Page 1 Recording of this session via any media type is strictly prohibited. Page 1 We Have a Plant There? u Managing International Property Insurance and Claims Denver – April 28, 2014

Page 2 Recording of this session via any media type is strictly prohibited. Peter Laun Partner Jones Day Ron Hajjar Managing Director, Claims Preparation Practice Aon Risk Solutions Jose Heftye Senior Director, Global Risk Management Flextronics Presenters Office: +1 (408) Office: +1 (972) Office: +1 (412)

Page 3 Recording of this session via any media type is strictly prohibited. What to Expect Transform lessons learned from past claims experience to: Design an efficient international property insurance program. Develop a claim management plan before loss occur. Better loss quantification to maximize recovery minimize delay.

Page 4 Recording of this session via any media type is strictly prohibited. Different levers that will influence a property claim outcome Successful outcome Corporate / Local Expectations Program Structure Claim Adjustment Process Claim Management Team Tax Consequences Multiple Insurers Local Policies / Master DIC Loss Tracking and Quantification

Page 5 Recording of this session via any media type is strictly prohibited. Typical Structures of International Property Insurance Programs Worldwide, no local insurers (not allowed in some jurisdictions) Global master with local admitted insurers Individual domestic placements Government-required reinsurance and effect

Page 6 Recording of this session via any media type is strictly prohibited. Issues Relating to Possible Program Structures Local objectives and needs versus corporate objectives and needs (e.g., deductible structures) Captive to cover deductible and protect BU P&L

Page 7 Recording of this session via any media type is strictly prohibited. One Insurer Versus Quota-Share or Layered Programs Advantages Disadvantages One InsurerMultiple Insurers Claims Negotiation Renewal Process Bigger relationship Pricing Stability Capacity Stability Counter Party Exposure Claims Negotiation Renewal Process Smaller relationship Pricing Stability Capacity Stability Counter Party Exposure

Page 8 Recording of this session via any media type is strictly prohibited. DIC Coverage May be critical coverage for global program How it works Key issues 1. Substantive Language, Coverage or Limits issue vs. interpretation issue 2. DIC coverage may not protect local balance sheet—can money be repatriated?

Page 9 Recording of this session via any media type is strictly prohibited. Legal Program Structure Issues Choice of Law (local, defined state) Choice of Forum Arbitration vs. Litigation Policy Construction Clauses (anti contra proferentem)

Page 10 Recording of this session via any media type is strictly prohibited. Possible Structures for Claim Preparation Local team Non-local team Hybrid Broker involvement—varies by country Does insurer have local adjuster

Page 11 Recording of this session via any media type is strictly prohibited. POSSIBLE CLAIM SCENARIOS Local only Multi-location: different countries and policies (inter-dependencies) DIC claims (local claim, global policy responds)

Page 12 Recording of this session via any media type is strictly prohibited. CLAIMS ADJUSTMENT PROCESS Depends greatly on structure of program and claim Global program may lead to hybrid claims adjustment process—local and global/DIC Local policy—local norms and adjustment practices

Page 13 Recording of this session via any media type is strictly prohibited. Key Issues Program Structure Declared values for BI and PD (more common outside US) —inflation skews values Leased property vs. owned property Local adjustment practices or policy language may result in coverage gaps BI coverage (e.g., budget vs. revised market) Code upgrade coverage Disputes over what is damaged and extent of damage Professional fees—covering forensic accountants; rates; local versus international accountants

Page 14 Recording of this session via any media type is strictly prohibited. Key Issues Cultural and Logistics Currency exchange Timing—can be a much slower process Audit detail level—can be higher Cultural; language (e.g., policy and contract translations) Local expectations vs. corporate views Time zones Access to local resources

Page 15 Recording of this session via any media type is strictly prohibited. Key Issues Legal and Regulatory Legal regime differences (effective access to courts, pro-policyholder orientation, etc.) – ipsa dixit problem Tax implications of global vs. local payment Government reinsurance involvement and effect Contractual obligations to 3 rd parties (e.g. customers and suppliers)

Page 16 Recording of this session via any media type is strictly prohibited. In Summary Multiple variables will influence the outcome of a claim Pre-loss work will help you identify those variables and prepare to successfully adjust future claims: Loss quantification Coverage identification Execution and project management

Page 17 Recording of this session via any media type is strictly prohibited. KEEP THIS SLIDE FOR EVALUATION INFORMATION/MOBILE APP ETC. Please complete the session survey on the RIMS14 mobile application.