1. Zurich North America Architects & Engineers Professional Liability Zurich North America Design Professional

2. Zurich North America Overview General Discussion on issues affecting A&e Professional Liability Insurance Conditions that specifically affect the underwriting process for a&e professional liability Why is it so important to understand these issues Zurich’s response to market conditions

3. Zurich North America Market Overview-Primary Market  Domination by two companies DPIC with plan agents, CNA with Pronet agents  Lack of senior technical underwriting knowledge  Lack of credible actuarial loss information  Small firms represent significant catastrophic loss exposure depending on area of practice  Adverse selection process at work

4. Zurich North America Market Overview - Secondary Market Excess and Surplus Companies Highly Volatile -- over 20 insurers have entered and left in past 10 years  Only 3-4 stable providers remain  Stability in some areas in question due to prior growth in project insurance and large A&Es  New entrants lack long-term commitment that sophisticated A&Es require

5. Zurich North America Profitability Factors  Focus on annual insurance or new products  Admitted coverage  Liability is negligence-based as opposed to strict or contractual  Severity of claims further reduced by computer-aided design developments and construction management practice  Statutory protection offered by most states for late and frivolous claims, statutes of repose or limitation, certificate of merit.

6. Zurich North America Recent Developments  Rates for A&E professional liability have been increasing for past 18 months  Rates for project insurance have at least doubled since last year  Policy forms, especially on project insurance, have tightened in coverage  Large segment of construction project owners prefer the owner’s protective product offering to mitigate exposures

7. Zurich North America Zurich North America’s A&E Professional Liability Products  Owner’s Protective Professional Indemnity (OPPI) Offers same protection to project owners as project insurance by supplements underlying insurance instead of replacing primary coverage of A&e  Contractor’s Protective and Professional Indemnity Insurance (CPPI). Offers professional liability insurance to design builder in conjunction with OPPI coverage

8. Zurich North America Emerging Issues  Economic downturn in private-sector construction  Condominium and residential construction market litigation  Increased contractual liability exposure with use of new COAA proposed contracts  Mold  New entrants to marketplace may repeat mistakes of the past

9. Zurich North America Strategies for Survival and Growth  Employ best selection process  Growth with new products and services  Solidify existing broker/client relationships  Capitalize on cross-selling opportunities  Push for adequate rates on programs.