1. AGA RISK MANAGEMENT COMMITTEE Business Interruption Due to Fires, Storms, and Other Extreme Conditions Presented by: Kurt Tentinger, Managing Director Jim Meyer, Managing Director Aon Risk Solutions - Global Energy & Power Monday, July 29, 2013

2. Contents Time Element Coverage Terms
Business Interruption Considerations
2013 Market Conditions
2013 Market Capacity – Property and Business Interruption
Aon Overview
Aon’s Global Energy and Power Practice

3. Time Element Coverage Terms
Business Interruption
Loss from owned operations. Covering fixed expense and loss of profit. Includes loss of income from loss production or inability to render services, loss of rental income, or loss from other sources of income.
Contingent Business Interruption
Loss from non owned operations such as a key supplier or materials or services used in your production or key receiver of your products or services.
Service Interruption
Loss resulting from an interruption of supply of Electricity, Gas, Water, Telephone, Satellite or other services.
Extra Expense
Expenses incurred to continue normal business activities.
Contingent Extra Expense
EE Loss from non owned operations (key supplier or receiver).
Pilot Relight Coverage
Coverage Trigger
Direct Physical Loss or Damage to Insured Property caused by and Insured Peril during the Policy Period

4. Time Element Coverage Terms (Cont.)
Typical Retention
days waiting Period
Valuation
Actual Loss Sustained
Business Interruption typically excludes loss of margin from completed stock. Use a “Selling Price Clause” to secure coverage as part of the Property Damage adjustment.
Period of Coverage
The period of time, commencing at the time of the loss, that is required, with the “exercise of due diligence and dispatch”, to rebuild, repair or replace the damage property
Expenses To Reduce Loss
Insured must use all reasonable means to restore property and get back into operations as soon as possible. This includes:
Use of other owned or temporary locations
Use of available stock
Other means of mitigating the claim
Expenses incurred to reduce or mitigate the claim are covered as long as they do not exceed the amount which would have been paid out if the cost had not been incurred.

5. Time Element Coverage Terms (Cont.)
Extended Period of Indemnity
Covers the period of time, following the restoration period, which is necessary to restore the operation to level preceding the loss.
Sales
Production
Contract Sales
Coverage Forms
There are numerous Business Interruption forms available in the International market. Following are examples:
Gross Earnings Mercantile – covers loss sales
Gross Earnings Manufacturing – covers sales value of product
Gross Profits – includes an extended period of indemnity
Valued B.I. Forms – stipulated limits per day, per week, per month
Turnover Forms
Leasehold Interest, rental value, other

6. Business Interruption Considerations
Avoid “Coinsurance” or “Contribution” restrictions
Include Ordinary Payroll if needed (can write in increments of 30 days)
Understand how “Depreciation” or “Depletion” allowances could impact your cash flow. Both can be covered as fixed expenses.
Identify and Evaluate –
Worst case loss and probable case loss scenarios include analysis of peak periods of activity (peak season) and required time for the restorations of operations
Interdependencies with and impact to other owned facilities
Key equipment and other bottleneck exposures
Contingent Exposures (to fixed facilities or transportation means)
Service Interruption Exposures
Contractual Obligations
Reconstruction/Restoration Periods
Contingency Planning and other Risk Reductions techniques
Redundancies
Unique Accounting Techniques that transfer or delay income or expenses

7. 2013 Market Conditions
Most Insurers had profitable results in and in the 1st half of 2013
Market capacity levels remain at high levels (by historical standards)
Significant new capital (from institutional investors) is being drawn into the Reinsurance Market causing reinsurance costs to decline
Underwriters continue underwrite for profit versus investment return but are not willing to give up market share
Insurers will push for flat or slight increases in rate but expect rates to be flat or declining for clean accounts
Retention levels will remain stable with the exception of N.E. CAT exposures.
Contingent Business Interruption, flood and other exposures under continued scrutiny.

8. 2013 Market Capacity Property and Business Interruption

9. Aon Overview

10. Aon Overview

11. Aon’s Global Energy and Power Practice
Global headquarters in Houston & London
120 dedicated professionals in Houston and a similar number in our London office 
Globally 300+ professionals
Leverage in the Market
Largest producer of energy industry premium to key insurance markets
Houston office placing in excess of $1 billion in premium
Why Clients Select Aon
Industry Knowledge
Claims Assistance and Management
Market Knowledge
Market Leverage
Global Reach