News from your Rating Organizations Mark Smith, CPCU El Cid Balitaan

News we’ll be discussing New Products ISO – Flood & Millennials AAIS – CannaBOP, Auto, & PPL Major Program Revisions: ISO – Management Protection & Personal Auto Regulatory Challenges Filings & ‘desk drawer’ rules Institutional knowledge Insurtech Blockchain Policy Automation

New Product: Flood 4.2 million homes ($1.1 trillion exposure) are at risk of hurricane storm surge flooding. Flood is most common and costly natural disaster 43% of homeowners believe they are covered Only 12% of homeowners have a flood policy Flood Insurance Gap represents $40B market

New Product: Flood NFIP – Federal Flood Program $250,000 for structures $100,000 for contents (purchased separately) No coverage for basements, crawlspaces, “walkouts” Limited coverage for mold No coverage for Additional Living Expense (ALE) Coverage for Increased Cost of Compliance Rates are not actuarially sound (i.e. subsidized)

New Product: Flood Stand alone single peril policy Broader, more flexible coverage than NFIP Higher coverage limits available Additional coverage options available Based on court tested ISO HO policy language Deductibles, valuations, terms all familiar

New Product: Flood Modeled actuarially sound loss costs (inland) Experience based loss costs (hurricanes) Numerous deductible options Newly introduced flood territories

New Product: CannaBOP Cannabis exposure is here! 64% Approval rating (Gallup Poll, October 2017) $10 billion in U.S. sales (2017); $20 billion by 2021 25,000+ cannabis businesses 200,000+ employees End of Prohibition? Cannabis + BOP = AAIS’s CannaBOP Answering the call for cannabis coverage in 2018 and the future Property Coverages – crime, theft, spoilage, fire, etc. Liability Coverage – products, premises, P&A, etc. Sorry, no samples

New Product: CannaBOP Cannabis + BOP = AAIS’s CannaBOP (18-0042) Built on existing AAIS California BOP Form, Manual, & Ratings Filed 4/20/18! Currently California only, but plans for expansion Click for more information on AAIS CannaBOP Target Insureds Dispensaries Small to Medium Sized Storage Facilities Private Labs Packaging Facilities Ancillary Business

New Product: Millennials Gen Y (1982-1997) 40% of US population Life decisions postponed Highly educated – tech savvy New modes of transportation LOVE social media

New Product: Millennials 1/3 want to customize coverage

New Product: Millennials 55% of renters do not have renters insurance Why?

New Product: Millennials 22% of millennials who don’t own/lease or drive, are interested in named non-owner coverage

New Product: Millennials Strategy for ISO product revisions: Personal Auto: Option for limited personal property coverage anywhere in the world Personal Auto & Homeowners: Named Non-owner Physical Damage Coverage Updated Renters Form (Q4 2018) Personal Inland Marine Option for personal property coverage anywhere in the world (Q4 2018) http://www.verisk.com/iso/isonet/new-iso-survey-results-on-millennials-and-insurance.html

New Product: Auto AAIS Personal Auto Introduced late 2016 Comprehensive forms solution with supporting rules manual Rollout status – approved in 44 states with a handful outstanding In Development Non-Standard Auto Comprehensive forms solution Commercial Auto Forms, Rules, and Loss Costs

New Product: PPL – Liability Only AAIS Personal & Premises Liability Fully developed program Forms, Rules, Rating Information BI & PD except for Products Completed Work Hazard Med Pay Fire Legal Liability Works with a CA FAIR Plan Dwelling Policy

Regulatory Challenges Increased scrutiny of filings Reversal of long held regulatory positions Re-emergence of the ‘desk drawer’ rule Loss of regulatory institutional knowledge

Insurtech Insurance + Technology = Insurtech Use of tech innovations to increase savings and efficiency from the old insurance model The future of insurance is here Blockchain, AI, gamification, IoT, automation, etc. Challenges and opportunities (ctrl+alt+del) AAIS’s Insurtech Solutions AAIS’s Stride Insurance Solutions Policy automation

Insurtech AAIS’s Stride Insurance Solutions Team that collaborates with members on their existing tech Team that delivers customized programs Takes advantage of emerging tech to enhance efficiency AAIS’s Policy Automation Livraria – product development & maintenance Kira – machine learning / AI AAIS clause library

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