June 11, 2013 by Brynna Leslie
The word on the street is Brooke Hunter has edge. The 45-year-old insurance broker has carved out a reputation as a knowledgeable advocate for venture capitalists, young startups and likeminded entrepreneurs. Technology excites, rather than scares her, and after more than 20 years acquiring expertise in contracts, acquisitions and D&O liability across a number of industries, her six-year-old Toronto firm, Hunters International Insurance, has become a go-to brokerage for people moving at the rapid pace of cutting edge business.
“As a startup herself, Brooke’s got something to prove as she builds her own franchise,” says Scott Pelton, a venture capitalist who invests in early-stage technology companies. “Some other firms are great and have great reputations, but I always find entrepreneurs like Brooke and her team work a little harder than the big firms. They’re hungry, they respond quickly and they’re willing to take risks. Frankly, Brooke’s a kindred spirit for venture capitalists.”
Not by accident, either. From the moment Hunter opened the doors to her firm in 2005, she knew precisely where she would focus her networking skills and bring her expertise to bear.
“My background was in D&O liability, and my professional expertise allowed me to have high-level conversations with clients on this subject. I really knew it and I had enough confidence in my expertise to talk about it to anybody in any industry. But while I was talking D&O, I wanted to talk to the same people in the same breath about private client insurance. So when I started thinking more carefully about who I wanted to target, I realized it was people like me—entrepreneurs.”
Hunter’s research led her to the realization that most entrepreneurs in the early 2000s were in the technology sector—not just information technology, but biotech and cleantech or green technology. She then started networking to determine which prospects were attracting savvy investors.
“It’s all a matter of networking—networking like stink,” says Hunter with a laugh. She even admits to tapping the network at her kids’ daycare (Hunter has two daughters, age two and five). “I started rubbing elbows with venture capitalists, the guys that are putting out money and betting that one in ten companies they invest in goes big.”
One of the defining characteristics of the technology sector is that it permeates every industry. It wasn’t long before pounding the pavement with edgy tech entrepreneurs opened up a wealth of business for Hunters International Insurance in other sectors.
“From a business development point of view it’s good to give yourself some focus,” says Hunter. “But while tech is one of our practice areas for business development, through referral and networking and best practice, we have ended up with everything from large manufacturing accounts and food processing firms to financial institutions and specialty contractors.”
Hard-Wired for a Career
Hunter’s networking skills have been honed through years of working her way up from the bottom rung, while taking assignments that helped her develop expertise in the details of contract language. She began in the industry in the early ’80s, when she took on a summer job doing “high-level reception work” at her father, Bryce Hunter’s brokerage. (Bryce is the current chair of Hunters International Insurance.) As a fifth-generation insurance broker, much of her knowledge of the insurance world is “genetically-wired.” But Hunter was also keen to forge her own path in the industry.
“In the early ’90s, the economy in Ontario was so bad that I joined the masses of people who went to British Columbia to find work,” says Hunter. “Thanks to some pull by my father, I started out as an assistant to the file room clerk at Jardines (now Jardine Lloyd Thompson, JLT).”
Hunter quickly worked her way through the ranks and jumped at an opportunity to work for Jardines in Sydney and Hong Kong two years later as account executive specializing in construction.
“Those opportunities are so few and far between that I had to do it,” she says. “Having that exposure early on taught me so much about the commonalities and differences internationally in insurance and in the corporate world. And it took away any fear I may have had to work with clients operating in different jurisdictions. I can pick up the phone and call France one day and South America the next. It doesn’t faze me in the least.”
In 1994, Hunter shifted to the Vancouver offices of another large brokerage, Sedgwick (later acquired by Marsh) where she made a bold move: “I took a demotion, on purpose, because I wanted to get some exposure to larger accounts.”
It may have seemed risky at the time, but Hunter has never regretted the decision. Specializing in construction and mining, she earned her stripes in the professional and D&O liability space before working her way up the ranks to become a full account executive. It wasn’t until 1997 that she came back to the family fold, returning to Toronto to join her father’s firm, Hunter Rowell. The company merged with another company a year later to become HKMB.
In the final two years at HKMB, before starting her own firm, Hunter was running the company.
“At the time, there were about 185 people working there,” says Hunter. “I’d study the list every day to remember everybody’s names. It was hard, but I really think that the acknowledgment of each individual when you see them in the elevator is a fantastic way to keep the glue together.”
Hunter has earned accolades from clients for her level of attention to detail, and not just because she’s great at putting a face to a name.
“Many of my clients, which included the Royal Bank of Canada and the Treasury Board and dozens of other companies that are among the largest in Canada, required special insurance contracts before we could conduct IT on their premises,” says Tim Stanley, founder of the IT consulting firm Broadsheet Data, which was acquired by NEXJay Systems in November.
“Whenever we would win a project, we would often have to get our policies turned around very quickly in order to start working on the client site. We demanded strong subject domain expertise in technology and someone who could anticipate the types of detail we would need inside our policies. Brooke and her team were very quick to respond.”
“You have to dig really deep into these. If you stay on the surface too much, it’s not going to cut it. Whenever you’re dealing with financial institutions or complex technology companies, there has to be some studying and deep understanding of the issues.”
Hunter’s quick response has a lot to do with studiousness. She reluctantly admits to keeping study notes from client contracts and policy wordings handy in her desk drawer.
“You have to dig really deep into these,” says Hunter. “If you stay on the surface too much, it’s not going to cut it. Whenever you’re dealing with financial institutions or complex technology companies, there has to be some studying and deep understanding of the issues. And you have to keep on top of it. There is something new every day.”
Having a broker do this kind of due diligence is invaluable for any client, but especially those in the technology sector, says Phil Baker, executive vice president of underwriting at Creechurch International Underwriters Ltd.
“There are a lot of claims in this space,” says Baker. “Nobody ever thinks they’re going to see that claim, and it may come from where you least expect it when you least expect it.
“And with the technology, it changes so fast that, even as underwriters, it can be very difficult for us to keep up with all the changes. We work hard to do that, educating ourselves on new types of risks and working really closely with our brokers and our clients to understand their specific exposures.”
What, When, How Much
Baker says professional liability is one of the main areas where IT consulting firms can get into hot water, specifically due to the often short-term nature of their contracts and the sensitive data with which they often come into contact.
“We always ask clients ‘What’s the worst thing that can happen if you make a mistake?’ ” says Baker.
Most clients of software companies, IT consultants, network providers or hardware manufacturers in the tech sector require contractors to hold significant errors and omissions (E&O) liability. A full package will often include network security coverage, unintentional copyright infringement and, more recently, cyber liability, which includes data breach coverage.
“It’s not just a mistake or human error by the client that may cause a financial loss to his client and make him liable,” explains Baker. “For example, any breach of the company’s network that causes them to release information of their clients to a third party, or anything that causes interruption to the client’s business. Maybe the IT consultant is a hosting facility and they release info accidentally, or the network goes down. If you’re a company that relies on using cloud services to do business, you have to shut everything down.”
Cyber liability coverage doesn’t necessarily require litigation or threat of litigation to kick in. More often, it covers the cost of notifying people that a data breach has taken place or any kind of business interruption that has occurred as a result of the breach.
As for when the breach or software error occurs? Baker says brokers should be advising clients who offer consulting or short-term IT solutions that they need to hold onto their insurance policies even after the contract is done.
“Most lawsuits, if they’re going to happen, happen after the completion of the contract,” says Baker. He adds that the value of a good broker is they will help clients to get the right kind of insurance, the right amount of insurance for the right time period.
“A lot of large companies have a standard contractual requirement that consultants have $10 million of liability coverage, for example,” says Baker. “But if the contract is only worth $100,000, it may not be worth it to pay the thousands of dollars in premium associated with that. A good broker, like Brooke, who has been working in this space, like us, since the mid-‘90s, can help clients go through those contracts and negotiate something more reasonable.”
“Ultimately, you want to make sure there are no surprises,” says Hunter. “In the technology space you are going to have something completely different hitting you every day.”
Hunter’s proven ability to burrow deep into contracts and shift gears quickly is beneficial to her non-tech clients, too.
“The big thing for any company right now is this whole issue of cloud computing and co-location (co-los),” says Hunter. “But if you’re not asking the right questions, you might not discover that the client is using co-los or the cloud or both because they may not even realize it themselves. And if you don’t understand it, it will be very difficult to manage business interruption coverages, not to mention coverage for their data.”
Def. Patent Trolls
Companies that make money by suing companies for patent infringement on behalf of other companies. “IBM has about 5-6,000 patents per year,” says venture capitalist Scott Pelton. “Chances are that everyone is infringing on everyone else’s intellectual property daily, but the boundaries aren’t always clear in information technology.” The insurance industry doesn’t offer standardized liability coverage to protect against patent trolls, but there are select companies that offer patent infringement policies. “There’s not a big market for it at the moment in Canada,” says Phil Baker at Creechurch.
Copyright 2013 Rogers Publishing Ltd. This article first appeared in the February 2013 edition of Canadian Insurance Top Broker magazine.
This story was originally published by Canadian Insurance Top Broker.