2. DECREASED COFFERS/ INCREASED RISK WHAT’S A PUBLIC ENTITY TO DO?

3. MODERATOR: Robert A. Spolzino, Esq., Partner, Wilson Elser Moskowitz Edelman & Dicker LLP PANELISTS: Daniel J. Howell, CPCU, ARM-P, Senior Executive Vice President, Managing Director, Specialty Group, Alliant Insurance Services, Inc. Susan L. Kostro, MBA, Senior Vice President, Public Entity and Energy, Ironshore Sean M. Pattwell, MS, Managing Director & Senior Vice President, Herbert L. Jamison & Co., L.L.C. & Jamison Special Risk, Inc. Thomas L. Vance, MBA, ARM, Risk Manager, City of Anaheim Introductions

4. Agenda Financial Challenges Facing Municipalities Impact on Claims The Economy and the Municipal Insurance Market Emerging Risk Management Strategies Where Do We Go From Here? Q&A

5. Nassau Police Precinct Closures Eyed, October 10, 2011 Chicago Transit Authority to Cut More than 200 Jobs to Save $22 Million, October 10, 2011 Many Cities Imposing Broad Cuts as Revenue Shrinks, September 27, 2011 Recent Headlines

6. Some Stats Cities' general fund revenues declined 3.8% from 2009 to 2010 and are expected to decline another 2.3% in 2011. Their expenditures went down 4.4% from 2009 to 2010 and are expected to decrease by another 1.9% in 2011. Sales tax receipts declined 8.4% in 2010. 72% of cities planned to deal with the financial situation by making personnel cuts. Source: National League of Cities Report dated September 2011

7. Some Stats 550,000 jobs in local government have been lost nationally since 2008. 60% would be delaying or cancelling capital infrastructure projects. 30% planned to reduce employee health benefits. ??? planned to reduce insurance expenditures. Source: National League of Cities Report dated September 2011

8. Financial Challenges Facing Municipalities Decreased revenues; decreased reserves Cutbacks, holdbacks, and cost-shifting Restrictions on of local taxing authority Diminished ability to raise fees Labor-intensive governments Greater demands for social services

9. Employment practices claims – Employees less likely to sue? – Are insured's doing a better job terminating employees? – Likely trend when economy improves? – Are other exposures similarly impacted? – Outsourcing implications? Impact on Claims

10. The Economy and the Municipal Insurance Market Downward pressure on premiums New markets; available capacity Insurance purchasing behavior Alternative financing Have governmental entities mortgaged their future?

11. JIFs/pools – part of the answer or part of the problem? Packaged coverage vs. stand-alone? Training and post-loss advice – valuable strategies? Evaluating increased risk in expenditure reduction strategies? Using the economy to expand defenses? What else? Emerging Risk Management Strategies

12. Present meaningful tort reform – Financial crisis – Questionable/unfair verdicts (and settlements) Use economies of scale for broad risk management projects Where Do We Go From Here?

13. Key Take-Aways Public Sector would argue that financial pressures have not measurably increased claims. Primary Excess Pools report faster claims development and greater willingness to settle clear liability claims. Legal environment has not worsened, but juries continue to award staggering verdicts against public entities.

14. Key Take-Aways Immunities from professional liability claims are available in most states, but insurers (and brokers looking for a value-added service) need to educate their public entity insured's (clients) on how they can act within those immunities. Professional Liability Market participants must be prepared to offer new products and services to a public entity client base that is seeing radical changes.

15. Questions & Answers

16. Dan Howell Susan Kostro Sean Pattwell Bob Spolzino Tom Vance Many thanks to …