Tort Reform in Tort Reform in Reverse?Reverse?

Singin’ The PL BluesSingin’ The PL Blues

MODERATOR:

• Sean Fitzpatrick, Esq., Senior Vice President, Middle Market & Specialty Financial, The Hartford

PANELISTS:

• Timothy Braun, MBA, Executive Vice President, AXIS

• Louis H. Castoria, Esq., Partner, Wilson Elser Moskowitz Edelman & Dicker LLP

• Jason Hawkins, Managing Director, Aon

• Kalju Nekvasil, Esq., Partner, Goodman & Nekvasil, P.A.

AgendaAgenda

• Tort Reform in Reverse: Has the tide turned?

• Developments in Securities Liability

• Healthcare Reform – Implications for the Professional Liability Industry

• Financial Services and Professional E&O – How will Underwriters and Brokers address a changing liability environment?

Developments in Securities Liability

Scandals, Prosecutions, and InvestigationsScandals, Prosecutions, and Investigations

• Madoff• Stanford• And a Cast of Thousands

Regulation of Hedge Funds? Insurance?Regulation of Hedge Funds? Insurance?

Changes in the FINRA Arbitration SystemChanges in the FINRA Arbitration System

• Fewer “Industry” Panelists• Fewer Motions to Dismiss• No Arbitrations of Statutory Rights

Section 1031 ExchangesSection 1031 Exchanges

• $3.7 Billion in TIC offerings in 2006• What happened at DBSI?• Why real estate turned out to be risky

Reg. D – Private OfferingsReg. D – Private Offerings

• 26,485 private offerings filed in 2008• What happened at Medical Central?• What happened at Provident Royalties• Who is minding this store?

Looking Ahead -- TrendsLooking Ahead -- Trends

Healthcare Reform – Implications for the

Professional Liability Industry

Health Care Reform = Tort Reform?Health Care Reform = Tort Reform?

Managed Care, ERISA, and Bad FaithManaged Care, ERISA, and Bad Faith

Medical Device Safety ActMedical Device Safety Act

Arbitration Fairness ActArbitration Fairness Act

Financial Services and Professional E&O – How will Underwriters and Brokers address a

changing liability environment?

Effect on FI UnderwritingEffect on FI Underwriting

Sector Analysis

• Underwrite to individual sectors to determine which are more vulnerable with systemic exposure always a concern.

• Understand that the exposure is fluid and changes occur from both internal and external forces.

Effect on FI UnderwritingEffect on FI Underwriting

• Management Analysis

• Financial Analysis

• Operational Risk Management Analysis

• Enterprise Risk Management

Effect on FI UnderwritingEffect on FI Underwriting

Conclusion: Comprehensive Review

• Utilization of traditional and non-traditional underwriting resources

• Differentiating between well-managed and poorly-managed risks

• Balance between proper rate and coveragevs. premium

• A Brokers Perspective Challenges faced by the broker What it means for the client Education - broker and client focused

• Potential Impact on Clients Higher premiums and retentions Limited coverage available Managing insurance budgets vs. insurance spend Education

Industry Challenges Industry Challenges

Industry Challenges Industry Challenges

• Carrier / Industry Challenges If current trend continues can/will carriers continue to

write certain lines of business Increased defense costs Increased claim frequency and severity Program limits and structures “In the News”/Headline Risks – Madoff, Stanford,

Lehman, AIG etc…. Economy

QuestionsQuestions&&

AnswersAnswers

Many thanks to …Many thanks to …

• Sean Fitzpatrick

• Tim Braun

• Louis Castoria

• Jason Hawkins

• Kalju Nekvasil