Fine Art and Collectibles Insurance Insights and Risk Management Strategies with Ron Fiamma, President of Treadwell

In this episode of the Private Client Risk & Resilience podcast, host Kurt Thoennessen, a high net worth insurance specialist and CEO of RiskRevu, is joined by Ron Fiamma, President of Treadwell Fine Art, an insurance carrier specializing in high value fine art and collectibles insurance. The discussion dives deep into the world of high net worth insurance, exploring the risks, challenges, and opportunities associated with protecting valuable collections.

Summary: The episode begins with Ron Fiamma sharing his unconventional journey into the insurance industry, starting from his early career on Wall Street to his eventual transition into fine art and high value collectibles insurance. He highlights his experiences at AIG Private Client Group and the entrepreneurial spirit that led him to co-found Treadwell. Throughout the conversation, Ron emphasizes the importance of understanding and managing the unique risks associated with high value collections, from fine art to couture and collector automobiles.

The discussion covers a range of topics, including the critical role of proactive risk management, the challenges of aggregation in high-risk areas, and the development of specialized insurance products to meet the needs of affluent clients. Ron also shares insights into the vetting process for vendors and the importance of maintaining up-to-date inventory systems for valuable collections.

Highlights:

1. Ron Fiamma's Career Journey:
   • Started on Wall Street and transitioned to insurance.
   • Played a key role in AIG's Private Client Group and later founded Treadwell.
   • Emphasized the entrepreneurial spirit driving his career decisions.
2. Proactive Risk Management:
   • Importance of detailed information for underwriting high value collections.
   • Training brokers to gather comprehensive data about clients' collections.
   • Emphasizing the need for up-to-date inventory systems for clients.
3. Aggregation Challenges:
   • Impact of high-value aggregations in areas like South Florida and California.
   • Issues arising from clients' growing collections and increasing asset values.
   • Strategies to manage and mitigate aggregation risks in high-net-worth insurance.
4. Development of Specialized Products:
   • Launch of couture insurance for high-value fashion collections.
   • On-track motorsports insurance for clients with valuable car collections.
   • Importance of creativity and flexibility in developing new insurance products.
5. Vendor Vetting and Client Support:
   • Rigorous vetting process for vendors to ensure high standards.
   • Providing clients with trusted referrals for various services.
   • Importance of helping clients protect their valuable assets through expert advice.

Conclusion: Ron Fiamma's extensive experience and insights into the high-net-worth insurance space provided a wealth of knowledge for listeners. His emphasis on proactive risk management, innovative product development, and the importance of client relationships highlighted the complexities and opportunities within this niche market.

Thank You and Resources: A heartfelt thank you to Ron Fiamma for sharing his expertise and experiences. For more information about Treadwell Fine Art, visit Treadwell.co. Additional resources and vendor recommendations can be obtained by reaching out to Ron directly at rfiamma@treadwell.co.

Thank you for listening, and stay tuned for future episodes exploring new and innovative approaches to risk management for high-net-worth clients.

Chapters

• 2:26 Guest Introduction: Ron Fiamma's Career Journey
• 8:14 Entrepreneurial Spirit: Founding Treadwell Fine Art
• 11:49 Timing and Challenges: Starting a Business During the Pandemic
• 15:23 Proactive Risk Management: Importance and Strategies
• 19:51 Underwriting High-Value Collections: Key Considerations
• 24:57 Vendor Vetting: Ensuring Quality and Security
• 27:30 Aggregation Challenges in High-Risk Areas
• 32:09 Market Dynamics: Rising Values and Increased Aggregation
• 34:34 Innovative Product Development: Meeting Market Needs
• 39:48 Specialized Products: Couture and On-Track Insurance
• 42:14 Finding Solutions: Accommodating Client Needs
• 43:29 Conclusion and Key Takeaways
• 45:00 Contact Information and Resources

Transcript

Kurt Thoennessen: 0:02

There are more wealthy people today than ever before in the history of the world. The risks they are exposed to through the assets they acquire and their unique lifestyles are significant. The bigger the asset, the bigger the potential loss. The bigger the potential loss, the more complicated the mechanisms for protecting those assets becomes. This show seeks to uncover the risks that successful people face so we can provide some guidance towards minimizing, mitigating and transferring them. From Coverage contracts and carriers to client experience, technology and claims, we will cover it all. Whether you're an agent looking to hone your skills or someone with significant wealth to protect. I hope this show becomes a valuable resource you can come to rely on to help you protect yourself, your family, and your clients. Welcome to the private client risk and resilience podcast. My name is Kurt Thoennessen. My experience comes from being a broker in the high net worth space for the past 16 years, as well as a certified advisor of personal insurance and the CEO of risk review. Risk review is a software platform that provides a library of digital smart forms to help agents gather information from clients and prospects with modern tools. So we have a great guest on the show today. Ron Fiamma has been a major influencer in the fine art and high value collectibles risk management and insurance world for over two decades as the Global Head of private collections at AIG Private Client Group, and more recently, as the President of his own high value collections insurance, mga called Treadwell. Now I've seen Ron twice in the last two months, once at the Council for ensuring private clients conference, and once at the Art appraisers, Gala. Both excellent times very fun events. And great to see Ron in person. I've also seen Ron on LinkedIn, and many other events over the last couple months. So I know he's, he's very busy. And he's doing a lot of things with the business and with the industry in general. So I'm really grateful that he's carved out a little bit of time to talk to us a PCR our audience and share his experience with us. Welcome to the show, Ron, so glad to have you here.

Ron Fiamma: 2:27

Thank you, Kurt, I appreciate you having me on give me the opportunity. It's an honor, because I've seen a lot of the other guests you've had on the show. So I'm thrilled to be here to share my experience. Thank you.

Kurt Thoennessen: 2:37

No, it's my pleasure. And I was really excited for our talk today. You have a very impressive career. And I'd like to start by asking you to share a little bit about that with the audience here. What got How did you get into insurance? What did you do before insurance? What did you do at AIG and what got you to where you are today?

Ron Fiamma: 2:56

Sure. Probably most folks in the insurance professional or on the call, we'll agree that virtually none of us intend on going into insurance. Unless it's a family business. I think that's your situation. Correct. But I mean, with a lot of folks, it's kind of, we kind of find our way there by a Securitas route, which kind of was was the case with me. I actually started my career on Wall Street, started my career on the trading floor of the New York Stock Exchange. After that, I went to Merrill Lynch. And then my brother and I started our own Wall Street research firm. We were doing analysis of stock charts for some Wall Street firms. And then we began trading money for those firms. We did that for many years, but nine years, until the entire market crashed in 2000. And then, you know, most of our clients went away a lot of the money dried up. And our research was, was no longer required by law firms, because they're all taken over by big banks. So looking for new directions. I decided to just look around and a friend of mine was at AIG. And I was very interested in their financial institutions division on the commercial side, and I was hired as an underwriter for E and O and DNO for hedge funds, security broker dealers, Wealth Advisors, investment advisors, I knew the business I knew the industry, I just had to learn sort of the underwriting side of the insurance side. So it was a natural fit. And I really enjoyed myself there did that for about five years. And several of my colleagues moved from the financial institutions group to AIG Private Client Group, which was a relatively new division with an AIG at the time. And they're all excited about the growth prospects. There was a very entrepreneurial division of AIG. It was fun, it was growing. There's a lot of great people there. So they encouraged me to look and I finally walked, went over there and, you know, had several interviews, and I thought, Wow, this a great part of the business. I really would like to come over here. And ultimately, I sat down with the chief underwriting officer, who said to me, so you've met with a bunch of Folks here. And let me get this straight. You started your career on Wall Street, you spent almost 20 years there. I said, That's right. said you spent the last five years at AIG and commercial lines underwriting E and O and DNO for hedge funds and broker dealers. I said, That's right. And now you want to come in and take over the underwriting of the fine art book. I said, Absolutely. And she said, Okay, well, let's give it a shot. So, so that was sort of my started my career on the fine art personal line side in, in the Private Client Group. Historically, My academic background actually turns out was an art history, archaeology and art restoration. So I did my undergraduate degree in philosophy and art history. And then I did graduate work in Rome and Florence, Italy, for almost three years, studying archaeology, art, restoration and art history. So i Sir, I definitely had a firm background on the art side. And so that's kind of where it all came full circle. And, you know, when I spoke to the chief underwriting officer at Private Client Group taking over this role, you know, I really believed at that time that underwriting is very much a transferable skill. And you know, why I spent five years learning the underwriting side on the E and D and outside for financial lines, I think that the role of an underwriter is really in one sense, very simple, right, it's looking at a risk, it's assessing a risk, you know, understanding if it's a risk the firm wants to take on. And then once that decision is made, it's then pricing that risk. And so, you know, while the risks change, you know, from from Ianno DNO financial lines to paintings, jewelry and watches, I still think the fundamentals of understanding and assessing risk were the same, it was merely learning a new fact set about risk management, you know, potential claims. So, you know, I was hired, the rest is history. So, you know, had a great time there for almost 14 years overseeing that book, we built a great team, we built a great business, Private Client Group really grew to a prominent position in the high net worth ultra high net worth personal lines, world. And I did that until about 2020. In the end of 2020, myself and two colleagues decided that it was time for something new and so we left together, and we created Treadwell. In 2021, we aligned ourselves with applied underwriters, which is a large insurance company based in Omaha, Nebraska. And we created Treadwell, which was a monoline NGA, specifically focused on underwriting all manner of collections, everything from fine art, jewelry, wine, collector, automobiles, furniture, rugs, baseball cards. And it's almost hard to believe that we're in our fourth year now, it seems like a blink of an eye since we've begun, but here we are, four years later. And I know in a few minutes, we're going to get into some of the aspects of market market disruption and what's going on in our industry. We know it's a very, very difficult time right now. But I'd like to say I had a crystal ball and I saw it was coming up close. I did not, but our timing really couldn't have been better. I think that we really entered the marketplace in a very, very interesting and challenging time. And I like to think that we provide a great solution for some of these really, really challenging, challenging client clients.

Kurt Thoennessen: 8:15

Yeah, no, absolutely. So that's a that is a fascinating career track trajectory. Thanks for sharing that. And there's all kinds of little things that are built into that. I love the the entrepreneurial spirit that you had you built that company with your brother, Avalon, which, incidentally, when I first saw that on your LinkedIn, I was like, What is this and I looked it up online, I couldn't find anything. So then I was like, well, the guy's into collections. He's into art. He's, you know, so maybe they had like, a little like, you know, comic store. I thought it was comics, because that's the way my brain works. But obviously, that's not the case, research for Wall Street. So very, very cool. And then you joined AIG because of the entrepreneurial spirit that they that you saw there. So this entrepreneurship bug that you have is really followed you through your career. And now you're, you're doing it again, which is really cool. So real quick, cuz a lot in a name. And sometimes there's a story behind it. I don't know if there is, but is there a story behind Tredwell?

Ron Fiamma: 9:19

That's a great question. We get asked that pretty often. And we, when we started the company clearly within and one of the first orders of business was coming up with a name. And my colleague ran Silva has a house up in the Catskills. And so the three of us ran, Chris Walsh, who's our chief underwriting officer and myself went up there, spent a week up there, we really just literally showed up with a couple of cases of beer, some bottles of whiskey, some giant legal pads and sat around a table days on end writing down names and coming up with names and just sharing names. And you know, if you've ever done this, you can imagine it's quite a process. And so the names got pretty ridiculous to the point where we're looking at, you know, Chris's dog and rands dog, and suddenly he's gonna be The pepper Jamison or James Jamison pepper going on and on and you know we had we had about to be narrowed it down to about a dozen names. And then one day ran was driving around with his wife up in the Catskills. And they, they passed through a little town, which in the 19th century of an artist's community, and the name of the town was Treadwell. And she looked out the window knowing that we were agonizing over the name he said, you know, what, just call the company Treadwell. And then sure enough, you know, Ranchi back, and, and the name stuck, but we did a little research into it. And we actually liked the sound of it. And it's been really, really well received by the, by the industry. But you know, it has sort of some connotations about you know, our customers tread Well, you know, with their risk management. We also obviously did a lot of research to make sure that it wasn't, you know, an offensive word and a foreign language. And, you know, there were all sorts of copyright issues, but we eventually settled on it. And, and it's worked. So there's always a story behind that. Right. But, but there it is, that's the truth behind the story. Great

Kurt Thoennessen: 10:59

story. Good story. And I like the the whiskey and the beer, how that how you slid that in there as well. And the dog, pepper Jameson, it's interesting to see how people's minds work. That's excellent. So let's talk a little bit about timing, because you mentioned that the timing was the best. And that's kind of counterintuitive, a little bit in my mind, because you started what, at the end of the pandemic, or in the middle of the pandemic, because you were planning potentially during that time. And you're also in the middle of a hard market, or at the beginning of a hard market? And so, I guess what, what was the thought process there? And were you What were you thinking about those challenges? And if they would be challenges, or if they would be opportunities?

Ron Fiamma: 11:49

Um, you know, it's a great question. I think it was a little bit of both. I think there's no question that anytime you start a new venture, there's always uncertainties, and, you know, there's going to be challenges. But I believe that, you know, we know, we knew, based on what we had done at AIG for all those years, that the market, you know, could always use another, another set of, you know, great backgrounds with a lot of experience a lot of resources brought to the markets marketplace, from a specialist perspective. And, you know, one of the themes we'll touch on, I'm sure throughout the podcast is how, you know, this line of business is so unique, compared to really any other line of insurance, particularly if you're writing the personal lines world, not the least of which is that these objects are very, very personal to these clients. And so while yes, we all know, this, certainly a financial interest these clients have in their collections, whether they be art, jewelry, wind cars, whatever it might be, but there's also a tremendous person, the personal and emotional connection. And so, you know, I always like to say the last thing clients want from us is a check, right, because if they get a check from us, that means it's been a total loss, that means they no longer have the object. And that's clearly the last thing they want. So recognizing this tremendous personal attraction people have to these objects, you know, we felt that there was a need in the marketplace, for another carrier, that really brought a tremendous amount of experience, and industry contacts, and really ways to help these clients from a proactive risk management perspective, to protect these objects, and really bring the expertise that we had gained in many, many years of doing this at AIG to the marketplace, you know, on an independent basis that we weren't fettered, you know, we're unfettered from any other lines of business considerations. were purely writing the collections line and replacing 100% of our focus on risk management, loss prevention, coverage and claims settlement, you know, for for private collections. And so we thought there'd be an opportunity, we felt that by bringing new capacity to the marketplace, there'd be a demand included, that has proven to be correct. And so we launched, crossed our fingers. And here we are now, you know, almost four years later.

Kurt Thoennessen: 14:03

Yep. Now, that's very interesting. And yes. And I see it myself on the broker side of the business is there is a very significant need for new capacity in the marketplace, and continues to this day. And so I want to focus a little bit about on what you said, on proactive risk management, because I think that's a really key topic in today's market, the hard market where underwriters are asking more questions, you know, on the home side, which is a significant portion of the business is there's a lot of questions about the home, you know, what year was it built? What's the square footage is in our alarm system, what's the is there a generator, etc. And some of these homes can be $2 million, 5 million, 10 million, some 50 million and above that. But then you look at the collections that some of these folks have, they could be 200,000 in jewelry, or they could be a billion dollar art collection. And so when you talk about the question gins that you need to ask relative to a home, you know, where there's a lot. And versus a billion dollar art collection that may be scattered, you know, across the world across the country. You know, can you talk a little bit about the underwriting of significant collections and, and how important that is to your process and what that looks like with Treadwell.

Ron Fiamma: 15:23

You're so So going back to the my days at AIG, and for the entire time that I've been doing this, you know, many times I'm really stunned by sometimes when brokers come to us with information or sighs lack of information, I should say, when we know in fact, they've answered they've asked as you refer to so many questions about the home, one of the built, what's the construction type? What kind of roof today? And what kind of nails of strapping do they have on the roof? You know, elevation certs, and when mid certs and yet that they'll then they'll submit to us, you know, the multimillion dollar collection with very little information saying, you know, please produce a quote. And, you know, we're asking basic questions like, does the client have a safe? You know, or what is the last time the collection was appraised? And many times they're like, Well, you know, I don't know, we don't know that information. So as you suggest, sometimes the collection can be a big multiple, in tip value based compared to the home. And so should we be getting at least as much information if not more, based on the size of the risk? And so I think one of our, one of our goals and initiatives is to sort of train the brokerage community to say, look, you know, these are the questions we need to answer not because we want to bother you, but because these are the questions that allow us to make a better assessment of the risk, you know, more accurately assess the risk, and at the end of the day, perhaps give a more competitive rate, because we're more comfortable with the risk and the way it's cared for. You know, one of the things one of our one of our paradigms, you know, when underwriting this book of business, is to always make sure that first we're underwriting the client, long before we look at the collection and what they own. So we want to make sure that the client really is a true collector, right, because from our perspective, if the clients a true collector, there's a different standard of care. As I said, previously, we're fully aware of the fact that these objects have financial value, and the financial value typically goes higher. And this, you know, is becoming a bigger and bigger portion of wealthy clients, you know, wealth picture, right, the anecdotal evidence is showing that more wealthy clients are placing more of their assets into tangible objects like art, like jewelry, like watches. And so we recognize that however, you know, we believe that someone who really views themselves as a true collector, as a steward of these objects to be passed on, either through their heirs or to museums will have a higher standard of care. And so, you know, the more questions we ask about, you know, how do you collect? And you know, is the collection growing? And do you intend on donating things to Museum? Or do you intend on, you know, selling part of your collection throughout the tenure of the policy? That gives us a better idea of how to underwrite the risk and understanding? Is it moving between homes or that stat? Is it a static risk? Do they tend to loan things to museums, which, as we all know, can add to the provenance of a piece and potentially add to the value of a piece. And that's very important to some collectors, whereas other collectors prefer to be very, very private, and never loan their things out. And so by understanding each of these things, we get a better understanding of how the collection is managed. So you know, many of the questions we ask sort of surround that understanding of how the collections managed, and then what can we do based on our expertise, to help the client manage that collection even better, you know, one of the things that we find when we visit clients homes, is that, because they live with these things day in and day out, and year after year, many times they don't recognize things that our risk management will see, you know, in 30 seconds, right, for example, walking into a client's home, and seeing a million dollar painting hanging directly under an air conditioning duct, you know, on the ceiling. That's something that we, you know, we recognize immediately, whereas the client of lives that painting every day, wouldn't think twice about it, until we pointed it out and say, you know, what, this might might not be the best place for this piece, let's either remove it, or put some kind of a protective cover so that in case it does drip, we're not ruining the painting. And so, you know, it's viewing things from a collections perspective, collector perspective, versus a risk management perspective, that allows us to make suggestions to these clients that most of the time are taken to heart, because the clients again, want to protect these objects.

Kurt Thoennessen: 19:25

Yeah, well, I think that's a really important point is that you're you're looking to work with stewards, and actually true collectors. And so when you do make these suggestions, they take them to heart because it's a million dollar work of art, or it's a$20,000, whatever the value is, it's important to them. And so if they see the risks that you point out, they're going to take action, and they're going to make it a better risk for them, and they're going to make a better risk for the insurance company.

Ron Fiamma: 19:52

And one extreme example I want to spend you're gonna start to draw up to one extreme example comes to mind. And this is a study that we normally underwrite, but for this client we did it was a good client. And he collected gold bars gold bullion, which, you know, as long as we all know, is really simply a form of currency. And so, you know, for him it was, it was an inflation protector, but you know, he collected gold bullion, however, you know, he had them stacked in a pyramid in his living room. And, you know, I said, Look, I said, that's not necessarily the best place to be keeping them. I said, you know, can't you put them in a safety deposit box in a bank? And he said, Well, I like to look at them, and, you know, touch them and pet them and like, well, you know, maybe, can you just keep one in your house and put the rest of the bank and ultimately, we convinced him and he also, we put them all to the bank, he kept one of the gold bars. And we felt better about it. And I think he did at the end of the day as well. But sometimes they need a little bit of convincing and nudging to do the right thing.

Kurt Thoennessen: 20:44

I 100% agree, you know, people have something in their mind about the way that they want to present something or display something and, you know, if there's anything that tells them otherwise, that they're definitely going to be needed needed to be convinced. And to take it a little further in this underwriting because you know, when you have large collections, and maybe it's not a large collection, but maybe there's a move happening, and they put art into a storage facility, or, or there are multiple locations, and there's some in Florida, there's some in California, there's some in Texas, in New York, and it's all over the place, you have the experience, right, that you can take a look at those different locations, and decide what the risk management is for each location, and how to structure that risk management plan. And so I think one of the things we talked about was the vendor assessments that you do, and how important it is to really understand who your vendors are, can you talk a little bit about your vetting process that you take those through?

Ron Fiamma: 21:48

Yes, so we vet, you know, every vendor that we work with, and that will refer to clients. So on the art storage facility side, for example, we vetted virtually every storage facility in the United States, and many of them overseas as well, knowing that our clients do, in fact, move things overseas and store things around the world. And so, you know, we will visit these facilities, we will talk to the owners, we'll look at their procedures, understand what their staffs are, see where they're located. And then we have our own internal list of facilities that we recommend. And we recommend those facilities to our clients that we feel present the best risk management options for those clients. You know, on a further note, you know, that the whole storage facility issue is one that it's of huge importance to the insurance industry, both to awesome, the domestic side, but also to the reinsurance community, in Lloyds in Europe and Asia, because there are tremendous, tremendous aggregations at these fine art stores, facilities. You know, for a variety of reasons, there's a lot of clients out there, who are buying so much stuff that either don't have room for it in their homes, or they're simply buying something, perhaps as an investment piece, they may buy something, ship it to a storage facility, never see it. And then it sits there for 10 years until this time it's sold. And so the aggregations of these facilities are becoming very, very large. But more importantly, you know, some, frankly, do a better job than others. And the ones that do the best jobs are protecting the clients assets are the ones that we're going to refer our clients to. Similarly, on the vendor side, whether it's someone that does appraisals, or conservation, or transit, or shipping, or, you know, building crates for fine art, there's different degrees of skills, and we want to make sure that we understand the best of the best out there to refer our clients to. And so it's one less thing our clients have to worry about. We'd love them to come to us and say, Hey, I'm looking to, you know, move this painting, you know, to my secondary home in Florida, can you recommend someone to a build a crate for me and then be ship it down there for me. And then see also, you know, execute a condition report before it's packed. And after it's after it's taken out of the crate. And then we hung in my home in Florida. And absolutely we love to make those recommendations because we know that we're referring them to skilled people who have their best interests at heart. You know, very often we'll get clients who go out and with the best intentions, they'll buy something at auction, and then we'll go ahead and ship something, you know, inadequately they'll ship you know, a million dollar painting by UPS or Federal Express, you know, ups and Federal Express are great for shipping documents and other small objects, not necessarily the best solution for painting. And when the claim occurs, you know, it's unfortunate, because you know, Federal Express and UPS may clients sign waivers, where they're responsible for 60 cents a pound, which of course, at a million dollar painting is obviously a worthless, you know, a worthless piece of insurance. And so, you know, we try to get there ahead of the curve and say, Look, there's reason why Fine Arts shipping companies exist. Here's the way we want you to ship this painting. So any of the experts that we refer our clients to are pre vetted by us and if we don't know one, we will go out and find one for them and vet them first and then make the referral. Yeah,

Kurt Thoennessen: 24:57

that's excellent in for for a broker. who's dealing with you as a carrier that's extremely valuable, you know, because we want to be able to help our clients, just like I said at the beginning of the show, is I want to be able to help my clients protect their assets. And if I can give them a high quality referral recommendation to a vendor that we are confident in their abilities like that is that is extremely helpful, powerful for all parties involved. So to have that type of resource from the carrier side is extremely helpful. And now, it

Ron Fiamma: 25:29

actually just reminded me of one thing I started to run through again, but one of the things that is first and foremost, we first either meet a new client or workflow, the client is making sure that they have a some form of up to date inventory system, I can't tell you how many times we've run into clients. And it's usually after our claim occurs where we particularly that blanket coverage and as a flood or a fire, we asked, okay, let's start putting together what did you have, and they're uncertain, because they really didn't have any sort of inventory system, maybe it was a piece of loose leaf paper, with some things scribbled down. In some cases, it may be a shoebox filled with receipts, which clearly is, you know, not adequate. And so one of the first orders of business we have with clients is making sure they have an inventory system. Some are very simple, some can be an Excel spreadsheet, some can be more sophisticated, like a cloud based system, you can look up on your phone, and see where each object is in every room, any home that you have. But whatever it might be simple or complex. Every client, including everybody on this call who's listening to this podcast, probably should have some sort of inventory system, you know, kept in a in an offsite, like a safety deposit box or on the cloud, to make sure that when the event eventually does happen, that it's very, very easily retrievable. Yeah, I

Kurt Thoennessen: 26:47

agree. And I, it's a great point, I want to go back to a word that you said a couple of times in the last couple minutes, aggregation. And he said that some of these storage facilities have a large amount of aggregation, a large amount of artwork, clients and collectors are buying art at such a rapid pace that they are putting this art into storage facilities. How is aggregation affecting your business as a carrier and a provider of capacity? Has it presented an opportunity in today's market with the hard market in places like Florida and California, Malibu, Palm Beach, those types of areas? And what does that look like?

Ron Fiamma: 27:30

So it's a great question. I think, as we all know, aggregation across the board is a huge issue in our world for a variety of reasons. The first reason is that, you know, many of our clients are a large percentage of our clients tend to live in the same sort of areas. A lot of our clients are in South Florida, a lot of our clients are in California, a lot of our clients from the Upper East Side of New York City. And so just by virtue of the fact that we have many clients with a lot of TV, in assets living in the same places that presents a problem. From a reinsurance perspective, they face the same issues, right. So, you know, we're all aware that there are reinsurance sort of behind the scenes. Some brokers are more familiar with the reinsurance landscape than others. But briefly, right, I buy reinsurance on my book, just like, you know, clients buy insurance on their home to reinsure my risk. And so, you know, everything revolves around how much capacity is available in a particular area. And as we all know, the current situation in particularly in Southern California, and in particular, towns like Malibu like Montecito, like Beverly Hills, like certain parts of Los Angeles, there are so many large risks contained in a in a particularly defined area, that, at some point, there's virtually no capacity left, right, you perversely cannot write any more risks, or even add to new risks. I mean, one of the newest phenomenons that I'm seeing now is certain carriers, and there's no particular carrier that I'm thinking about. But certain carriers are putting a cap on clients allowing to add to their current collections policy, so it's capped at whatever it is today, if you're gonna go out and buy a new painting tomorrow, unfortunately, it cannot be added to the policy. That presents a huge problem, because traditionally, these policies provide newly acquired coverage, where a client can go out and buy something safe in the knowledge that the minute they pay for it, no, it's automatically covered under the policy. If they're being told now that because of aggregation issues, that's no longer the case. Well, now what do they do? So, so that's presenting its own set of issues, you know, from our perspective, because we are new to the market with so called Fresh capacity. We don't necessarily have similar aggregation issues as some of the other markets and some of our competitors now that might be now might not be the case. Two or three or four years from now will be grown to the point where perhaps we start having aggregation issues as well. But you know, from our perspective, it still does mean however, we need to be very, very diligent about how we underwrite. And so, you know, while you know, in the case of a large client, the client may live in a in a $20 million home and have $100 million collection in that home. But you know, six of his neighbors may have the exact same situation. So on the same street, you may have other $20 million homes and each one of those clients is $100 million collection, and of one insurance company ensures all those risks will suddenly you have a gigantic aggregation. So whether it's a windstorm coming through, or a wildfire or an earthquake, that risk is magnified. It's it's no longer that single risk of the company has been concerned about. It's the aggregation of those risks. So I think that more and more due to the fact that these objects are getting more expensive home values are going up, and the aggregations are becoming tighter and tighter. That's why this issue is becoming presented to this industry. And it's becoming more and more visible and causing the issues that we're seeing now. Yeah,

Kurt Thoennessen: 30:57

absolutely. And while you're talking about that, I had a couple of accent examples where the carrier told me that client bought a new car down in Florida, and we couldn't add the car because of the the flood zone that the car was in. And so there was some aggregation issues there, there was also a piece of jewelry that couldn't be added because of the aggregation issues. But it's definitely an issue. And, you know, one of the things I think we're we're starting to see is we're we're peeling off those one offs that are above the aggregation of the existing carrier and having to place it with a different insurance company to provide a solution for, for the, for the client. And the other thing that you mentioned there that was very interesting was that things have become more expensive. And that's so not only our clients buying things, but everything that they have already that they already own, has become more expensive over the last three to four years, it's become significantly more expensive. And they're also still buying things. So that aggregation is just compounded because of the market dynamics that we're seeing. So it is a very interesting market space that we're in.

Ron Fiamma: 32:09

And that's what makes it you know, that's what makes this this line of business interesting. And these policies, because, you know, perhaps unlike other lines of business that we all are involved with, you know, we grow, we grow two ways, right? We grow, obviously, by acquiring new business. But the organic growth is tremendous, because as you said, clients are not only buying new things that most of our clients buy and hold, not only buying new things, but the value of those things, you know, is going up. And you know, from my perspective, unless there's some sort of a massive economic event with the s&p 500, drops 50% I don't see the the the market for valuables, whether it's art, wine, jewelry, cars, or anything else going down in a significant way. And so these values will only continue to increase. And therefore the values of the policies go up, even if the clients not buying anything, right. And so that's where the value of appraisals comes in. And making sure that clients are are insured the value, you know, obviously, at the end of the day, the the the intent of these policies is to make the client whole at the time of loss. So what does that mean, right? So if the client has a million dollar painting, at the time of loss, we want to make sure that they are made whole, whether it's a total loss, or if there's partial damage, it gets restored. Now the penny loses 20% of its value, we want to make sure that put back in economic position, the day they were that the loss occurred. And so making sure that clients are insured to value that their collections are appraised on a regular basis of the values do reflect current market values is crucial. But that's where you get into these aggregation issues as these values continue to go higher. Yeah,

Kurt Thoennessen: 33:41

absolutely. Great point. And, you know, there's one other thing that I wanted to chat with you about, because, you know, with your entrepreneurial background, you ran your global head of AIG private collections for 18 years. So you've gone through a lot of different things in these different roles. And one of the things is, you're continuing to grow the things I you know, you were part of the growth of AIG from, you know, the start up to over a billion and then $2 billion in written premium, and more, and new products is a big part of that. And so I was just wonder if you could talk a little bit about your philosophy for identifying, you know, new opportunities to bring new products to the market and what that process looks like, because there's a lot of risk in bringing new products to the market. And there's there could be a lot of reward to, but it's, I thought it was an interesting thing to hear from you.

Ron Fiamma: 34:34

That's a great point. And one of the fun parts about this line of business is that it does lead itself to innovation, and flexibility and creativity. And because of that, you know, as a sidebar, it also is a great line of business to use for business development, and marketing, right, because it does have an appeal. You know, nobody wants to go to a cocktail party and chat about life insurance, right or even homeowners insurance. But if I know that someone's an antique violin collection and collect her and I walk up to them to discuss their antique violin collection. They'll they'll talk for hours. But every violin they've ever owned, you know, and sold and collected and the values. And so it's a very easy jump to make about risk management and protection. But you know, through the years, we've come up with a number of novel product ideas that addressed client needs, because they just weren't being addressed in the marketplace. But we recognized the importance to these clients. One story that we tell, you know, we've told many times, is, you know, my colleague was inspecting a client's home in Greenwich, Connecticut, and our husband was on the road traveling and they were walking around the home and it was both their second marriages so they both came to the cage with the situation with their own sort of sets of things. But she said it was my clients, my husband's art collection, and you know, living or walked in the garage. And so this is my husband's car collection, went down the cellar and said, I this is my husband's wine collection, and she said, Well, let me show you my collection. So they walked into the bedroom and she pushed the literally push a secret button and the walls open. And behind the wall, she had a collection of 150 or mez, Birkin bags. And, you know, my colleague, rands jaw dropped open and looked and said, Wow, this is pretty impressive. You know? He said, Let me ask you a question. You know, there's an orange bag on the second shelf and the bottom over there in the corner. If you walked in here one day and looked into it, how long would it take you to recognize that that one was missing? You sort of snap your fingers and said immediately, she said, This is my collection. I look at it every day. And I would know even if it was turned slightly, I would know that someone had been in here. So that sort of sparked the conversation like, wow, there must be a lot of collectors like this, perhaps not this magnitude, but to collect these objects. And as we all know, you know, a 6050 $30,000 Birkin bag is not covered properly under contents of a homeowner's policy. So where's it covered, right. And so we did a lot of research in the entire couture field, not just about handbags, but what about, you know, custom couture one off gowns, you know, very expensive Chanel ready to wear accessories, shoes, bags, belts. And so after doing a lot of research, we found there's a tremendous need. There's a lot of collectors, this is their passion, this is what they collect. And so we rolled out a product specifically for, you know, handbags and couture. Because we recognize that these were things were more or less improperly being, you know, covered by the contents of a homeowner's policy. But after the claim occurs, you recognize or they're not going to reimburse you for partial loss for partial damage, they're certainly not going to reimburse you for diminution in value. And so that led to the creation of a separate standalone right couture product, which to this day, we continue to write and it's been well received by the marketplace. Now, nobody's going to get wealthy just writing couture coverage, right. But we know that if a client collects couture, clearly, they collect other things as well, most likely jewelry and art, you know, probably wine and other things. So it's a great lead line, right to get in the door to a collector. You know, similarly the years ago, we rolled out program for on track motorsports activity, mostly for individuals who have you know, valuable cars, they want to take them on track, they won't understand how to drive them. They'll go on with an instructor to really, you know, let the car stretch his legs. But we found that most of the products that were available in the marketplace at the time, offered about $100,000 in coverage, maybe $150,000 in coverage, for which you know, our clients are taking you know, $15 million vintage Ferraris was inadequate. And so again, we did a bunch of research, we talked to our clients, we understood what the risks were, we really came to the conclusion that virtually any car out there, no matter what the value was, could be restored for about a million dollars or less, despite the value of the car. And so we decided to roll out a product offering up to a million dollars in coverage per occurrence for approved, you know, on track motorsports activity. And again, very well received great lead line, not something we want to do on a monoline basis, right just writing that because it's not, it's not going to be, you know, a huge growth area. However, you know, if a client is taking their cars, if that's their hobby, taking cars on track, they most likely are a candidate who owns other objects. And so I think those are two good examples of rolling out a product where there was a need in the marketplace using the collections line to be flexible and creative. And then, you know, presenting it to the marketplace, you know, on the couture product. It was funny because you know at that time, like everyone else, you know, in the industry, I had been interviewed countless times in the insurance press and Wall Street Journal and Forbes and fortune. But when I finally narrowed that interview in Vogue magazine, I knew that's when I made it. I knew my career was taking off when we discussed the couture product in Vogue magazine and Women's Wear Daily. But it was a great success and we launched it during New York Fashion Week. And it was it was really a great testament to the the ability to be flexible with the collections line.

Kurt Thoennessen: 39:49

Yeah, absolutely. And like you said, it really allows you to extend your creativity to the work that you do. And you identify a need you identify a gap in in the marketplace, something that's not being offered, and you just you create this new thing, and then it's well received. And yes, you're not going to get rich off of couture insurance or on track insurance. But like you said, it's a lead line, if they're doing that they have other collections. Most assuredly. And if you do, so, in the case of the on track insurance, you're doing it kind of as an accommodation, you know, for certain clients, you know, where you're a valuable client to us, you do this extra hobby, we created a product just for you. So that there creates a bond between you the carrier, the broker and the client, right there, because you're giving them something they cannot get anywhere else. So I think it's it just really takes the the experience of purchasing insurance managing your your insurance relationships to a whole new level, it's really exactly

Ron Fiamma: 40:55

I think, what's important about that, Kurt, is that as we all know, all of us who work in this high net worth personal risk insurance marketplace, right, these clients can be very demanding. That could be you know, very eccentric, in many cases, but most of the usually used to getting what they want, right, they usually are not used to hearing No. And so you know, one of our one of our watch words is really, we really do make an effort to try to find a way to get to yes. You know, I think too many companies out there these days are just quick to say, No, we can't do it, no, are are aggregated. No, we don't like to read whatever it might be. And we understand that look at full part of the insurance underwriting process. But we believe, especially on the collection side, because these objects are so personal to these clients, because they mean so much to them, because they may have spent your entire life 40 years building a burgundy collection, you know, in our wine cellar, that we want to try to find a way to accommodate them, like you said, using that word as a great as a great word, right to accommodate these clients. Because we know it's important to them, right? We know they want these things protected. And as long as we can surround the product, with a great risk management protocol, that's going to help them protect what they own while insuring it at the same time, then we're gonna find a way to get the Yes, and I think that's really an important thing, when it comes to very demanding clients who you want to win over right, by coming up with solutions that that make them happy.

Kurt Thoennessen: 42:14

Absolutely. Ron, this conversation has been excellent on so many levels, you know, for the young person who might be thinking about getting into the private client space, you know, seeing someone such as yourself, start out on Wall Street, and then jump over to the insurance and then jump over to the private client space. And then create such an amazing career out of it is just inspiring. And I would encourage those folks who are thinking about getting into the private client space, if they're in college, or after college to do so. And start by looking at the collection space, because it's a very interesting and fun space to be in. And, and then we talked about so many things from, you know, aggregation to reinsurance and new product developments. There's, it's just, it's a really fascinating conversation that we've just had, and I know our audience really appreciated it. So thank you so much for sharing that. And, you know, as we wrap up here, obviously, I want people who on this call who are listening to be able to reach out to you and to connect. And, and and do business with you, if that's what they need. What is the best way for them to do that going forward? And how can they contact you if if they have a question?

Ron Fiamma: 43:30

Sure. Thank you, Kurt. And just one quick point I want to make is that while some of the examples we give, you know, involve tremendous collections have big values, because they're spectacular stories. People love to hear those stories. That's not all we do, right? We're happy to look at small collections, right? You know, half $1,000,000.02 and 1000 hours and jewelry, you know, 50,000 Our Watch collection, we're open for business across the board. So please, by all means, we'd love to speak with you and help you with your needs. We know that it's a challenging market out there. But you know, our our website is www dot Tredwell, t r e a d w e ll.co. It's not.com. It's dot co. So long story behind that. And my email address is my name, our Fiama RFI a mma@treadwell.co. And please, we're happy to answer any questions. And most importantly, we're happy to refer any of our export referrals to any broker out there. Whether you do business with us or not, if you have a need for anything in the industry, one of your clients from an appraiser to a shipper to a conservation expert. By all means reach out, we're happy to share our expert vendor list with you. But I want to thank you, Kurt for the opportunity. It's it's been great. It's been fun. And hopefully some of what we said today. assist your your listening audience in navigating this. This increasingly difficult High Net Worth collection space. And we'd love to hear from you with any of your questions, thanks again to Kurt.

Kurt Thoennessen: 45:01

No, thank you. Thank you very much. This was excellent. As you said, I enjoyed it. And I learned a lot as well. So I know other people did this. This was fabulous. Thanks again. And to the private client risk and resilience audience, thank you for listening. Thank you for supporting the show and keeping us going. It's your energy and enthusiasm that keeps me passionate about this project. And I appreciate it. And I want to encourage you to listen to our next episode, I'm going to be talking with a firm that is taking risk management for ultra high net worth families into the world of games. So it's going to be very interesting. Don't miss it. It's coming up in a few weeks. So thanks again, everybody. Make sure you stay safe out there and I look forward to seeing you soon take care.

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