Simon Delchar - MARSH Global MarketsLisa Hansford-Smith - MARSH

Insurance Market Update

May 26 & 27

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Simon DelcharManaging DirectorGlobal Markets

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State of the World-wide Property Market

01 January 2005 Renewal Season - London Market

Catastrophe PerilsDespite loss activity in the USA, Asia & Europe, property rates have continued to fall in 2005 by an average of 10%

Fire PerilsPlenty of capacity & pricing variance, heavily influenced by individual territory results. Rates continuing to fall for accounts with no major loss activity by an average of 15%.

Greater reductions available if market longevity not crucial

DeductiblesStable, but can look to reduce with good loss record & information. Generally, not sufficient credit given for increased retentions.

CapacityNo shortage of capacity. Global market capacity in excess of USD 7 billion for fire; less for natural catastrophe depending on location.

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State of the World-wide Property Market12 months to the present date

Natural Disasters Losses

April 2004 - Oklahoma Hailstorms USD75-100,000,000

May/June 2004 - US Midwest Tornadoes USD500,000,000

June 2004 - Colorado Hailstorms USD625,000,000

June 2004 - Texas Severe Weather USD175,000,000

June 2004 - Asian Typhoon Mindulle USD100,000,000

July 2004 - Japan Floods USD190,000,000

August 2004 - Asian Typhoon Rananim USD2,000,000,000 (direct economic losses)

August 2004 - Caribbean/Florida Hurricane Charley USD7,600,000,000

August 2004 - Asian Typhoon Chaba USD950,000,000

August 2004 - Asian Typhoon Aere USD269,800,000 (direct economic losses)

August/September 2004 - Caribbean/Florida Hurricane Frances USD4,700,000,000

August/September 2004 - Asian Typhoon Songda USD3,000,000,000

September 2004 - Caribbean/Florida Hurricane Ivan USD11,700,000,000

September 2004 - Caribbean/Florida Hurricane Jeanne USD4,500,000,000

September 2004 - Asian Typhoon Meari USD215,000,000

October 2004 - Asian Typhoon Ma-On USD195,000,000

October 2004 - Asian Typhoon Tokage USD1,100,000,000

October 2004 - Japan Earthquake USD450,000,000

December 2004 - Indian Ocean Earthquake & Tsunami USD2.5 - 4,000,000,000

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Property Placements - Key issues

Intangible Property (data)Crucial for exposure to be evaluated and separate products/risk

transfer effected if required.

Contingent Business InterruptionSuppliers and CustomersInterdependency

Catastrophe LimitsAsia - existing operations and growth opportunities

Loss Mitigation

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The Key to Success: Strategic Planning

Quality, relevance & depth of information

Timing

Benchmarking can help validate limits, retentions and pricing

Rating tools ensure a feel for market pricing- don’t let the market dictate the pricing!

PML’s- One common standard

A clear placement plan- Target key markets with appetite and understanding of Technology

industry exposures - Geographic diversity of market to create competition

Pro-active relationship with your insurance/reinsurance panel - Mid -Term Strategic Review Meetings- Visits to key locations

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Market reform

Best terms

Split terms/ Composite pricing

Potential pitfalls:

- Who is the leader?

- Multiple agreement parties for wordings, claims and amendments

- Could lead to:delay of policy issuanceinconsistency of coverageappointment of multiple expertsperceived breach or trust

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Conclusion

Rate reductions are continuing and no sign of upturn

Information= differentiation

Relationships are important for most clients and underwriters

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Lisa Hansford-SmithFINPRO

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State of the D&O Marketplace

Companies are now tending towards purchasing Side A or Side A&B only and reducing Side C cover.

We are seeing softening premiums across all industry groups (with the exception of Pharma).

Issues such as poor financials, governance, outstanding claims are still of concern to underwriters.

We are continuing to see increasing levels of capacity – approximately USD 400 million.

Exclusions – some of the hard market exclusions are being removed such as failure to maintain insurance.

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State of the E&O MarketplaceState of the E&O Marketplace

There are several strong Technology lead Errors & Omission markets - HISCOX, AIG, Beazley, Chubb.

Premiums -5% to 10%.

Loss Experience Uncertainty of what the next high tech issue may

bring – i.e. privacy claims.

Capacity Good levels of capacity available (approx 250

million dollars).

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The State of the E&O Market

What underwriters are not writing from an E&O perspective!!

Single project cover

– Single project cover is very difficult to obtain and in most cases not cost effective.

Patent cover

– In some cases all IPR cover.

Where are underwriters being cautious

Security liability cover

Cyber and Virus cover

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State of the MarketplaceState of the Marketplace

Tech D&O and E&O StrategiesTech D&O and E&O Strategies Underwriter Information/Face to Face Meetings

Start renewals early and ensure that all information is present in submission form.

Explain/introduce CFO/CIO/GC (if possible) to demonstrate coordination, control & process

In terms of E&O coverage: Milestone management

Meet with contract managers (this is for the E&O coverage)

How does the company handle dissatisfied customers (how soon does it move beyond the project manager to a more senior level manager?)