CIA Annual Meeting Assemblée annuelle de l’ICA June 29 & 30, 2006  Les 29 et 30 juin 2006 Ottawa, Ontario

Who we are Speakers –Alexis Tertulliani –Jean-Marc Tittley

Index Who we are Damage Insurance Risk Management Professional Liability Insurance Insurance program as THE solution Questions

Who we are Morris & Mackenzie Inc. Over 65 years in the insurance business Canadian privately owned corporation – ownership vested among 26 active senior employees National presence Totally independent from insurance markets Offering a full array of insurance services

Who we are Morris & Mackenzie Inc. (cont’d) Specializing in managing insurance programs for over 30 years Dealing with over 100 selected and approved insurance markets Holistic approach to Risk Management Proven track record with an impressive client loyalty record

Damage Insurance Earthquake risks vs. Professional Liability –Frequency –Severity –Exposure –Control

Damage Insurance Frequency Earthquake –Unpredictable Professional Liability –Increasing over time –Public awareness –Access to the courts –Increasing demand for actuarial services

Damage Insurance Frequency “Actuaries have become an increasingly popular target for litigation over the last decade, with scores of suits by clients and third parties alleging injury from an actuarial opinion or report.” Daily & Selznick “Recent Developments in Actuarial Malpractice Litigation”, January 8, 2004

Damage Insurance Severity Earthquake –Low level - warning –High level - catastrophe Professional Liability –Low level - defence fees –High level - lengthy court procedure - high indemnity

Damage Insurance Severity “Even if the actuary ultimately prevails, the expense of defending an actuarial malpractice lawsuit is very high.” Andrea M. Sweeney American Institute of Actuaries, June 2002 “These lawsuits are usually for enormous amounts of money relative to the fees received. Plaintiffs bring lawsuits even where there is little or no connection between a financial problem and the actuarial estimate.” Charles A. Bryan “Projections, Not Predictions”, July 2005

Damage Insurance Exposure Earthquake –Geographical location –Building construction Professional Liability –Business volume –Area of practice –Geographical activities – Law of the land

Damage Insurance Exposure “Actuaries are being held more responsible in a legal setting for their work products and their impact on employers and clients.” The Actuarial Review “The Top Ten Casualty Actuarial Stories of 2003”

Damage Insurance Control Earthquake –Building codes –Territory –Contingency plan

Damage Insurance Control Professional Liability –Member of an association Apply the standards of practice Respect the code of ethics –Specification of potential risks Internal – quality control by Management External – peer review –Contingency plan Managing contractual liability Managing business processes

Risk Management Goal: Reduce frequency and severity of losses Goal: Pay for losses incurred RISK MANAGEMENT RISK CONTROLRISK FINANCING

Professional Liability Insurance Key components –Claims made –Deductible –Defence and inquiry fees –Limit per occurrence –Aggregate –Policy term vs. scope of coverage –Territory

Insurance program as THE solution Program advantages –Provide purchasing and negotiating power Product accessibility Competitive conditions Take advantage of sharing of information –Preventive measures –Statistics on cause of claims –Safety blanket Claims management Policy standards Working together towards a common goal!

Insurance program as THE solution CLAIMS SERVICE Handling all claims reports and inquiries, enter all information in the claims database, and follow-up pending claims until final settlement SERVICE ON IN FORCE POLICIES Handling of all incoming requests from participating members such as policy changes, premium payments, etc. DISTRIBUTION Direct contact with the members to offer the program or renew their participation RENEWAL PROCESS Update policy information and limits, and verify if coverages are adequate. Negotiate renewal conditions with the insurer. GENERAL MONITORING Prepare quarterly statistical reports and insurance committee meetings. Prepare annual meeting with the insurer. FACILITATOR Canadian Institute of Actuaries Insurance Committee MORRIS & MACKENZIE National account manager M&M OPERATIONS Distribution team Service team Technical team (products) Claims experts Loss prevention IT specialists (database) MOSAIQ Risk Management Committee

Insurance program as THE solution Characteristics of THE successful program –Long term commitment by all –Significant membership response –Insurer experienced in program management –Data analysis –Communication & information platform available to all

Insurance program as THE solution Process evolution Information gathering, data collection Risk analysis Market selection Presentation to the PLIAC Presentation to insurance markets Negotiations with insurance markets Selection of the best solution Communication and program implementation

Insurance program as THE solution Legal Liability Document Canadian Institute of Actuaries – November 1986 “Actuaries may obtain insurance against awards for damages for professional negligence. Employed actuaries may be protected by their employers and they should consider whether the protection meets their needs. It should be noted that, as a professional, an actuary bears a personal responsibility beyond any corporate responsibility. An employer’s liability insurance may or may not cover all actions of the actuary. Also, the employer itself may bring action against an actuary for wrongful action.” Frank Livsey, Committee Chairman

Thank you PLIAC –Daniel Lapointe –Joseph Nunes –André Racine –Wayne Woods CIA –Nancy Jenkinson –Daniel Lapointe –Roxanne Vézina All attendees

Questions