1. Welcome to RIMS 2012 Annual Conference & Exhibition  Familiarize yourself with the Emergency Exits Silence Cell Phone/Blackberry Your Feedback is very important to RIMS and to the Speaker(s). Please complete the session evaluation form and return to the door Monitor.  Familiarize yourself with the Emergency Exits Silence Cell Phone/Blackberry Your Feedback is very important to RIMS and to the Speaker(s). Please complete the session evaluation form and return to the door Monitor. (For (IND) industry sessions, please give the completed form to the moderator of the session.)

2. Selecting and Working with a Broker April 17, 2012 RMG 102 Philadelphia, PA

3. Presentation Outline The Selection Process – Gordon Adams, Tri Marine Int. – Identifying Broker Candidates – Selection Criteria – Invitations to Bid – Broker Compensation Working With a Broker – Todd Marumoto, Mattel, Inc. – Ethics – Administration – Claims – Loss Control Working With a Broker (more details) – Hal Larson, Muscatine Foods Corporation – Risk Financing Techniques and Alternatives – Setting Performance Expectations – Terminating a Broker Relationship – International Insurance Brokers

4. The Selection Process Gordon Adams Chief Risk Officer Tri Marine International

5. The Selection Process Why do you need a Broker? How often should a Broker review be done? How much time do you need? As a Rule of Thumb – 6 Months 1. Data Collection 2. Bid Parameters and Determination 3. Participant Determinations 4. Bid Specifications 5. Review Process / Interviews 6. Broker Selection & Service Agreement Negotiation

6. Identifying Broker Candidates Referrals Industry Associations Reputation Publications Ongoing Working Relationships – Yours – Risk Management Network

7. Invitations To Bid Reasons for Bidding a. Operational Changes b. Merger or Acquisition c. Broker Service Issues d. Assurance of Competitive Product & Pricing Bidding Types a. Open Bid – (Governmental Agencies) b. Closed / Limited Bid 1. Selected Participants 2. Controlled Access to Information and Markets 3. Confidentiality

8. Bid Specifications Conceptual Full Quotation – With or Without Market Assignments Hybrid Split Programs Beauty Pageant Conceptual / Risk Based

9. RFP Process Information to Provide to Brokers: – May Choose to Exclude Premium Information – Policies – Programs Insurers Limits Retentions / Letters of Credit Exposures – Engineering Reports – Loss Runs

10. Selection Criteria Industry Expertise Size & Type of Organization Technical Competence Market Access Financial Condition Marketing Philosophy Location

11. Making the Choice Matches – Knowledge – Personalities – Personnel – Philosophies – Reputation – Results

12. Broker Compensation Commissions Fee Based Combined Commission & Fee Incentive / Bonus Plans Note: Under any broker compensation plan, services provided must be clearly specified and detailed Examples: Insurance negotiations & placement, policy service, safety inspections, loss control, claim support and risk management consultation

13. Working With A Broker Todd Marumoto Director Mattel, Inc.

14. Ethics Code of Mutual Appropriate Conduct Honesty Integrity Good Judgment Full & Total Disclosure Objectivity, Due Diligence, Professional Care Privacy, Confidentiality

15. Ethics Ethical and Courteous Behavior Avoid Real or Perceived Conflicts of Interest Be Forthright and Realistic Know Your Opportunity Partner (Broker) Written, Clear Expectations and Standards Discuss Philosophy of Contingent Commissions Report and Correct Issues

16. Administration Contract – Key Points Service Agreement – Key Points Communication – Elements of Good Communication Other Services – Actuarial Support – Captive Feasibility Studies – Contract Review & Support

17. Claims Claims Services – Adjusting – Audits – Analysis Team Approach – Communication and Trust – Partnership Issues to Consider When Evaluating Broker Claims Services – Industry Knowledge – Qualifications, Specialties and Level of Expertise – Familiarity with Carriers and TPAs – Availability

18. Loss Control Purchasing Loss Control Services – Determine Need, Criteria & Cost – Identify Candidates – Maximize Resources Loss Control Projects – Disaster Recovery – Business Continuity – Claims Analysis – Property and Casualty Issues to Consider when Evaluating Broker Loss Control Services – Industry Knowledge – Qualifications, Specialties and Levels of Expertise – Knowledge of Insurance Company Resources, Reputations and Market Capabilities

19. Working With A Broker (More Details……) Hal Larson Risk Manager Muscatine Foods Corporation

20. Types of Risk Financing Traditional Insurance – Installment Payments – Premium Financing Self Insurance Risk Retention Programs Purchasing Groups Captives

21. Risk Financing Techniques Broker Services Actuarial Feasibility Studies Implementation Plans Program Management Compare to Traditional or Self Insurance * Involve your CFO

22. Captives Considerations Coverage(s) Financial Goals Legal Environment & Domicile Taxation and Repatriation of Profits Start up and Continuation Costs – Capitalization, Management, Accounting, Auditing, Reinsurance, Legal, Fronting Fees, Claims Services, Loss Control

23. Setting Expectations Setting Expectations – Mutually Agreed – Term of Engagement – Compensation – Confidentiality Agreements – Conflict of Interest Agreement – Record and Data Retention and Ownership – Service Team Responsibilities and Timelines

24. Setting Expectations (cont.) Clear - Written Expectations Periodic Performance Status Adjustments and Corrections As Needed Conduct a Contract Ending Assessment

25. Performance Expectations Details Identify Relationships Review Performance Guidelines Prioritize Expectations Determine Performance Elements Determine Performance Metrics Reach Agreement Document in Writing Continually Evaluate Performance

26. Performance Measurements RIMS QIP (Quality Improvement Process) – Template Driven Guidelines rims.org – Resources – Quality Program Quality Partnership Builder (QPB) – Soon to be released revision Broker Forms Other Industry Forms Company Specific *Word format samples in book & on CD

27. Terminating A Relationship Due Diligence – Failure to Resolve Conflicts & Dissatisfactions – Periodic Competitive Assessment of Services – Regulatory Requirements No Surprises Direct Detailed and Timely Notice Conduct an Exit Conference

28. Termination – Timing Considerations Broker Service Agreement Policy Terms Broker Remuneration – Minimum Commissions or Fees – Remaining Old and New Fees Other Services – Safety, Loss Control, Claims, RMIS, Professional, etc.

29. Termination – Points of Caution New Brokers Access to Carrier(s) Certificates of Insurance Auto Insurance ID Cards Special Services *Buyer must conduct this termination in a professional and ethical manner to avoid emotional and non-professional behaviors.

31. International Broker Considerations Same as Your US Broker Multiple by Country Broker’s Offices and Size Partnerships and Affiliations – Assurex Global, Globex International etc. Product Line or Industry Expertise Accessibility and Communication Local Banking Contacts and Relationships

32. International Broker Services Local Representation – Customs, Regulations Domiciled Policy Requirements Premium Payments Accounting Services Safety and Risk Engineering Claims Services

33. Questions?? The Selection Process – Gordon Adams, Tri Marine Int. – Identifying Broker Candidates – Selection Criteria – Invitations to Bid – Broker Compensation Working With a Broker – Todd Marumoto, Mattel, Inc. – Ethics – Administration – Claims – Loss Control Working With a Broker (more details) – Hal Larson, Muscatine Foods Corporation – Risk Financing Techniques and Alternatives – Setting Performance Expectations – Terminating a Broker Relationship – International Insurance Brokers

34. PLEASE POST THIS INFORMATION ON THE LAST SLIDE. PLEASE POST THIS INFORMATION ON THE LAST SLIDE. AS PART OF RIMS GREEN INITIATIVES, THERE ARE NO PRINTED HANDOUTS. VISIT WWW.RIMS.ORG/2012HANDOUTS TO DOWNLOAD AVAILABLE HANDOUTS. PRINT ON DEMAND STATIONS ARE AVAILABLE ON LEVEL 1 LOBBY: BROAD & 13 TH STREET BLDG.; 12 & 13 TH STREET BLDG. OF THE PENNSYLVANIA CONVENTION CENTER, AS WELL AS RIMS CYBER STATIONS LOCATED IN BOOTHS #431 AND #2431 IN THE EXHIBIT HALL.WWW.RIMS.ORG/2012HANDOUTS Welcome to RIMS 2012 Annual Conference & Exhibition