1. AFOA CONFERENCE Ottawa, Ontario February 2005
Insurance Presentation By
Heather J. Loughery, SVP - Zurich, Canada
Gil Saunders, Pres. - AFN Insurance

2. OVERVIEW Insurance Industry Factors Influencing Pricing & Coverage
Coverages for Bands - Liability, Property, Automobile Insurance
Roles
Claims
Considerations & Communication
February2005

3. OVERVIEW General information
Canada is the world’s 7th largest insurance market (between Italy and Spain)
General Insurance industry - GWP 34.8 billion in 2003 (approx 12 billion commercial business)
New wave of consolidation of insurers in Canada
The industry’s expense ratio in 2003 was 28.7% down from prior years
February2005

4. THE CYCLE WILL WE EVER LEARN ?
February2005

5. FACTORS AT WORK 1. SUPPLY & DEMAND
2. ACTUARIAL SCIENCE / UNDERWRITING PRIORITY
LOW INTEREST RATES
UNKNOWN LOSSES
5. THE WEATHER ?
6. LOW ENTRY BARRIERS / FEWER PLAYERS
7. CLAIMS / LEGAL SURPRISES / TORT REFORM
8. REINSURANCE RECOVERABLES
PRIOR YEAR RESERVE ADJUSTMENTS
REGULATORY ENVIRONMENT
February2005

6. PREMIUMS - (CLAIMS & EXPENSES) + INVESTMENTS = PROFIT
SIMPLE BUSINESS
PREMIUMS
- (CLAIMS & EXPENSES)
+ INVESTMENTS
= PROFIT
COMMERCIAL P & C INSURANCE IS A HIGHLY UNUSUAL PRODUCT
1. PRICE FOR PAST - UNDER PRICING /UNDER RESERVING
2. PRICE FOR CURRENT REALITIES
(ACCIDENT YEAR)
PRICE FOR FUTURE UNKNOWNS
P&C TRANSACTIONS VIEWED DIFFERENTLY WITH
PASSAGE OF TIME
- A/Y LOSS RATIOS DEVELOP UNTIL ALL CLAIMS
SETTLED
- CAN’T GO BACK IN TIME TO REOPEN BOOKS,
THEREFORE CURRENT PRICING MUST RESPOND
- TODAY’S CUSTOMERS, SHAREHOLDERS, MANAGE-
MENT SHARE THE BILL
- OCCASIONALLY POSITIVE -- ONTARIO AUTO IN
THE ‘90s
THE PRESENT
- LOSS COST TRENDS
- RELIABLE INFORMATION CHALLENGE
- DEMAND SHRINKING
- PREDICTING INTEREST RATES
- REINSURANCE COSTS
February2005

7. (SMALL CAUSES = LARGE IMPACT)
WHAT’S CHANGED?
(SMALL CAUSES = LARGE IMPACT)
ONE TREE FALLS ON A POWER LINE IN OHIO
ONE SARS-INFECTED TOURIST LANDS IN TORONTO
ONE TERRORIST THINKS OF USING A COMMERCIAL PLANE AS A MISSILE
ONE COW TESTED “MAD COW” POSITIVE
February2005

8. INFLUENCES LEGAL ENVIRONMENT U. S. Tort System
Plaintiff Counsel Ingenuity
Class Actions
INFLATION & TRENDING
February2005

9. COVERAGES General Liability Bodily Injury to other people
Property Damage to other’s property
Band operations – any special cover needed?
Environmental
Public Officials Liability
Care Homes
February2005

10. COVERAGES Property Band Property Housing Boiler Crime
Employee Dishonesty
Theft
February2005

11. RATING General Liability Claims Experience Limits & Deductibles Chosen
Band size, operations
February2005

12. RATING Property & Boiler Claims Experience Limits & Deductibles
Type of Construction, Protection, Age, Crime
Procedures, Limits, Deductibles
February2005

13. ROLES UNDERWRITERS Assess exposure Evaluate information
Rate & provide cover
LOSS PREVENTION/RISK SERVICES
Inspect location & determine if recommendations needed
Advise Insured & Underwriter of concerns
February2005

14. ROLES CLAIMS ADJUSTERS Third Party / Zurich Staff
Assist, Explain, Expedite
Evaluate
INSURED
Communicate
Preventative measures for losses
February2005

15. CLAIMS Typical claims - Fire, Water, Theft, Slip & Fall, …
“Anyone” can file a liability claim
Provide information
Have procedure to document any incidents
Timeliness is important
February2005

16. WHAT CAN YOU DO? Property Values – updated?? Deductibles Chosen
Loss Control measures
Take the time to note & communicate
what is (or what will be) different about your Band, operations
what you have done / are doing / will be doing to meet / exceed standards
February2005

17. COMMUNICAITON Communicate, Explain Work with Insurance Representatives
Be proactive
Document - keep up with standards
Allow time
February2005

18. Thank you!! Any Questions??
February2005