1. Laura S. Danoff Educational Enterprises (#30885) Wilson Elser Moskowitz Edelman & Dicker LLP (#1760) “The Art, Science and Law Of Underwriting” Thanks to our Continuing Education Providers Wednesday, September 6, 2007 Sierra Specialty Insurance Services Thanks to our Hosts

2. Opening and Welcome  Statement of compliance – anti trust  CE/MCLE Credit  PLUS Membership Benefits  Makes programs like this possible  Discounts at PLUS national events  Resources through  Resources through www.plusweb.org  Local and International networking  RPLU and other recognition n the industry  We have a good time! WELCOMEWELCOME

3. Today’s Speakers Diana Granillo United Valley Insurance Services Nick Taube Maxim Insurance Group Louie Castoria Wilson Elser Moskowitz Edelman & Dicker LLP and You

4. Our Agenda Underwriting is an Act – DianaUnderwriting is an Artistic Act – Diana Underwriting is a Act – NickUnderwriting is a Scientific Act – Nick Underwriting is a Act – LouieUnderwriting is a Legal Act – Louie Three Difficult Placement Situations, featuring audience reactions and panelists’ comments.Three Difficult Placement Situations, featuring audience reactions and panelists’ comments. Feel free to ask questions and contribute comments throughout.

5. Underwriting is an Act Underwriting is an Artistic Act

6. Underwriting is a Scientific Act

7. Underwriting is a Act Underwriting is a Legal Act

8. What results from Underwriting? (Hint: it’s a Contract)

9. What do those words mean? Do they mean what they say in the contract? Do they mean what you or I intended? Do they mean what a judge says they mean?

10. When do we look beyond the policy itself? Ambiguity Ambiguity Rescission/Reformation Rescission/Reformation Public policy Public policy

11. Ambiguity General Rule: read the contract, all of it. If still unclear, look at the context If still unclear, look at the insured’s objectively reasonable expectations

12. Rescission/Reformation Reformation: The parties’ mutual intent isn’t reflected in the policy. Rescission: The applicant concealed or misrepresented facts that were objectively material to the risk, and which the insurer didn’t have reason to know.

13. Public Policy

14. “Time for a short break”

15. Laura S. Danoff Educational Enterprises (#30885) Wilson Elser Moskowitz Edelman & Dicker LLP (#1760) “The Art, Science and Law Of Underwriting” Thanks to our Continuing Education Providers Wednesday, September 6, 2007 Sierra Specialty Insurance Services Thanks to our Hosts

16. Difficult Placement #1 A mortgage banking firm, Owl Lending, has been through some tough times. Owl is a small company, with less than $2 million in capital. They have had an operating loss for the last two fiscal years, and restated their financial statements once during that time frame.

17. Owl has only a small percent of subprime loans, and no prior E&O claims. To satisfy contract commitments, Owl must maintain both Mortgage Banker E&O and D&O coverage. Would you underwrite this risk, and if so on what terms?

18. AGREE OR DISAGREE? The current negative publicity about subprime mortgages make Owl an unacceptable risk.

19. AGREE OR DISAGREE? Owl is too small a company to find a market.

20. AGREE OR DISAGREE? An insurer can’t cover Owl without stepping into its shoes under its mortgage loans if Owl goes belly-up.

21. AGREE OR DISAGREE? Owl sounds like one of those fly-by-night mortgage companies

22. Difficult Placement #2 MediHazards, a medical malpractice insurer (rated B++) has a wholly-owned subsidiary, RiskiHazards Insurance Agency. RiskiHazards used to sell Business Package Policies to Doctors who were insured by MediHazards for their medical E&O risks.

23. However, MediHazards has now decided to sell the Business Package Policy book of business to an unrelated insurer, Massive Market, which will underwrite the program through its own MGA, MeGaAgency. RiskiHazards will still be the producer.

24. Up to now, RiskiHazards has not carried its own Insurance Agent & Broker E&O coverage, since all its placements have been with its parent company, but MeGaAgency requires all producers to carry E&O coverage. If you’re the broker E&O underwriter, would you insure RiskiHazards?

25. AGREE OR DISAGREE? I would not underwrite RiskiHazards at all because it had no prior coverage.

26. AGREE OR DISAGREE? There’s a big difference between an agency that only writes coverage issued by its parent company and one that writes through a different carrier’s MGA.

27. AGREE OR DISAGREE? Business Package Policies present greater risk when issued to a lot of doctors than to other kinds of businesses.

28. AGREE OR DISAGREE? I’d never insure anything called “RiskiHazards.”

29. Difficult Placement #3 The owner of “Auto U,” a driver’s education company, approaches you to buy a Miscellaneous E&O Policy. Auto U has never had that coverage before, though it has broad-form CGL coverage and insures the cars it uses in training and its instructors under a comprehensive Auto policy.

30. AGREE OR DISAGREE? Auto U has no need to buy Miscellaneous E&O coverage, because Driver’s Ed isn’t a “profession.”

31. AGREE OR DISAGREE? Auto U shouldn’t buy the new coverage because it’s already covered for all the risks inherent in its business.

32. AGREE OR DISAGREE? I’d need to know more facts.

33. A month later a recent graduate of Auto U, Ariel Ditz, buys a new hybrid car and insures it for the $15/$30K minimum limits. On her first trip in the car, she comes to a stop light and her engine shuts off, which hybrids do. Surprised by the lack of engine sounds, she thinks that she has stalled the car and that it can’t move. OK, here are more facts:

34. She looks for the owner’s manual, and takes her foot off the brake pedal. The car rolls forward under battery power, colliding with a pedestrian in the crosswalk.

35. Unfortunately, he is Mark Splatz, world-famous Olympic swimming gold-medalist. His swimming career and lucrative endorsements are ruined.

36. Mr. Splatz sues Ms. Ditz for $10,000,000. She cross-complains against Auto U for failing to teach her that hybrid cars can move forward when their engines turn off. Do these facts change your answers?

37. Questions/Comments

38. Thank you for your Participation! Please visit www.plusweb.org for membership information and upcoming events.