Opportunity and ObligationLeadership for a New Millennium
11th Annual Industry Leaders Luncheon
Don BaileyFebruary 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
1943A 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
1347Falun, 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 LaterSomebody, 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
The 10 Commandments Immutable Ideals
No gods but meNo idols
Don’t abuse my nameKeep the SabbathHonor thy parents
Don’t killDon’t commit adultery
Don’t stealNo false evidence
Don’t covet
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 governance
best 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 Certainty
represent tremendous opportunitiesto build positive differentiation
What else can be done to create value?
17
History Lesson #5
Amenhotep1388 – 1348 B.C.
Price is an issue
in the absence of value
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
• Members of PLUS
• Carrier Community
• Law Firms
• Willis Clients
• Willis Associates
• Other risk management and insurance professionals
Don Bailey
212 820 7476
Opportunity and ObligationLeadership for a New Millennium
11th Annual Industry Leaders Luncheon
Don BaileyFebruary 13, 2007
Recommended
