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Opportunity and Obligation Leadership for a New Millennium

Opportunity and Obligation Leadership for a New Millennium. 11 th Annual Industry Leaders Luncheon Don Bailey February 13, 2007. Mission, Leadership, Legacy. The mission of PLUS is to enhance the professionalism of its members through education and other activities

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Opportunity and Obligation Leadership for a New Millennium

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  1. Opportunity and ObligationLeadership for a New Millennium 11th Annual Industry Leaders Luncheon Don Bailey February 13, 2007

  2. Mission, Leadership, Legacy The mission of PLUS is to enhance the professionalism of its members through education and other activities and to responsibly address issues related to professional liability • The Maturation of Expectations • A Job • A Career • A Legacy

  3. History Lesson #1 1943 A little behavior science…

  4. Where Do I Want to Be? Abraham Maslow’s Hierarchy of Needs • Family & Friends • Money • Geography • Capacity • Validation • Security • Legacy

  5. The Everlasting Insurance Industry • An ingredient of life since the days of Babylon • The DNA of commerce and social structure today • A cornucopia of jobs and professions– relatively stable through economic cycles– virtually “recession-proof” • An industry where the best and the brightest are …     D&O People 

  6. Careers of Note – Moving Beyond D&O… • Eric Anderson – Aon • Cynthia Beveridge - Aon • Scott Carmalani – AWAC • Chris Cavallaro – ARC • Chris Duca – Navigators Pro • Tom Gamble – Zurich • James Gerry – Dual International • Mark Herman – Ariel Re • Ralph Jones – Arch • Eric Joost – Willis • John Keogh – ACE • John Lupica – ACE • Dave McElroy – Hartford • Brenda Shelly -- Willis • Peter Wilson – CNA … and Risk Managersaround the world

  7. History Lesson #2 1347 Falun, Sweden April 8, 1347 at 3:32 p.m. (local time) 19.4° Celsius and Partly Cloudy

  8. Invention of the Modern Corporation • Who? • Stora Kopparberg Mining (1347)– chartered by King Magnus Eriksson • Why? • To attract capital for enterprises that involve great risk and/or require significant capital resources • How? • By limiting personal liability through a “legal fiction” • What’s New? • A “renaissance” of personal liability A 1/8 Share

  9. History Lesson #3 About 600 Years Later Somebody, Somewhere (beginning with Lloyds in the 1930s) Invented the D&O Policy … thereby facilitating …

  10. Malfeasance in the Boardroom • Enron – the “perfect storm”business practices disaster • Job losses  Impaired pensions • E&O  D&O  Surety • Financial interdependencies • Ruined reputations • Death knell for Arthur Anderson • A new era foraccountabilityand compliance Arthur Andersen’sHouston Office

  11. History Lesson #4 Genesis (a long time ago, BC) & July 30, 2002 AD

  12. “You Can’t Legislate Morality” – attempt #1 No gods but me No idols Don’t abuse my name Keep the Sabbath Honor thy parents Don’t kill Don’t commit adultery Don’t steal No false evidence Don’t covet The 10 Commandments Immutable Ideals

  13. “You Can’t Legislate Morality” – attempt #2 Sarbanes-Oxley

  14. The Enduring Legacy • SOX (Sarbanes-Oxley) • Stakeholders and regulators demandingaccountability and transparency • Activism in the Boardroom • Growth of Side A D&O • Coming of age for enterprise-wide risk management

  15. How Has Our Industry Helped? • Delineation of standards and expectations • Analytical and underwriting tools • Risk Profile Analysis • Mock Claims Review • Innovation – new product offerings • Education – at all levels of the corporation • Face-to-face meetings with the CFO and CEO • Providing incentives for corporate governancebest practices

  16. How Can Our Industry Do Better? • Policy Issuance • D&O tends to be “worse” • No greater call for contract certainty than there is for D&O • Ease of claims payments • Claims Advocacy and Contract Certaintyrepresent tremendous opportunitiesto build positive differentiation What else can be done to create value?

  17. History Lesson #5 Price is an issue in the absence of value Amenhotep1388 – 1348 B.C.

  18. A Few Years Later Joe Plumeri’s Keynote AddressRIMS – April 18, 2005

  19. Creating Value • More incisive risk analysis and modeling capabilities • Greater clarity and certainty of contract language • Creating new tranches of capacity • Providing specific guidance on best practicesin dealing with a complex and more demandingregulatory environment • Building and promoting a robust, proven body of corporate governance best practices

  20. Thank you ! • Members of PLUS • Carrier Community • Law Firms • Willis Clients • Willis Associates • Other risk management and insurance professionals Don Bailey 212 820 7476 don.bailey@willis.com

  21. Opportunity and ObligationLeadership for a New Millennium 11th Annual Industry Leaders Luncheon Don Bailey February 13, 2007

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