Wisconsin Association of Mutual Insurance Companies Directors Seminar November 9, 2015

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1 Wisconsin Association of Mutual Insurance Companies Directors Seminar November 9, 2015

2 Kimberly Ersland Reinsurance Regional Marketing Manager Grinnell Mutual Reinsurance Company Flaming enthusiasm, backed by horse sense and persistence, is the quality that most frequently makes for success. --Dale Carnagie

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4 Opportunities What are your expectations?

5 Disclaimer Anti-Trust Statement Variance by company

6 The mutual idea is an idea whereby every man might help another, without any disservice to himself. Benjamin Franklin

7 Diversify Risk Profitability Pay Claims Future viability Duty to society Why do we do it? Comply with Legal/Regulatory requirements Customer Needs

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9 Risk Transference What is Risk? Hazard or chance of loss Probability of loss Insurance An arrangement or agreement that protects someone from incurring future losses A contract that transfers the risk of a specified loss to another party in exchange for the payment of a premium --thefreedictionary.com

10 Law of Large Numbers Perform same experiment a large number of times Average of those results should be close to the expected value The more trials performed the more accuracy How does that relate to insurance?

11 Good Faith Bad Faith more often discussed

12 Insurable Interest Insured must have an interest in the property insured Can be variables and numerous person(s) with interest Not insurable interest just because a person pays premium

13 Indemnity Act of making someone whole Equal to what was lost, not better

14 Subrogation the assumption by a third party (or an insurance company) of another's legal right to collect a debt or damages

15 Understanding Operations

16 Goal Attainment Internal Constraints Efficiency Expertise Size Resources Other Brand External Constraints Public Opinion Competition Economic Conditions Regulations Demographics & expectations Catastrophic losses

17 Board of Directors Guardian Policyholder Employees Community Leader Proactive vs Reactive Strategic Planning Business Plan

18 Management

19 Internal Control Control environment Assess Risk Control activities Communication & Information Monitoring

20 Processes Underwriting Loss Control Claims

21 Underwriting Develop & Maintain profitable book of business Selecting appropriate risks Enforcing underwriting guidelines NEED guidelines Premium reflect exposure Additional coverages where appropriate

22 Underwriting Oversight of book of business Policy growth/loss Review

23 Reduce insured losses Loss Control Improve underwriting decisions Encourage improvement Potential additional revenue Reduce potential errors & omissions

24 Physical Survey

25 Claims Comply with contractual promise Relationship to financial health of company Overpayment Underpayment

26 Claims Handling Acknowledgement & Assignment Identify policy & Set Reserves Contact Insured Investigation Document Determine Cause, Coverage & Loss Amount Conclude Claim

27 Finance Management Asset Liability Policyholder protection

28 Human Resources Finding talent in the marketplace Pay structure Job Satisfaction vs Motivation Succession Planning

29 Talent Development Training Education

30 Disaster Recovery

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32 Products Home Specialty/Niche Market Farm

33 Current vs Goals Trends Rate Adequacy Surplus Growth Underwriting Gain or Investment Income? Line of Business Multivariant rating planning

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35 Information Technology BIG DATA Policy Administration Imaging

36 Security Physical Technology Importance Risks Data breach Hactivism Ransomware

37 What questions do you have for me?

38 Kimberly Long Ersland Reinsurance Regional Marketing Manager Grinnell Mutual Reinsurance Company x 5676