MARKET UPDATE HOW IS THE INSURANCE MARKET ADAPTING TO NEW OPPORTUNITIES AND CHALLENGES? 2013 Simon Howell Placement Leader Bowring Marsh

Profitability Peaks & Troughs in the P/C Insurance Industry 1975 - 2012 P&C Insurance Industry has experience 4 consecutive “10 years” cycles since 1975 History suggests next ROE peak will be in 2016-2017

Natural Disasters Worldwide, 1980 – 2013 Number of Events Number of CAT events or quality of its data collection is increasing with time Insurance markets need to allocate increasing underwriting capital to account for the future anticipated larger CAT Losses

Bowring Marsh P&U Portfolio (313,635 MW) Historical Rate per 100 TIV and Claims Globally Static Rates Regional differentials between traditional and emerging Insurance Hubs (London, Europe, Singapore, Middle East) Increased Quantum and Frequency of claims Increased technology complexity in manufacturing requirements Rate per 100 TIV

Key Global P&U International Insurers (existing and new) New, emerging or expanding insurance capacity London Existing consolidated P&U expertise (Zurich, Travelers, Scor..) New: Sciemus USA AIG (US$1 BN) OIL (Mutual) Asia Chinese capacity expanding abroad (PICC, CPIC) Cont Europe Traditional continental capacity expanding abroad (MAPFRE, AXA, Generali…) Middle East Limited Appetite 4

How is the P&U Insurance Market Adapting to Changes in Client Exposure Profile Statistical data analysis enables development of capacity within historical deductible ranges for both Property Damage and Time Element exposure. With changes in operating regime, come changing Business Interruption profiles. Post loss movement is a MAJOR CONCERN ! Growth & Development of Dedicated Renewables Insurance Capacity. Comprehensive Policy Wordings Deductibles aligned to appetite. Inclusion of Coverage for Life Time Extension work. A number of major Market losses have occurred post this LTE work.

P&U Insurance Forecast for 2014 Headline Premiums continue to have downward pressure. New and existing carriers will provide Innovation in Product and Design. Bespoke Solutions to changing Business Interruption Profiles. Spin-offs of Renewable Energy Portfolios to stand alone policies. Development of Deductible “buy down” Solutions.

Risk Analysis Modelling Platform (RAMP) The size and diversity of our global portfolio has enabled us to develop a market-leading Risk Analysis Modelling Platform (RAMP). This helps us benchmark Property Damage and Business Interruption insurance programmes. In December 2012, the RAMP won the ‘International Broker Innovation of the Year’ Insurance Times award on behalf of Bowring Marsh. Using data points such as critical catastrophe, deductibles, key sub-limits, loss limit, loss ratio, mega watts, region of exposure, total insured values and type of power generation, the RAMP enables us to provide important in-depth management information on a confidential basis to: Present a clear visual representation of how any insurance programme compares to that of others in the same industry Compare local programmes (in the same region as the insured) to those available from international markets Provide quick ‘ball-park’ estimates for either new or renewing business based on historical trends.

Risk Analysis Modelling Platform (RAMP) Screen Shots of the Risk Analysis Modelling Platform Tailored Risk Analysis Reports

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