Mission impossible? Well, maybe not 

Insuring a single vacant property can have its challenges, but suppose a vacant parcel is part of a complex holding that includes occupied and foreclosed properties? Then suppose a client has many such holdings scattered across the country and needs coverage for the entire portfolio of disparate holdings?

That was the situation faced by Daniel Rossen, vice president of Burns & Wilcox Brokerage in Chicago, after he visited a midsize retail agent and talked about the brokerage's ability to put together large, complex master programs of insurance. Little did he know that the retail agent would come back a few weeks later with just such a challenge.

The agency's client is a financial services organization that was buying distressed assets from multiple banks and had to insure its investments. The purchase involved loans for commercial property worth hundreds of millions of dollars from banks across the country, and the client needed protection for the unpaid balances on each property still owned by the borrower and for the value of properties that had gone through foreclosure and were already owned by the client. The loan value and title ownership were both moving targets.

"Some of the loans are performing and some are not performing," said Rossen. "They are pretty much distressed assets and at any time, the owners could stop paying for the loan. We had to be prepared to backstop the whole process."

Beyond that, Rossen had no answers to traditional underwriting questions like claim history and how the property was being used. Adding to the difficulty, all properties needed to be insured against wind, earthquake and flood,the key tough property perils, no matter where they were located.

In some cases, usually where the loan was still being paid, the owner continued to insure the property, but when money got too tight or once foreclosure proceedings were initiated, the owner generally stopped paying premiums. No one knew which properties were still insured and which required forced placement.

What seemed at first like an impossible task became easier to manage once the right experts were brought in to create workable solutions. Burns & Wilcox custom-crafted the policy, coming up with a unique way to value actual loss for these properties that would keep the premium cost under control. It also built tracking and all kinds of controls into the master program, drawing on the expertise of the broker's underwriting, in-house claims and brokerage organizations, explained Rossen.

"The complexity was incredible and solution was cutting edge," said Rossen. "We were able to provide automatic coverage for any property in the portfolio, no matter what it was and where it was located, so there was no gap. And we indemnified the risk for the client without having them overpay for what they didn't use."

In the end, the financial services company was pleased with the structure of the policy, the agent looked incredibly good and Rossen is seeing additional opportunities from an agency that loves to provide high-level service and to handle very specialized needs. "That's how we work, too," said Rossen.

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