Page 1 Recording of this session via any media type is strictly prohibited. Page 1 International Programs – Beyond the Hype

Page 2 Recording of this session via any media type is strictly prohibited. Bruce Wineman Sr. Managing Director Aon Global Client Network Audrey Rudberg Insurance Manager Cargill Inc. Richard Friesenhahn Executive Vice President Head of Specialty Casualty, US and Canada AIG Property Casualty Mike Reeves Executive Vice President – Global Markets Crawford & Co.

Page 3 Recording of this session via any media type is strictly prohibited. What to Expect After attending this session you should be able to better understand: Factors that impact international insurance program performance from Fiscal, Statutory and Operational perspectives Potential impact of poorly designed risk finance programs Best Practices to employ in designing, implementing and managing international insurance programs

Page 4 Recording of this session via any media type is strictly prohibited. Agenda  Introduction  Program Performance – the Other Half  7 Dimensions of a Successful International Program  What Can Go Wrong?  Best Practices

Page 5 Recording of this session via any media type is strictly prohibited. Constraints Market – Product Availability Cost Considerations Market Evolution Customs / Practice / Knowledge Change Legal Finance Tax Compliance Human Resources Operational Response Indemnity Fiscal  Tax  Payment Statutory  Admitted  Non-Admitted  Compulsory Program Performance – the Other Half

Page 6 Recording of this session via any media type is strictly prohibited. 7 Dimensions of Successful Program Design Based on cross-border business flows and processes Address critical issues - contractual obligations, interdependence and contingent exposures Comprehensive, including coverage as required, available and appropriate to address exposure across multiple lines/policies Options factor in contractual obligations, regulatory requirements, permissibility of admitted /non-admitted insurance, compulsory coverage, and tax. Balance corporate objectives, risk characteristics and appetite, compliance, market offerings insurer relationships and available solutions. Information on risk-related events: Local policy/exposure data, events, changes in industry, business environment, regulatory, legislative and other Designed for efficiency in program cost, execution and administration Mirrors company’s underlying operating structure Tailored to minimize coverage overlaps/ensure program responsiveness and compliance where possible, Clarity on response of multiple policies

Page 7 Recording of this session via any media type is strictly prohibited. What Can Go Wrong?

Page 8 Recording of this session via any media type is strictly prohibited. WAREHOUSE FIRE IN FRANCE Non-Admitted not permissible in France No Local Policy issued First Party Damages in excess of $50M – PD & BI Issue: Program Structure

Page 9 Recording of this session via any media type is strictly prohibited. Compulsory Insurance Compulsory Insurance =Those lines of insurance that are required by law for companies operating in a particular territory – typically Automobile Third Party Liability, Work Injury and some forms of Professional Liability. Trend towards compulsory requirements for other lines, such as Environmental and D&O, in certain countries.

Page 10 Recording of this session via any media type is strictly prohibited. Admitted Insurance Risk based in Country A Policy issued by Insurer licensed or registered in Country A Risk based in Country A Policy issued by Insurer NOT licensed or registered in Country A = Admitted = Non-Admitted “In over 85% of countries non-admitted cover is prohibited or restricted”

Page 11 Recording of this session via any media type is strictly prohibited. Claims Payments & Tax Considerations Foreign Subsidiary ("FS") Capitalization (If P only insures Financial Interest) Parent Entity ("P") Income or Other Tax? Non-Admitted Loss Proceeds Income Tax? Loss proceeds (collected by P on behalf of FS) Frictional Cost Foreign Subsidiary (“FS")

Page 12 Recording of this session via any media type is strictly prohibited. Program Design Tool Explores recommended approach for multinational program, considering local regulations, tax, coverage and claims issues. Provides risk managers with comprehensive/holistic view of variables impacting their decision to insure their companies’ risk exposures locally or globally. Illustrates how particular exposures, business strategies and risk sensitivities impact a multinational’s program structure. Available at:

Page 13 Recording of this session via any media type is strictly prohibited. Sample Country Review Workbook

Page 14 Recording of this session via any media type is strictly prohibited. WAREHOUSE FIRE IN FRANCE Non-Admitted not permissible in France Local policy issued under Primary Liability program with limits at US$1M Third Party Property damages over US$6M Issue: Coverage

Page 15 Recording of this session via any media type is strictly prohibited. WAREHOUSE FIRE IN FRANCE Operation had expanded rapidly. Error is calculating exposure based on incorrect exchange rate. Values reported at US$9M actually over $90M Issue: Communications

Page 16 Recording of this session via any media type is strictly prohibited. INSURANCE PREMIUM TAX Global company technically headquartered in Switzerland for tax purposes, but majority of operations in the US. Liability policy issued by global insurer at direction of US Risk Management with Master policy issued in Switzerland and local policy issued in US. Premiums paid by Swiss management company. Issue: Compliance

Page 17 Recording of this session via any media type is strictly prohibited. Tax Audits 17

Page 18 Recording of this session via any media type is strictly prohibited. FLOOD IN THAILAND Sub-Contractor Location Multiple sources of components Significant Damages Issue: Address Exposures

Page 19 Recording of this session via any media type is strictly prohibited. Transfer Pricing 19

Page 20 Recording of this session via any media type is strictly prohibited. Sub-Contractor Location Multiple sources of components Significant Damages FLOOD IN THAILAND Issue: Efficiency

Page 21 Recording of this session via any media type is strictly prohibited. Developing the Right Solution Listening to the client requirements Building the right solution/process jointly Supporting brand and business strategy Custom systems structure, data and MI Delivering expert project management and implementation Building relationships and working to the same objectives Focus on program controls o Financial o Quality o Data o Process o Feedback

Page 22 Recording of this session via any media type is strictly prohibited. Response – implementation (1) Global crisis team agreed Project plan developed Business critical tasks prioritised Operational resource both local and from other countries to cover language, culture, licences, visas, immunisation, travel, accommodation, incident control centre First notice of loss/ intake – scripts: phone, dedicated , web portal Claims management and reimbursement processes Treasury management – bank accounts, currency, who & where Legal, data privacy and integration of local Government requirements Activate global web claims system Data capture criteria

Page 23 Recording of this session via any media type is strictly prohibited. Response – implementation (2) Implement 24/7 online access. Risk management information system – MI report design, distribution & frequency Systems initiated with defined triggers in place Resource ‘Ramp Up’ to accommodate surge volume Training programme implemented Supply chain utilisation with access to approved and accredited contractors Transparent client communication channels throughout Designated CAT personnel with ability to mobilise as required

Page 24 Recording of this session via any media type is strictly prohibited. Risk Management Best Practices Assessment Know the company’s footprint and operations Seek knowledge partners and service providers with a comparable footprint (Brokers/Insures/Claim Adjusters/Loss Control) Data collection: what, who and how Evaluation Establish a Risk Financing/program strategy with respect to international operations Utilize consistent methodology for determining where local policies advisable Determine local service requirements (Broker, policy issuance, invoicing, Engineering/Loss Control, claim adjustment) Document decisions

Page 25 Recording of this session via any media type is strictly prohibited. Risk Management Best Practices Implementation Communicate Objectives and Program Structure Local service expectations/deliverables Roles/Responsibilities, including local decision rights Processes/procedures for invoices, policy receipt/acceptance, document retention, claims reporting Monitor Changes in country rules or non-insurance situations with potential impact Service deliverables, regularly Outcomes and issues with key stakeholders

Page 26 Recording of this session via any media type is strictly prohibited. Broker Best Practices Assessment Risk Management objectives Communications process/protocols Compliance Framework and threshold for materiality Claims Scenarios Evaluation Regulatory constraints Program structure options Market capabilities Opportunities for consolidation/improvement across lines Challenges Service scope and model Document decisions

Page 27 Recording of this session via any media type is strictly prohibited. Broker Best Practices Implementation/Monitoring Marketing plan for Global and Local lines Account Service Plan with milestones Risk Management Manual and other documentation available to all stakeholders Open Items/Stewardship Reports

Page 28 Recording of this session via any media type is strictly prohibited. Insurer Engagement Best Practices Communicate Risk financing strategy Program structure objectives including local policy coverage and service requirements Exposure Information Evaluate program structure options and identify potential constraints Timeline and monitoring for implementation Off- Cycle Meetings Implementation postmortem Upcoming changes in exposures /operations Exchange of knowledge of specific country changes Review of loss trends and mitigation activity Specific claim updates

Page 29 Recording of this session via any media type is strictly prohibited. Insurer Engagement Best Practices Roles/Responsibilities In-country Claims Points of escalation

Page 30 Recording of this session via any media type is strictly prohibited. Claims/TPA Best Practices Crisis team agreed in advance. Roles/responsibilities/processes/escalations etc. agreed Understanding of potential regulatory and compliance requirements Pre event planning with partners around ‘common events’ in specific geography. Dry runs to identify potential process problems ‘One off’ non major events – clear protocols subject to geography/event specific requirements pre agreed with partners. Empowered management available to commit globally ‘ One off’ major events – assigned and empowered to sign off commitments and timelines subject to needs around incident type

Page 31 Recording of this session via any media type is strictly prohibited. Claims/TPA Best Practices Protocols signed off, secured and kept current ready for activation. Core team all trained/aware of global assignment/commitments and ability to deploy Agreeing core protocols around incident types with partners – within first 60 days

Page 32 Recording of this session via any media type is strictly prohibited. Toward Program Performance 1 Establish Clear Risk Finance / Structure Objectives with KPI to measure success 2 Utilize Pragmatic Process to Establish Options to Meet Objectives and Document Decisions 3 Ensure Strong Formalized Communication with Overseas Local Business Units Relative to Risk Management 4 Ensure Linkage With Internal Stakeholders Including both – Management – Operational 5 Clearly Document Program Intent – including roles, responsibilities and financial considerations 6 Monitor & Measure Performance

Page 33 Recording of this session via any media type is strictly prohibited. Questions, Final Comments and Contact Information Bruce Wineman/Aon Global Client Network Telephone: Audrey Rudberg/Cargill Inc. Telephone: Richard Friesenhahn/AIG Telephone: (212) Mike Reeves/Crawford & Co. Telephone: +44 (0)

Page 34 Recording of this session via any media type is strictly prohibited. KEEP THIS SLIDE FOR EVALUATION INFORMATION/MOBILE APP ETC. Please complete the session survey on the RIMS14 mobile application.