as an MGA and as an agent because we see an opportunity here.”

When asked to recall the moment he knew that Ethos had the project locked in, he smiles broadly.

“The broker called me on June 10, saying, ‘Bind it,’” says Schnell. The restoration project, which is scheduled to kick off before year’s end, is forecast to take between 32 and 36 months; the length of the policy is 42 months.

Work will be done on the approaches on each side of the bridge, and will be focused on restoring the structure’s ornate brickwork. The entire structure, Schnell notes, is granite – and the work involves an extensive re-mortaring process that includes bricks produced from the same Upstate New York mine that produced the original building stones.

Building a better mouse trap

Schnell, who previously served as Head of Primary Casualty nationwide for Aspen Insurance, joined the MGU space in 2012, overseeing and building WKFC’s Casualty and Professional lines programs. In 2017, he was recruited by the Ascot Group, where he became part of a start-up MGU platform which is now Ethos Specialty Insurance Services. As executive vice president of Casualty GL and Construction, he now builds Casualty GL programs – and sees firsthand how much exposure there is to be mitigated in Gotham’s numerous construction projects.

New York, he says, “is going through a major transformation right now. This is the most active construction boom I’ve seen in over 25 years. There’s such a high demand to build.” Schnell estimates that $70bn of work is being held up by city agencies looking to do proper due diligence – which isn’t the worst thing.

Opportunity, he says, shouldn’t come at the price of safety. On construction project, Schnell says, taking the proper steps to minimizing risk is paramount no matter what coverage limits can be achieved.

“All industries use insurance as a safety net,” he adds. “That doesn’t mean you can take risks where you shouldn’t. Often, it’s not the underwriter who failed. It’s the buyer.

“Those who are good risks will pay an appropriate amount of money for their exposure,” he adds. “The rest will be uninsurable.

“This is the new way of doing business,” he says. “We’re taking a class of business in great distress and providing a program that has a great suite of services to the buyer.” 

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