Zurich in North America Corporate Broker Advisory Council

Mike GoldenHead of Distribution ManagementZurich Global Corporate, North America

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October 2011 2

WELCOME NEW MEMBERS

Anne Anderson

Sharon Brainard

Brian Elowe

Brian Kelly

Jim Rubel

Brian Wanat

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October 2011 3

CBAC Agenda - Today

8:15 am Global Corporate Update – Mike Kerner Update from our Customer Council Meeting Q&A

9:15 Global Programs - Facilitated by: Greg Martin & Corrine Kadlec Benefits, Challenges and Solutions

10:30 BREAK

10:50 Information Security & Privacy – Risks, Challenges & Solutions – Catherine Mulligan

11:45 CBAC Session 1 Wrap-up – Mike Golden

11:55 Review afternoon activities & evening events – Brenda Lombardo

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October 2011 4

CBAC Agenda - Tomorrow

7:00 am Breakfast – Surfside A/B

8:00 CBAC Session 2 – Lori Spoon RafkinAgenda OverviewAction items from yesterday

8:15 Predictive Modeling – Tom Barger

9:00 How has the profile of the buyer changed? Facilitated by Greg Maguire

9:45 CBAC Open Forum / Q&A

10:30 CBAC Closing remarks – Mike Kerner

10:45 BREAK – Dunes Terrace

11:00 General Session – facilitated by Mike GoldenOpen forum / Q&A Panel

11:50 Closing – Randall Clouser

NOON Box Lunches / Departures

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October 2011 5

Member Tools

“Members-only” web site

BAC Membership Guide

Membership Card

Zurich Global Corporate Update

Mike KernerChief Executive OfficerZurich Global Corporate in North America

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Fall 2011 North America Risk Management Council - Update

September 14th & 15th, 2011 – Lucerne, Switzerland

Immediately preceded Global Risk Management Summit

19 key Global Corporate in North America customers

Agenda developed with customers’ input

Presenters from Europe & North America, including Group Chief Compliance Officer Jason Schupp, Head of Global CAT Management Matthew Jones, Chief Market Strategist Guy Miller, Head of IPZ Sales & Distribution Petra Riga and others

Topics included impact of RMS 11.0 on property underwriting strategy, global economic & market outlook, product recall, international programs, the meaning of Zurich’s brand essence, regulatory & legislative developments, etc.

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Key messages

Despite a year that has already seen unprecedented catastrophes, Zurich has maintained string of 34 profitable quartersWe must execute well to maintain solvency, ensure claims payments, provide reasonable return to shareholders and, most importantly, to provide service under policiesMaintaining conservative investment strategy has contributed to financial strength and stabilityContinue to seek new and expanding opportunities for profitable growth – our goal is to grow market share over the cycleZurich’s core aspiration is to be the best global insurance company serving corporate customers, as measured by our customers, shareholders and employees

INTERNAL USE ONLY 99

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Real GDP Growth (%)

Recession began in Dec. 2007. Economic toll of credit crunch, housing slump, labor market

contraction has been severe but modest recovery is underway

The Q4:2008 decline was the steepest since the Q1:1982

drop of 6.8%

2011 got off to a sluggish start, but growth is expected to accelerate in the remainder of the year. This is a major positive for insurance demand

and exposure growth.

Market Context - US Real GDP Growth*

* Estimates/Forecasts from Blue Chip Economic Indicators.Source: US Department of Commerce, Blue Economic Indicators July 2011; Insurance Information Institute

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Market Context – Annual Inflation Rates,(CPI-U, %), 1990–2014F

2.8 2.6

1.51.9

3.3 3.4

1.3

2.5 2.3

3.0

3.8

2.8

3.8

-0.4

1.6

3.1

2.2 2.1 2.2

2.92.4

3.23.0

5.14.9

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11F 12F 13F 14F

Sources: US Bureau of Labor Statistics; Blue Chip Economic Indicators, March 2011 and July 2011 (forecasts).

Annual Inflation Rates (%)

Inflation peaked at 5.6% in August 2008 on high energy and commodity crisis. The recession and the collapse of the

commodity bubble reduced inflationary pressures in 2009/10

Higher energy, commodity and food prices are pushing up inflation in 2011, but not longer term

inflationary expectations.

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Cumulative Quarterly Comm Rate Changes, by Account Size: 1999:Q4 to 2011:Q2

Source: Council of Insurance Agents and Brokers; Insurance Information Institute

1999:Q4 = 100

Pricing today is where is was in

Q3:2000 (pre-9/11)

Downward pricing pressure is most pronounced for

larger risks

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10-year Treasury Notes reached all-time low in August

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Jun-08Oct-08

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Feb-10May-10

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Mar-11

Jun-11Oct-11

Jan-12%

Yie

ld

Month - Year

10-yr Treasury Note Returns (as of Aug-26-2011)

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Global Catastrophe Loss SummaryFirst Half 2011

2011 Is Already (as of June 30) the Highest Loss Year on Record Globally

− Extraordinary accumulation of severe natural catastrophe: Earthquakes, tsunami, floods and tornadoes are the primary causes of loss

$260 Billion in Economic Losses Globally− New record for the first six months, exceeding the previous record of $220B in 2005− Economy is more resilient than most pundits presume

$55 Billion in Insured Losses Globally− More than double the first half 2010 amount− Over 4 times the 10-year average

$27 Billion in Economic Losses in the US− Represents a 129% increase over the $11.8 billion amount through the first half of 2010

$17.3 Billion in Insured Losses in the US Arising from 100 CAT Events− Represents a 162% increase over the $6.6 billion amount through the first half of 2010

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Criteria Necessary for a “Market Turn”All Four Criteria Must Be Met

Criteria Status Comments

Sustained Period of Large Underwriting Losses

Not Yet Happened

• Apart from Q2:2011, overall p/c underwriting losses remain modest

• Combined ratios (ex-Q2 CATs) still in low 100s (vs. 110+ at onset of last hard market)

• Prior-year reserve releases continue reduce u/w losses, boost ROEs

Material Decline in Surplus/ Capacity

Surplus is At/Near Record High

• Surplus hit a record $565B as of 3/31/11• Analysts est. excess surplus of $75-$100B• Some excess capacity may still remain in reinsurance

markets• Weak growth in demand for insurance is insufficient to

absorb much excess capacity

Tight Reinsurance Market

Somewhat in Place

• Higher prices in Asia/Pacific• Modestly improved pricing for US risks

Renewed Underwriting & Pricing Discipline

Not Broadly Evident

• Commercial lines pricing trends remain negative• Competition remains intense as many seek to

maintain market share• Terms & conditions—no broad tightening

Sources: Barclays Capital; Insurance Information Institute

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Focus on International Business

Latin America Region

Santander acquisition – life, pension and general insurance

Malaysian Assurance Alliance Berhad acquisition

MIA for Brokers

Customer Service Reports

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The way forward – Customer Centric Operating Model

1. Largely fixed costs2. Variable processes per office & LoB3. Inconsistent customer service4. Role definitions often unclear

1. Mphasis & ZNA service on a variable cost basis2. Management of process steps to drive improvements3. Focus on retaining within GCiNA tasks that add customer value4. Reduce front end footprint to focus on customer facing activities

General Operations Support

Front Office Market Facing & Market Facing UWSS

Centralized and Virtual UWSS within GCiNA

ZNA Service Center

Mphasis

UWSS O.S.S.

Projects &

Initiatives

Governance

SchaumburgSchaumburg

Increasingly standard, simple procedures

2009 2010 - 2011 onwards

Front Office UW & UWSS

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Reduced fluctuations in results

Reduced fluctuations in results

Balance sheet protectionBalance sheet protection

Protect brand & reputation

Protect brand & reputation

Informed decision making

Informed decision making

Supporting sustainability and profitability

Maintain customer relationships

Maintain customer relationships

Increase transparency

Increase transparency

SC11(V1)Apr/20/10GC/ZCA

Supply chain risk assessment and insurance

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Reducing risks and costs by integrating technology with insights

SaferSafer

Cost effectiveCost effective

GreenerGreener

Zurich Fleet Intelligence

Q&A

Global Programs – Benefits, Challenges and Solution

Facilitated by: Gregory MartinBroker Relationship Leader Zurich North America

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8/13/2010 21 2

240 + countries and kingdoms

Conflicting laws and regulations

Various premium and tax requirements

Varying business practices

Various licensing requirements

Increased communication among regulators

TEM24(V1)Oct/28/09GC/ZCA

Complexities of International ProgramsNumerous Variations and Considerations

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8/13/2010 22 22

Zurich IPZ OperationsInvesting in managing the network

65 dedicated professionals

Worldwide uniform goal setting

Monthly performance

measurements

Worldwide use of International

Program Application

90% of claims managed by our owned network

1,000 Risk Engineers in 37

countries and 50,00 assessments

30,000 policies issued annually

What Our Customers Say

IPZ34(V1)Oct/30/09GC/ZCA

What Our Customers Say

IPZ35(V1)Oct/30/09GC/ZCA

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8/13/2010 25 25

Our Customers

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8/13/2010 26

So, how do we get there?

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8/13/2010 27

Multinational Insurance Application (MIA)

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What are the Risks of Non-Compliance?Argentina imposes fines

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8/13/2010 29 29

What are the Risks of Non-Compliance?Switzerland & FOPI step in

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8/13/2010 30

Multinational Insurance Application

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The MIA Process has 3 steps

Map customer’s risk profile and

structure1

Input Output

Devise solution and allocate premiums

2

Calculate & document insurer

premium taxes3

19© Zurich -

LPF

LP D

LPI

LPUSA

Example of a solution

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AUHK

CNDCountries that allow

non-admitted

LP

LPLP

USIR

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Financial Interest Cover to protect parent‘s

interest in case cover and/or limits can not be

fully exported

LP = Local policy

LP LP LP

EEA => FoSDIC / DIL

2

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LP D

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LPUSA

Example of a solution

Master Switzer-

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AUHK

CNDCountries that allow

non-admitted

LP

LPLP

USIR

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Financial Interest Cover to protect parent‘s

interest in case cover and/or limits can not be

fully exported

LP = Local policy

LP LP LP

EEA => FoSDIC / DIL

2

Tax

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8/13/2010 32

MIA - Comprehensive and easy to use

Choose your Line of Business, country of

risk and business scenario

Selected countries displayed

Non-admitted information detailed including variations (regulatory & tax

information)

The data is updated to incorporate any country regulatory changes when identified by our legal network. In addition, MIA data is annually reviewed and maintained.

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8/13/2010 33 33

Country/Risk Mapping

Countries where non-admitted insurance is permitted for ground-up primary insurance, DIC/DIL and/or excess coverage.

Countries where non-admitted insurance is prohibited for ground-up primary insurance, DIC/DIL and/or excess coverage. The only insurance activity tolerated is by a locally licensed/registered insurance company.

“Red” EEA countries where Freedom of Services (FoS) principles apply – permitting cross border insurance without further regulatory or licensing requirements.

Green Countries

Blue Countries

Red Countries

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8/13/2010 34 34

Calculate and Document Taxes

Premiums and related taxes must be paid under policies where coverage is being provided

Using the MIA database, we can identify and calculate taxes for 41 Lines of Business in approximately 180 countries

We can provide customers with a report of all premium taxes owed by the insurer that were collected and disbursed to the tax authorities.

TaxReport

TaxReport

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8/13/2010 35

MIA Demo

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8/13/2010 36

Customer Service Report

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8/13/2010 37 37

International Program SystemEnsuring Program delivery & Service Excellence

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8/13/2010 38 38

NEW Global Customer Service Report Customer Relevant Metrics

Service Metrics are mirrored in new, improved, and consistent Customer Metric report

Supports greater transparency with our brokers and customers

Enables a direct understanding of how our internal (service) performance impacts and influences our customer’s experience

Helps us to communicate with our brokers and customers to find ways they can help us and vice versa.

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8/13/2010 39

Customer Service Report

1. Introduction Explains terms used and metrics measured in an easy to understand manner

2. Executive Summary 1-page summary, overview of performance results and list of countries helps to quickly focus on hot spots

3. Program Overview Overview of current status of all policies

4. Performance Measure

Every metric is highlighted on 1 page

5. Benchmark Comparison of current performance with prior year and Zurich portfolio

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8/13/2010 40

Customer Service ReportService Performance Measurements

The report includes the following measurements: Time to receive all information Time to issue policies Time to issue invoices Time to receive premium payments (only for Captive programs)

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8/13/2010 41

Customer Service ReportProgram Overview

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8/13/2010 42

Customer Service ReportBenchmark

How did we perform? Overview in comparison to property portfolio 2010

The Benchmark section includes two comparisons:

Performance versus prior year

Performance versus Zurich portfolio (LoB specific)

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8/13/2010 43

Thank you !

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October 2011 44

BREAK

Information Security & Privacy

Catherine A. MulliganVP, Underwriting ManagerSpecialty E&OZurich North America

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October 2011 46

Agenda

Security Breach definedPrivacy Breach definedSecurity & Privacy ExposuresLitigation & Regulatory TrendsData Breach Costs/StatisticsRisk Management TrendsClaim Examples & Costs

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October 2011 47

What is a Security Breach?

The theft, alteration, or destruction of Electronic Data on a Company’s Computer System;the Unauthorized Access to or Unauthorized Use of the Company’s Computer System;the denial of an authorized user’s access to a Company's Computer System, the participation by a Company's Computer System in a Denial of Service Attack directed against a third party’s Computer System; orthe transmission of Malicious Code from a Company's Computer System to a third party’s Computer System.

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October 2011 48

Examples of Security Breaches

Network Hack or IntrusionUse of stolen login credentials (most common)Exploitation of “Backdoor” (see below)SQL InjectionOperating System CommandingFootprinting/FingerprintingExploitation of insufficient authentication (no login required)Exploitation of insufficient authorization (weak or misconfigured access control)Denial of Service Attack

Malware Backdoor - Allows remote access/control (most common)Keylogger/Spyware - captures data from user activity Send Data to Additional Site/Entity/PersonDownload/installation of additional malwareRAM Scraper – captures data from volatile memoryPacket Sniffer – capture data from networkWorm – infects other systems via network propagation

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October 2011 49

What is a Privacy Breach?

Privacy Breachan unauthorized disclosure or loss of:

– Personal Information in the care, custody or control of any Insured or Service Provider; or

– Corporate information in the care, custody or control of any Insured or Service Provider that is specifically identified as confidential and protected under a nondisclosure agreement or similar contract; or

a violation of any Privacy Regulation.

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October 2011 50

Privacy Breach Examples

Lost/stolen laptops or other portable devicesLost or stolen physical records Improper disposal of sensitive documentsImproper disposal of hardware containing sensitive informationSocial Engineering Misappropriation of trade secrets

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October 2011 51

Security & Privacy Exposures

Why is this such a hot topic?

Change in Regulatory Environment

Several High Profile, Well-Publicized Incidents over last couple of years

Increased Dependency on Technology

More “Paperless” Work Environments

New Contractual Requirements

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October 2011 52

Security & Privacy Exposures (cont.)

Over 535 Million records have been breached since January 2005;So far this year:

Almost 417 separate breaches have been recorded;Causes:

– Unintended Disclosure (accidental posting, sent to incorrect party, etc…)

– Hacking or malware

– Payment Card Fraud

– Insider (rogue employee)

– Physical Loss

– Portable device

– Stationary Device

– Unknown

Source: Privacy Rights Clearinghouse (www.privacyrights.org)

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October 2011 53

Who is at Risk?

IndustriesHospitality (40%)Retailers (25%)Financial Services (22%)Government (4%)Manufacturing (2%)Technology (2%)Healthcare (1%)

Service ProvidersBusiness Process OutsourcersPayrollCall CentersData Processors

Any Organization holding:Sensitive Customer/Patient DataSensitive Employee InformationConfidential Third Party Corporate Information

Source: Verizon 2011 Data Breach Investigations Report

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October 2011 54

Financial Impact – What will it cost?

Crisis Management Costs to Restore Reputation

Legal, public relations or other service feesAdvertising or related communicationsCustomer Churn/loss of customer confidenceStock devaluation

Forensics InvestigationCosts of Notification

Printing, postage or other communications to customers

Credit/Identity monitoring servicesRegulatory/PCI Fines and PenaltiesLegal Liability

Class action litigationSuits from Customers and Vendors

Risk Management improvementsCost to implement a comprehensive written information security programCost to upgrade network security

Business Interruption LossesLoss of IncomeCosts to Recreate Lost or Stolen DataExtra Expenses– Overtime pay for staff

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October 2011 55

Litigation and Regulatory Enforcement Trends

Increase in regulatory actions: HIPAA/HITECH relatedOCR and CMS have aggressively enforced the Privacy and Security Rules under HIPAA

Enforcement continues at the state level (AG’s)

Class Actions continue

Emerging theories of liability (does the threat of identity theft equate to actual damages?)

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October 2011 56

Data Breach Costs

Average Cost of a Breach: $7.2M

$214 per recordDirect costs: $73 Indirect Costs: $141

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October 2011 57

Data Breach Statistics

Almost 800 cases studied

92% resulting external bad actors (hackers, malware)

17% implicated insiders

86% were discovered by 3rd parties, NOT by the company itself

96% of incidents were avoidable with simple controls

Main attack pathway – web applications (54%)

Hospitality was the largest sector represented by volume

Source: Verizon 2011 Data Breach Investigations Report

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October 2011 58

Data Breach Statistics (cont.)

Costs Associated with Data Breach Incidents

• Third party mistakes (vendors) • Avg cost per record: $217 v $194 • Due to additional forensics and consulting fees

• Malicious or criminal attack resulting in loss or theft of Personal Information• Avg cost per record: $215 (malicious) v $166 (negligence)

• Lost/stolen laptop or other mobile data device• Generally more expensive than other incidents• Avg cost per victim: $225

• First Time Data Breaches• Avg cost for first time breach: $228 per record• Avg Cost for repeat experience: $198 per record

Source: Ponemon/PGP 2009 Annual Study: Cost of a Data Breach

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October 2011 59

Data Breach Statistics (cont.)

Mitigating Factors

• CISO leadership during a data breach response reduces the overall cost per record• Avg Cost per record: $157 (CISO) v $236 (non-CISO)

• Quick Response times correlate with higher average notification costs• Avg Cost per record: $219 (quick response) v $196 slower response• Moving too quickly may cause cost inefficiencies during the

detection, escalation and notification phases

• Engagement of outside consultant decreases average costs • Avg Cost per record: $170 (3rd pty) v $231 (in-house)

Source: Ponemon/PGP 2009 Annual Study: Cost of a Data Breach

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October 2011 60

Risk Management Trends

Shift in Risk Management Practices

Many organizations have shifted the focus from pre-breach risk assessment to post breach reaction procedure – “Checklist Mentality”General lack of awareness of the extremely high costs associated with a breachProtocol for auditing 3rd parties/external organizations is inadequateAwareness has not yet translated to the enterprise level

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October 2011 61

Claim Examples and Costs

Broome Community College – February 2009Winter/Spring Alumni Magazine was mailed with Social Security Numbers posted on back cover;Approximately 14,000 individuals were affected;

Kaiser Permanente Bellflower Medical Center – May 2009Hospital was fined $250,000 for failing to prevent unauthorized access to patient medical records;Hospital was fined a second time in July 2009 for same violation in the amount of $187,500.

Network Solutions – July 2009573,000 records compromised when hackers broke into Network Solutions’ web servers used to provide e-commerce services to more than 4,000 small business merchants;TransUnion hired to notify merchants and customers; estimated costs are unknown;Network Solutions was PCI-Compliant at the time of the breach;

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October 2011 62

Questions?

Contact information:

Catherine MulliganVice President, Specialty E&O(212)553-5560Catherine.Mulligan@zurichna.com

Tim StapletonAssistant Vice President, S&P Product Manager(212)553-5424Tim.Stapleton@zurichna.com

CBAC Wrap up – Session 1

Mike GoldenHead of Broker Relationship ManagementZurich Global Corporate in North America

Afternoon Activities…grab a lunch and…

Golf – A Scramble start will begin at 1:00 pm. Plan to meet in the lobby of the Beach Resort at 12:15 pm for departure

Sailing – The Catamaran boat will depart from the main resort dock at 1:00 pm and return around 3:00

pm. Plan to meet in the lobby of the Beach Resort at 12:15 pm for transfer to the main resort. Casual attire is recommended.

Tapas Cooking Class – The Tapas Tour hands-on cooking will begin at 1:00 pm and concluded around 3:00 pm. Plan to meet in the lobby of the Beach Resort at 12:30 pm for transfer to the main resort. Casual attire is recommended.

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Evening Events…

6:15 pm – Departure for Dinner, meet in lobby6:30 pm – Cocktails, Luca Patio7:30 pm – Dinner, Lucca Garden Room7:40 pm – Awards 8:45 pm – Dessert, Scotch & Cigars, Lucca Patio

Transfer back to beach hotel (3 shuttles)9:15, 9:45 & 10:00

HAVE FUN!

Zurich in North America Corporate Broker Advisory Council

Lori Spoon RafkinBroker Relationship LeaderZurich North America

Friday, October 21Second Session

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CBAC Agenda

8:15 Predictive Modeling – Tom Barger

9:00 How has the profile of the buyer changed? Facilitated by Greg Maguire

9:45 CBAC Open Forum / Q&A

10:30 CBAC Closing remarks – Mike Kerner

General Session

10:45BREAK – Dunes Terrace

11:00 General Session – facilitated by Mike GoldenOpen forum / Q&A Panel

11:50 Closing – Randall Clouser

NOON Box Lunches / Departures

Predictive Modeling – How can we partner better together?

Tom BargerAVP, North America ClaimsZurich North America

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HISTORY OF ZURICH’S EFFORTS

STRATEGY Long Term Strategic Initiative for U/W, Distribution, and ClaimsActuarial “Center of Excellence” for PM established in 2007Initial Modeling done in UnderwritingClaims Modeling started in 2009:

– WC led

– Goal : reducing total cost of risk, both loss cost side and expense

– Several models operational: Severity, FNOL, NCM assignment

– Deployment running parallel with Workflow Management project (driving down expenses)

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PREDICTIVE MODELING:IT’S ALL ABOUT THE DATA

Data Type Source Example

Claim, Claimant data Internal: Claims System

Date of Loss, inc’d $

Claim Text info Internal: Notes Comments, Case summary

Claimant Medicals Internal: Bill Review ICD-9, CPT codes, Pharmaceuticals

Policy Internal: Policy system Employer characteristics

Agent/Producer Internal: Sales system Loss experience

Credit External: 3rd Party Rating, payment history

Prior claims External: 3rd Party Claimant history

Demographic External: 3rd Party, Gov’t

Education, hobbies, income

Environmental External: Gov’t Weather, disease8/13/2010 71

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PREDICTIVE MODELING:SOME TECHNICAL ASPECTS

How we built the Claims Models:Uses Generalized Linear Modeling (Multivariate) techniquesExtensive data categorization and refinement

– Trending of loss data by state and type

– Groupings and classification (e.g. ICD-9 codes)

– Roughly 1 million claims in modeling population – Text mining of adjuster notes

Worked with external consultants and data vendorsIncorporates structured claim data, text, policy, and external dataTarget variables include severity, propensity, and duration Lift – what is it ?

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Sample Lift Chart from Model

Actual and predicted are within a +-10% ratio across deciles. As predicted value increases, actual loss severity is well segmented with an overall spread over 350 points.

Lost Time Indemnity Validation Data

-200%

-100%

0%

100%

200%

300%

400%

1 2 3 4 5 6 7 8 9 10

Actual RelativityPredicted Relativity

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PREDICTIVE MODELING: SOME OPERATIONAL ISSUES

So, Now you’ve got a model. What’s next ? Extensive Testing prior to deployment

– Identifying false positives, etc… for patterns (supplement with rules)

Deployed as part of new FNOL system (Fall, 2010)

– Builds on existing operating model (Rules)Scoring Engine: What’s that?Scores and reason messages available to Claims Professional

– Updated content and display currently in development

– Integrated with Workflow Management efforts How often do you run model ?

– Specific intervals ?

– Specific triggers ?

– How much does score change ?

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PREDICTIVE MODELING:HELPING TO REDUCE TOTAL LOSS COSTS

Future plans for Claims Predictive Modeling Work continues on WC:

– NCM referral, Life of claim/development models

– Other applications: Suspicious claims, Recovery, Other lines of business:

– Liability , Auto, & Property

Improving Timing and Delivery of Services to Customers:3,000+ Claims Professionals Award-winning Claims Intake Center200+ Nurses, including Medical Director, U/R physicians300+ Attorneys Recovery, Subrogation, and SIU Specialists

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PREDICTIVE MODELING:IMPROVING THE CUSTOMER AND BROKER EXPERIENCE

Driving Value for Customers:Improved service through more precise, timely, and better focused interventionsBetter insights about loss costs and key drivers – helping them better manage risk in their own operations

And for Brokers:Enabling strategic rather than transactional focus with customersLarge-risk customers vs. smaller

– Sophistication, RM staff, support needsEnhancing reach of your data and systems

How can or should we work with Brokers and Customers ?Their efforts ?Specific applications ? Beyond Claims ?

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Facilitated by: Greg MaguireHead of Customer, Distribution and MarketingZurich Global Corporate in North America

How has the profile of the buyer Changed?

What role can we play to advance ERM in our customer’s organizations?

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ERM Practices in Large Companies

THE ISSUE

Corporate Boards not walking the ERM talk

Risk Managers playing minor role

THE CHALLENGE

What can we do to advance ERM as an ongoing practice/function within the Corporate segment?

What can we do to advance the position/standing of the Risk Manager within the overall ERM framework?

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OVERVIEW: Greenwich Associates Survey Results & RecommendationsInternet survey of Risk Managers at large U.S. companies in July

2011Questions regarding ERM practices in their companies

Study HighlightsRM’s report that ERM is a widely accepted CONCEPTBut, Board of Directors have failed to provide leadership in establishing effective ERM practices70% of large companies do not have CRO’s with ERM as a primary focus

– 75% of financial companies have CRO’s

– 78% of non-financials do not

40% of large companies lack a “Corporate Risk Committee”– over 80% of companies with more than $5 billion of annual sales have a CRC

Of companies that do have a CRC, about 33% do not include their insurance RM

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Greenwich Associates Recommendations to Corporate Boards

Boards should tap into risk management expertise from external sources such as Insurance Broker and Carriers

– Too much reliance on internal briefings and reports from the CFO regarding risk management

Boards should take full advantage of their own insurance risk professionals

– More than 50% of RM’s do not meet with the Boards to discuss risk issues

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Summary

ERM has gained much traction as a valuable concept in large companies

ERM practices have yet to be embedded consistently across these companies

The role of the Risk Manager in ERM is at a low level

We are in a “Talk the Talk” stage

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Questions for Discussion

ERM – GENERALShould we work to advance ERM as an embedded practice with our customers?

If so, is there value in doing this together as Broker and Insurer?

What actions could be taken?

RISK MANAGERSPerspective: Do Risk Managers want to take a more visible and active role within the ERM framework of their companies?

For those that do, what can we do to help them elevate their roles to become more valuable and strategic within their companies?

Facilitated by: Mike Golden

OPEN FORU

M

Corporate Broker Advisory Council:Closing Remarks

Mike KernerChief Executive OfficerZurich Global Corporate in North America

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BREAK (Dunes Terrace)