State of the Market

Coverage Update
Event Cancellation
• few claims in wake of Japan (Tohoku EQ)
• 8/23 east coast EQ leads to few claims, most limited to disruption not cancellation
o expect EQ surcharge in certain regions not previously affected
• active 2011 Atlantic hurricane season forecast results in single landfall (8/22 Irene category 1)
• terrorism & communicable disease (CD) rates biggest component of premium expense
• surcharges for terrorism, CD & wind vary based on carrier reinsurance terms & costs
• stratified terrorism & CD options cause coverage confusion among buyers and brokers
• Outlook: mild hurricane season will keep aggressive competition among London syndicates - factor in keeping rates low

Property & General Liability (CGL) including Automobile & Umbrella Liability
• rate trend thru Q2/11 had been @ expiring or 2% - 3% below expiring
• property rates increased 1% - 2% in Q3 11
o expected to go up 2% - 5% through Q1 12
• coastal property rates expected to rise even higher w/increased wind deductibles
• CGL, Auto and Umbrella rates should remain flat to slightly up

Worker Compensation
• midway through traditional rate filing season over half of states reporting have approved rate increases or are considering them
• FL, NY, NJ, VA all among states w/7% - 10% rates increases pending or already approved
• rates & regulatory climate expected to remain stable thru 1/12 in most other states
• smaller working population along w/increased healthcare & prescription costs driving rates up
• impact of recent healthcare reform unclear

Nonprofit D&O
• overall D&O market likely to see rate increases –
o nonprofit rates Q4 11 thru Q2 12 expected to remain level perhaps slight increase
• Employment Practice nonprofit D&O claim frequency leader w/as much as 90% of reported claims

Top Nonprofit Insurance &
Risk Management Story: Mother Nature
With the possible exception of DC’s “trembler to remember”, no one event has affected nonprofit organization risk management in a singularly dramatic way. However, the frequency and severity of large scale natural disasters throughout the world in recent years cannot be overlooked. Extraordinary quakes in Japan, Turkey, New Zealand and Chile; flooding in Japan, Australia, the US and Thailand, have led to loss of life and damages on an almost unthinkable scale. In the US tornados, have been both devastating and frequent unlike any previous period for which records are available. Winter storms with snowfall totals and low temperatures setting records in many areas not accustomed to such harsh conditions.

Carrier Update
AM Best Rating
Carrier Rating Financial Size Category Outlook Effective Date
Axis A XV Stable 11/12/2010
Chartis1 A XV Negative 12/20/2010
Chubb A++ XV Stable 3/4/2011
CNA A XV Stable 3/2/2011
Great Am A XIV Stable 2/14/2011
Hartford A+ XV Stable 4/12/2011
Lloyds A XV Stable 7/6/2010
Philadelphia A+ XIV Positive 2/9/2010
Travelers A+ XV Stable 6/8/2010

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