Emerging Issues

Charlie Kingdollar FEBRUARY 2015

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Emerging Issues

Could arise from

• Scientific and medical advancements • Judicial decisions and interpretations • New and/or amended laws and regulations • Societal trends • Other (e.g., pandemic, terrorism, climate change)

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Emerging Issues Rating Agency Interest • A.M. Best ‐ Part of ERM strategy

• S&P

‐ How is insurer:

‐ Do you have a formal committee to manage your emerging risks?

‐ Tracking emerging issues?

‐ Top 5 emerging risks?

‐ Managing emerging issues?

‐ Have you quantified losses for each of those emerging risks?

‐ Who has responsibility?

• Fitch ‐ Reserves for “other latent issues” are deficient by up to $5B

‐ Examples of emerging risks you have successfully addressed? ‐ To sources for tracking emerging risks?

‐ While its estimate “is unscientific, it's based on the belief that the industry does not fare well in its ability to predict new major latent loss exposures —making it likely that prior underwriting years will develop unfavorably.”

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Emerging Issues S&P’s ERM Framework

• S&P’s assessment of ERM examines whether insurers execute risk management practices in a systematic, consistent and strategic manner across the enterprise that effectively limits future losses within the insurers’ optimal risk/reward framework.

• All else being equal, in insurer with a stronger ERM score is less likely to experience losses outside its predetermined risk tolerances under our criteria.

Source: Standard & Poor’s Ratings Services.

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Emerging Issues So Many Issues, So Little Time…

• Cyber Attacks

• The Share Economy

• Nanotechnology

• Hazardous Imported Products

• 3D Printing

• Green Building Innovations

• Self‐Driving Vehicles & Assisted Driving Innovations

• C8 / PFOA

• Internet Communications– Personal Injury Claims

• Endocrine Disrupters

• Hydraulic Fracturing • Drone Use • GMO’s • Food‐borne Illness • BPA • Food Flavorings and Coloring Litigation

• Secondhand Smoke • Counterfeit / Imported Medicines • First Party Coverage for Asbestos Remediation • Legal Highs • Toxins in Personal Care Products • Judicial Reformation of Policy Defenses • Climate Change

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Cyber Attacks Nanotechnology 3D Printing Green Construction Internet Communications– Personal Injury Claims Residential Oil and Gas Boom Judicial Reformation of Policy Defenses GMO’s Food-borne Illness BPA Food Flavorings and Coloring Litigation The Share Economy Hazardous Imported Products C8 / PFOA Secondhand Smoke Endocrine Disrupters Counterfeit / Imported Medicines First Party Coverage for Asbestos Remediation Legal Highs Toxins in Personal Care Products Climate Change Proprietary and Confidential

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Charlie Kingdollar

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