CIA Annual Meeting LOOKING BACK…focused on the future

Session 2205 Catastrophic Loss Exposure in Group Insurance LOOKING BACK…focused on the future Survey Results: 19 Canadian Companies responded in June 2005 (3 have more significant group AD&D than group life exposure) Insurers not Reinsurers Group only SOA survey issued May 2005 based on 31 Dec 2004 Mainly US, included reinsurers Individual and Group Survey Results: 19 Canadian Companies responded in June 2005 (3 have more significant group AD&D than group life exposure) Insurers not Reinsurers Group only SOA survey issued May 2005 based on 31 Dec 2004 Mainly US, included reinsurers Individual and Group

Session 2205 Catastrophic Loss Exposure in Group Insurance LOOKING BACK…focused on the future General awareness For 10 of 18 companies this is a “live” issue corporately (SOA 66%) In most of those the Group area has been asked to quantify concentrations Larger companies or those who have large AD&D blocks most likely to be aware Modeling Only 4 companies are doing any modeling (SOA 29%). Only one looks at epidemic. (1 large, 2 medium and one small company) Epidemics generally ignored in SOA (64%) General awareness For 10 of 18 companies this is a “live” issue corporately (SOA 66%) In most of those the Group area has been asked to quantify concentrations Larger companies or those who have large AD&D blocks most likely to be aware Modeling Only 4 companies are doing any modeling (SOA 29%). Only one looks at epidemic. (1 large, 2 medium and one small company) Epidemics generally ignored in SOA (64%)

Session 2205 Catastrophic Loss Exposure in Group Insurance LOOKING BACK…focused on the future Specific Group Cat cover 7 companies have cat cover specifically targeted at Group 5 are smaller with payments at a 2, 3 or 4 life warranty 2 are larger companies with high trigger point for Cat cover Other approaches (Survey and SOA) Industry pool (Quebec based cos) Pooling for clients Accidental death carve-out Aggregate limits for clients Traditional reinsurance (e.g. coinsurance, excess) Specific Group Cat cover 7 companies have cat cover specifically targeted at Group 5 are smaller with payments at a 2, 3 or 4 life warranty 2 are larger companies with high trigger point for Cat cover Other approaches (Survey and SOA) Industry pool (Quebec based cos) Pooling for clients Accidental death carve-out Aggregate limits for clients Traditional reinsurance (e.g. coinsurance, excess)

Session 2205 Catastrophic Loss Exposure in Group Insurance LOOKING BACK…focused on the future Aggregate limits 5 use for life, only 1 frequently 7 use for AD&D, 3 frequently (some of the larger AD&D carriers) 5 limit exposures on refund groups (9 companies do little or no Life refund), usually 2, 3 or 4 life warranty Aggregate limits 5 use for life, only 1 frequently 7 use for AD&D, 3 frequently (some of the larger AD&D carriers) 5 limit exposures on refund groups (9 companies do little or no Life refund), usually 2, 3 or 4 life warranty

Session 2205 Catastrophic Loss Exposure in Group Insurance LOOKING BACK…focused on the future Quantifying risk concentrations (1): 7 companies ask larger clients for info (one of these is just starting) Larger defined as $50M or $100M of cover or number of lives 4 more companies work on other sources to develop concentration information One of largest 3 doing nothing, only 2 of largest 13 doing nothing Equally split between postal code and building info (SOA 75% ask for zip code) Quantifying risk concentrations (1): 7 companies ask larger clients for info (one of these is just starting) Larger defined as $50M or $100M of cover or number of lives 4 more companies work on other sources to develop concentration information One of largest 3 doing nothing, only 2 of largest 13 doing nothing Equally split between postal code and building info (SOA 75% ask for zip code)

Session 2205 Catastrophic Loss Exposure in Group Insurance LOOKING BACK…focused on the future Quantifying Risk concentrations (2): Other sources of info include (in order): Internet D&B Postal code info from medical claims system Reasonable level of success getting info from intermediaries but varied by company Advisor attitude varied from generally cooperative to bad (some companies are told that they are the only company asking for such info!!) Info on up to 95% of large groups 6 companies are trying to combine concentrations from different clients in same location Quantifying Risk concentrations (2): Other sources of info include (in order): Internet D&B Postal code info from medical claims system Reasonable level of success getting info from intermediaries but varied by company Advisor attitude varied from generally cooperative to bad (some companies are told that they are the only company asking for such info!!) Info on up to 95% of large groups 6 companies are trying to combine concentrations from different clients in same location

Session 2205 Catastrophic Loss Exposure in Group Insurance LOOKING BACK…focused on the future 3 companies say they might decline to quote a group with high concentration (one actually has) 2 might consider higher premiums (SOA 4% charge higher premiums if no detailed location info supplied) In both cases a mix of sizes SOA 67% do not limit exposure SOA 67% of companies insure/reinsure their own head office because of concentration exposure 3 companies say they might decline to quote a group with high concentration (one actually has) 2 might consider higher premiums (SOA 4% charge higher premiums if no detailed location info supplied) In both cases a mix of sizes SOA 67% do not limit exposure SOA 67% of companies insure/reinsure their own head office because of concentration exposure

Session 2205 Catastrophic Loss Exposure in Group Insurance LOOKING BACK…focused on the future Conclusion Conclusion More awareness, particularly among those who are most exposed More awareness, particularly among those who are most exposed Those with lower exposure often have cat loss reinsurance for group which may make them more comfortable Those with lower exposure often have cat loss reinsurance for group which may make them more comfortable Information being gathered, directly and indirectly Information being gathered, directly and indirectly Relatively little apparently done with the results by medium/large companies Relatively little apparently done with the results by medium/large companies