Barney & Barney Presentation at San Diego Business Journal's 2016 Economic Trends Event

1. ECONOMIC TRENDS
Commercial Insurance Outlook
Trindl Reeves
Principal, Chief Sales Officer
January 7, 2016

2. MARSH & McLENNAN INSURANCE AGENCY LLC • BARNEY & BARNEY 2

3. MARSH & McLENNAN INSURANCE AGENCY LLC • BARNEY & BARNEY 3

4. MARSH & McLENNAN INSURANCE AGENCY LLC • BARNEY & BARNEY 4

5. MARSH & McLENNAN INSURANCE AGENCY LLC • BARNEY & BARNEY
• Decreases average 4% across all lines
• Incumbents don’t want to lose business
• Carriers will fight to keep good clients
• Excess capacity
• Merger activity (Chubb/ACE, XL/Catlin,
Tokyo/HCC)
• Social Engineering
5
• Auto going up 5–10%
– More expensive to repair cars

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EMPLOYMENT PRACTICES LIABILITY
• California remains difficult
• Significant claim activity
• No coverage for Wage & Hour
DIRECTORS & OFFICERS LIABILITY
• Improving market
• Distinguishing risk profile is key
• Coverage for investigations on rise
(public companies)
• Cyber exclusions (?)

7. MARSH & McLENNAN INSURANCE AGENCY LLC • BARNEY & BARNEY 7
STILL A HOT TOPIC
• Interest by Boards of Directors
• More companies buying coverage
– 5–10% of clients have coverage
– Existing buyers increasing limits
BREACH FATIGUE!
• Who owns it
• Resource allocation issues

8. MARSH & McLENNAN INSURANCE AGENCY LLC • BARNEY & BARNEY
• First created in 2002 and renewed 2015 as TRIPRA
• Provides re-insurance coverage to insurers in the
event of a certified terrorist attack
• Automatically included in workers’ compensation
• Property take up rates are approximately 60%
depending on the size of company
• Stand alone coverage – longer term contracts
and avoid requirement that Congress must certify
an act of terror
• Underwriting considerations:
– Concentration (employees, property values)
– Location of risk
– Current capacity from the insurer
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9. MARSH & McLENNAN INSURANCE AGENCY LLC • BARNEY & BARNEY
CYBER TERRORISM
• Now excluded from TRIPRA
• Review your cyber policy for coverage
(expressly granted or silent)
POLITICAL VIOLENCE COVERAGE
• Global corporations
• Strikes, riots civil commotion, rebellion,
revolution, war and insurrection
ACTIVE SHOOTER COVERAGE
• Covers an employer’s expenses related to the
attack (counseling services, public relations, etc.)
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10. MARSH & McLENNAN INSURANCE AGENCY LLC • BARNEY & BARNEY 10
Calendar Year Combined Loss and Expense Ratios
103 102
94 94
80
62
54
45
53
64
73 74 74 76
72
68
20
16
12 12
11
10
11
13
14
17
21 20 25 18
19
18
22
20
18 16
15
14
14
16
18
20
22 23
23
20
18
18
145
138
124 122
106
86
79
74
85
101
116 117
122
114
109
104
0%
50%
100%
150%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

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Industry Average Charged Rate per $100 of Payroll
2.56
2.33
2.69
4.66
6.29
6.05
5.49
4.96
4.36
3.50
2.85 2.75
2.30
2.15 2.10
2.25 2.32
2.47 2.59
2.88
2.97 3.01
0.00
2.00
4.00
6.00
8.00
1996 1998 2000 2002 07/03-
12/03
01/04-
06/04
07/04-
12/04
01/05-
06/05
07/05-
12/05
01/06-
06/06
07/06-
12/06
01/07-
06/07
07/07-
12/07
2008 2009 2010 2011 01/12-
06-12
07/12-
12/12
2013 2014 01/15-
06/15
Dollars

12. MARSH & McLENNAN INSURANCE AGENCY LLC • BARNEY & BARNEY 12
SB863 (passed 09/2012)
• $770M net savings to CA Workers Compensation
system so far
– Reduced physician/surgery costs
– Reduced number of liens
– Increased IMRs, cumulative trauma, attorneys
EXPERIENCE MODIFICATION CALCULATION
CHANGES
• 2016 – Using expected loss rates resulting in
Experience Modifications being issued faster
• 2017 – Changes in “split point” to consider size
of employer; more emphasis on frequency
RATES ARE GOING DOWN
• 2% rate reduction approved for January 1, 2016
• 10.2% rate reduction approved for July 7, 2016

13. This document is not intended to be taken as advice regarding any individual situation and should not be relied upon as such. Marsh & McLennan Insurance Agency LLC shall have no
obligation to update this publication and shall have no liability to you or any other party arising out of this publication or any matter contained herein. Any statements concerning actuarial, tax,
accounting or legal matters are based solely on our experience as consultants and are not to be relied upon as actuarial, accounting, tax or legal advice, for which you should consult your own
professional advisors. Any modeling analytics or projections are subject to inherent uncertainty and the analysis could be materially affective if any underlying assumptions, conditions,
information or factors are inaccurate or incomplete or should change. CA Insurance Lic: 0H18131