Aon’s 11th Energy Insurance Training Seminar Guidelines for Presentation of Negotiated Terms James Taylor

Know Your Market Prior to seeking terms, analyse where the market is (market cycle), and what factors drive it. Take steps to mitigate specific underwriting concerns/hotspots - information is key! Deep water drilling. Pollution Liability. Oil Sands. Set targets based on market analysis and the risk in question.

Peer Group Analysis Consider expiring terms against similar risks to identify current position. Benchmarking of key criteria, these being: Rating, Limit purchased, Retention, Loss record, Policy conditions, Sub limits. GRIP Analysis/Industry Comparison. Based on this analysis, is the insured currently benefitting from competitive terms?

Analysis of Terms Review terms against client’s needs: Are there any gaps or shortfalls in coverage? Is there coverage which is surplus to client’s needs (cost implications)? Is the offer subject to: Subjectivities (subject to survey within 90 days). Warranties (SNKORL). Stamp Conditions (NCAD, Line to stand, Best Terms). Compare to expiring terms, expectation based on market cycle and any other factors.

Credibility of Terms Are terms provided by a quality Leader Rating agency rating (S&P/A.M. Best) Market Reputation – will others follow? What capacity have they offered? Is it a credible lead line – 3% or 15%? What other services/capabilities does that market have? Risk engineering Professional claims department Ability to meet/adapt to client’s requirements

Credibility of Terms Aon Market Security Committee – Independent analysis of carrier Are there any previous issues with claims payment?

Comparison of Alternative Terms Obtained Compare terms offered by alternative leaders to those of incumbent leader. Financial difference, Difference in terms and conditions, Basis for renegotiation? Consider consequences of changing lead insurer Historic relationship Goodwill as a result of longstanding relationship (claims) Market perception of regular leadership change Future options?

Client Dialogue Present lead terms obtained, plus broker analysis, for client’s review . Discuss and review the merits of terms obtained with the client. Identify and renegotiate high value areas of concern based on discussion with client. Make recommendation to client based on outcome of discussions. Client consideration of recommendations. Client issues firm order to bind cover.