County Reinsurance, Limited Casualty Market Update

1. County Reinsurance, LimitedCasualty Market Update NOVEMBER 15, 2011 Mark TurkaloPublic Entity PlacementNew York, NY

2. Agenda • Public Sector Update • Casualty Insurance Market Update • Hot Topics • Volunteer Exposure • Casualty & Excess Workers Compensation Markets • Fiduciary Liability • Questions

3. Public Sector Update • Continued budget deficits • Staff reductions and furloughs • Increased workers’ compensation and employment practices claims • Proposed cuts for education, transportation, construction, renovations and services • Entities are seeking solutions to reduce the total cost of risk to meet budgeted allowances • Increased retentions • Reduced limits • Self insurance • Risk transfer, reduction in loss funds

4. Casualty Insurance Market Update • Insurance pricing generally has remained stable for 2011 but… • Rate increases are anticipated in 2012 depending on loss experience or tort law • Where losses deteriorate significantly, rate increases can be as high as 50 percent • Excess Workers’ Compensation marketplace is becoming volatile - increases from10% to 30% on renewals • Poor results of investments, negative loss development and lack of medical cost containment • Underwriters are setting higher minimum premiums and/or higher retentions • Premiums are still driven almost entirely by actuarial projections

5. Hot Topics • Jails and related Law Enforcement activities • Sexual abuse • Strip search procedures • Suicide prevention • Inmate medical care • Overall aging infrastructure • Furlough and reduced workforce • Law Enforcement training • Parks Security • Spike in severity • Dams • Nursing homes • Benchmarking – Exposure, Experience, Expiring Rate? • Volunteer Screening

6. Hot Topic - Volunteer Exposure How is coverage provided? • General Liability and Automobile Liability provide insured status while under the direction of the Named Insured • General Liability usually excludes injury to volunteer fire fighters, police and EMT’s, as coverage would be sought under Workers Compensation • Workers Compensation is provided through the Voluntary Compensation endorsement How is coverage rated? • General Liability and Automobile Liability do not have a separate charge for volunteers • Workers Compensation rating basis varies by state - could be a flat charge or per volunteer Challenges • Carriers are carefully underwriting this exposure • More volunteers are used in a depleted workforce - increased claims activity related to the exposure • Many volunteers can be past the age of retirement - more susceptibility to injury • Public Entities must carefully manage this risk so as not to infringe on civil rights • Volunteers require the same background screening as an employee

7. ACE Arch Argonaut (Trident or Alteris) AWAC BRIT Catlin Chartis - Lexington Endurance Evanston Genesis Great American Ironshore Liberty Meadowbrook Munich Re (various programs) New York Marine (Midlands) OneBeacon Philadelphia Praetorian Safety National Scottsdale/National Casualty Starr Indemnity Travelers Zurich (Glatfelter) Casualty Markets

8. Excess Workers Compensation Markets • ACE • Arch • Chubb • Discover Re • Midwest Employers • Meadowbrook • Midlands • Safety National

9. Fiduciary Liability Employee Benefits Liability vs. Fiduciary Liability • Needed when pension plans are managed on behalf of individuals • Rated off of planned assets and number of contributors • $25,000 investigation limit • $10M to $15M capacity Claims Examples for Defined Contribution Plans: • Failure to timely distribute assets • Failure to choose/offer prudent investments • Failure to monitor investment performance • Failure to diversify investments • Failure of investments to perform as promised • Failure to provide participants information • Failure to take steps to stop/minimize loss • Failure to timely deposit money in participant Accounts

10. Fiduciary Markets • ACE USA • Chartis • Chubb • Philadelphia • Travelers • XL • Zurich