Alarm Fire Group and the FRIC Consortium Conference 5 March 2014

1. Alarm Fire Group and the FRIC Consortium Conference5 March 2014 Bev FitzGerald - Managing Director, FitzGerald Consulting Baden Smith - Associate, FitzGerald Consulting Registered Number: 4440627 Registered Office: FitzGerald Consulting Limited, 145-157 St. John Street, London EC1V 4PY FitzGerald Consulting Limited is authorised and regulated by the Financial Services Authority

2. CAT (Catastrophe) Management Bev FitzGerald Managing Director FitzGerald Consulting Ltd

3. New York City, USA • Tuesday 11 September 2001 • 9/11 Terrorist attack

4. New York City, USA • Fire Department of the City of New York (FDNY) • 400 employees on World Trade Center site when Twin Towers collapsed • 343 FDNY personnel lost their lives

5. New York • Extraordinarily, average response times to fires elsewhere in NYC that day only rose by 1 minute to 5.5 minutes

6. New York • FCL appointed to support Royal Sun Alliance on its 9/11 exposures (our first ever case) • Multi-billion $ portfolio of claims • Included several individual billion $ losses – banking, communication and transport corporations

7. New York • FCL’s specific brief – • To oversee technical adjustment issues and ensure consistency • To create excellent communications – within RSA; with external suppliers, e.g. loss adjusters; with reinsurers

8. New York • Project executed successfully • Included settlement of RSA’s largest ever claim - $725m • And, ‘Lessons Learned’ report recommending best practise for future CAT events

9. London, UK • 10.27 Saturday 24 April 1993 • IRA Bishopsgate bombing

10. London • Dark blue Ford Iveco tipper truck • Parked outside 99 Bishopsgate – HSBC Building • One tonne fertiliser bomb

11. London • HSBC claim settled for £92.5m (in fact with Hammerson) • All of this sum, bar £400k, paid by Pool Re • Pool Re paid total of £262m on Bishopsgate incident • Event completely changed risk management, especially CAT planning

12. Pool Re set up in 1993 • Covers Property Damage & Business Interruption • Chemical, biological, radiological and nuclear contamination • Excludes war & related risks and cyber risks

13. Fire Brigade activity after terrorist attack obviously crucial Also, proper risk management, inc business continuity planning FCL has long-term relationship with Pool Re

14. Decade of Catastrophe! • Since set-up in 2002, FCL has dealt with numerous CAT events – • Hurricanes - Mexico, Grand Cayman • Earthquakes – Italy, Chile, New Zealand • Explosion – Buncefield • Terrorist – USA, UK • Storms/Floods – UK, Canada, Thailand • Where next - ??

15. 30 multi-disciplinary experts – • Senior Chartered Loss Adjusters • Claims Managers/Directors • Engineering • Surveying/QS • Legal • Damage restoration/management

16. Over-riding Lessons Learned for CAT management • Importance of excellent communication • Complexity of technical issues arising • Need for great team-work

17. Alarm Fire Group and the FRIC Consortium Conference5 March 2014 Baden Smith - Associate, FitzGerald Consulting Registered Number: 4440627 Registered Office: FitzGerald Consulting Limited, 145-157 St. John Street, London EC1V 4PY FitzGerald Consulting Limited is authorised and regulated by the Financial Services Authority

18. TERMS OF REFERENCE • To validate the claims / to identify any issues the Consortium may wish to take up with the insurer. • Strategy - clear, coherent and all the settlement options explored? • Logic and basis for the quantum - appropriate rigour in calculation and validation of costs? • Case management- strategy followed , proactive management, quantum reviewed and adjusted? • It was not intended to examine liability but particularly for case 1 the impact of liability was a major factor. • The audits did not examine compliance with RTA regulation and procedures.

19. WHAT I DID AND HOW • On site file review – 9 to 12 July, follow up 6 and 7 December 2012 • Reviewed 3 of the original cases plus 6 others (3 EL, 2 PL and 1 Motor) • Open mind on the claims • Used research and experience to validate and to query • Looked for opportunities to add value

20. ONGOING KEY CONSIDERATIONS • Financial – claims and premiums • The Injured • The Emergency Service Vehicle Drivers

21. CONCLUSIONS • The Insurance • Satisfactory with opportunities • The risks can be mitigated with a coordinated approach – (Major Incident Protocol Prepared) • The Audits • Brought focus • Put the claims handling in to context • Pointed to value added ways forward

22. THE OUTCOMES • Case Reserves v Settlements • Original case reserves for the 3 major claims totalled £4.7m • Cases settled at £ (awaiting figures from Dan at JPIC) • Other Highlights • A10% saving on the substantial motor spend • No more major incidents to date

23. Thank you. Questions?

24. Alarm Fire Group and the FRIC Consortium Conference5 March 2014 Bev FitzGerald - Managing Director, FitzGerald Consulting Baden Smith - Associate, FitzGerald Consulting Registered Number: 4440627 Registered Office: FitzGerald Consulting Limited, 145-157 St. John Street, London EC1V 4PY FitzGerald Consulting Limited is authorised and regulated by the Financial Services Authority