2007 General Meeting ● Assemblée générale 2007 Montréal 2007 General Meeting ● Assemblée générale 2007 Montréal Canadian Institute of Actuaries Canadian Institute of Actuaries L’Institut canadien des actuaires L’Institut canadien des actuaires

Who is Morris & Mackenzie Offering a full array of Insurance and Risk Management services Property Casualty Director’s and Officer’s Liability Professional Liability Engineering Risk Modeling Alternative Risk Financing Group Home & Auto Group Benefits 2007 General Meeting Assemblée générale General Meeting Assemblée générale 2007

Who is Morris & Mackenzie Holistic approach to Risk Management Needs and goals analysis Traditional Insurance only one of the available options to transfer risk Alternative Risk Management solutions Risk Management with emphasis on Control, Transfer and Financing of Risk Claims settlement for Insurers and Clients (S.I.R) Implementation and analysis of databases for clients Proven track record with impressive client loyalty 2007 General Meeting Assemblée générale General Meeting Assemblée générale 2007

CIA and Professional Liability Insurance: A Brief History CIA’s 1 st guiding principle “In carrying on its activities and programs, the Institute holds the duty of the profession to the public above the needs of the profession and its members” Dual role of Insurance Protect public interest Protect actuaries Insurance market position relative to Actuarial Professional Liability Difficult to obtain insurance High premiums Limited scope of coverage Questionable exclusions Inadequate limits of insurance Few insurers with in-depth knowledge of Actuarial activities 2007 General Meeting Assemblée générale General Meeting Assemblée générale 2007

ProAct: A Brief History RFP sent to six (6) brokers – Morris & Mackenzie appointed M&M and PLIAC create presentation to insurers Proposals received from four (4) leading and reputable insurance markets AIG Aviva Axa Lloyd’s Lloyd’s proposal selected unanimously January 2007 official ProAct launch Step 1: Creation of Voluntary Professional Liability Insurance Program COMPLETED 2007 General Meeting Assemblée générale General Meeting Assemblée générale 2007

ProAct: A Brief History Obstacles in developing the program Generally unfavorable insurance market position in regards to Actuarial Professional Liability Actuarial activities under heavy scrutiny Increasingly litigious environment Increasing damages sought/awarded New program – no predecessor Accurate claims information and loss data for Canadian Actuaries is unavailable M&M mandates law firm to prepare litigation and jurisprudence report Difficult to forecast level of CIA member participation 2007 General Meeting Assemblée générale General Meeting Assemblée générale 2007

ProAct: A Brief History Mandate Protect Public Interest Protect Actuaries Develop sustainable Professional Liability Insurance Program Professional Liability Insurance accessible to all Broad terms and conditions of coverage tailored to Actuarial Activities Uniform policy wording Cost efficient and competitive program Flexible limit and deductible options 2007 General Meeting Assemblée générale General Meeting Assemblée générale 2007

Professional Liability Insurance Coverage Damages arising out of negligent acts, errors or omissions of the Insured Key components Claims made Retroactive date Deductible Defense costs and legal expenses Occurrence limit Aggregate limit Extended reporting period Policy terms and scope of coverage Insuring agreements Territory 2007 General Meeting Assemblée générale General Meeting Assemblée générale 2007

ProAct: The PL Solution ProAct advantages Purchasing and negotiating power Product accessibility Competitive terms & conditions Credible statistics to enhance Risk Management Common causes of claims Preventative measures Sustainability Uninterrupted coverage Stability in terms of coverage Ongoing client contract requirements Enhanced credibility 2007 General Meeting Assemblée générale General Meeting Assemblée générale 2007

ProAct: The PL Solution ProAct advantages Enhanced coverage Primary limits up to $5M Excess liability limits available Aggregate limit = two (2) occurrence limit (up to $5M) Accessible to all Areas of Practice Broad coverage for Actuarial Professional Activities Extended Reporting Period Options Defense cost reimbursement for CIA CPC inquiry Worldwide coverage: claims brought in Canada / U.S. Coverage for TPA activities Retroactive date to match prior insurance Various deductible options Ability to customize and adapt to specific activities / needs 2007 General Meeting Assemblée générale General Meeting Assemblée générale 2007

ProAct: The PL Solution ProAct advantages Safety blanket Policy standard Absence of questionable exclusions Claims management Continuous program review, evolution and enhancement CIA involvement Simple process Standard application Standard policy form Proposals typically available within 10 days of submission Insurance Binder issued upon receipt of coverage confirmation Policy issued shortly thereafter One point of contact: submission and service 2007 General Meeting Assemblée générale General Meeting Assemblée générale 2007

ProAct: The PL Solution ProAct advantages Sound Risk Management and Insurance Program are essential to long-term success and protection Enables CIA members and firms to voluntarily contract insurance Increase credibility Increase client confidence Expand client base Create a level playing field among competitors Secure financial and operational stability Protect personal assets 1 st step in enhancing Public Protection and advancing the Actuarial Profession 2007 General Meeting Assemblée générale General Meeting Assemblée générale 2007

Risk Management Issues Personal Liability of Actuaries Actuaries are personally exposed to professional liability lawsuits Financial burden of defense costs and damages (if awarded) Personal assets exposed Employers often have no legal obligation to defend employees Many situations where employers will not defend employees: Company no longer exists Bankruptcy Lack of adequate insurance coverage Loss Control Best Practices & Standards of Practice Professional Development Peer review Due diligence in choice of clients 2007 General Meeting Assemblée générale General Meeting Assemblée générale 2007

Risk Management Issues Contracts Clearly defined scope of work performed Clearly defined scope of work not performed Limitation of Liability Hold Harmless & Indemnity clauses Dispute Resolution IMPORTANT: Insured must not contractually assume any liability other than liability imposed by statutory law, nor promise to exceed the generally accepted standard of care Reliance on work of others Responsible to review work to determine possibility of errors Identify information and data provided by client that may impact your ability to provide an opinion 2007 General Meeting Assemblée générale General Meeting Assemblée générale 2007

Risk Management Issues Documentation and reports Put recommendations in writing, including the risk from not following the recommendations Get written response/acknowledgment regarding your recommendations Records might be appropriately purged from your files and destroyed as part of your standard business practices Be careful what your write and review before sending Organize into electronic folders – keep paper copies as needed for physical files Do not delete s that may be subject to discovery requests in claim situations Don’t try to be everything to everyone Focus on core competencies Client needs / expectations in line with you area of expertise 2007 General Meeting Assemblée générale General Meeting Assemblée générale 2007

Claims & Litigation What constitutes a claim? Receipt of written or verbal demand for damages Becoming aware of an intention to make such a demand Becoming aware of fact, circumstances, or events which could reasonably be anticipated to give rise to such a demand What to do in case of a claim? Report the claim as soon as possible! Report to broker/insurer should contain: Copy of initial legal process (Declaration, Motion, etc.) Copy of demand letter and details surrounding receipt of the letter Circumstances, alleged damages, claimant names, etc. Do not discuss the claim with anyone Gather as much information / documentation as possible 2007 General Meeting Assemblée générale General Meeting Assemblée générale 2007

Claims Process Claim notification received Adjustor / legal counsel appointed Review claim Advise coverage provided by policy Evaluate claim / request for damages Work with Insured to: gather information and circumstances surrounding claim determine optimal claim resolution strategy Stages of legal proceeding Examination for Discovery Interlocutory Motions Pre-Trial Settlement Conference Mediation / Arbitration Trial 2007 General Meeting Assemblée générale General Meeting Assemblée générale 2007

Claims Process Special attention devoted to: Mitigating impact of a claim on the client’s operations and business continuity Reputation Maintaining open lines of communication between all parties involved Coordinate claims process in a timely manner 2007 General Meeting Assemblée générale General Meeting Assemblée générale 2007

Next Steps: Key Components of Program Success Long term commitment by all parties involved Membership response Higher participation = better insurance terms & conditions Feedback extremely valuable to program advancement Data monitoring and analysis Open communication Coverage modifications and enhancements as Profession and member needs evolve Added value for members Step 2:Basic personal liability coverage for all members 2007 General Meeting Assemblée générale General Meeting Assemblée générale 2007

Questions? 2007 General Meeting Assemblée générale General Meeting Assemblée générale 2007