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PCI SmartBrief

December 13, 2007

CEO Corner

Looking forward to 2008
Part I of this PCI SmartBrief special year-end report looked back at the most important trends and stories of 2007. Part II, below, highlights our predictions and yours for what's in store for 2008.

As we move into 2008, Congress seems poised to enact an extension of the Terrorism Risk Insurance Act. This is a very positive development for commercial insurance buyers, the insurers that provide this important coverage, and the U.S. economy. Congress will continue to be engaged in important debates over the role of the federal government in financing losses from natural disasters, and the regulatory structure of the insurance business. States are tackling tough issues -- from coastal insurance affordability and availability, to bad faith laws, to regulations governing auto body repair shops, to insurers' use of credit information, to where and how our industry will be regulated.

Make better underwriting, policy pricing, and risk management decisions using Risk Data Suite. Risk Data Suite contains valuable information on geographic risk factors such as: brushfires, shorelines, sinkholes, earthquakes, hail storms, hurricanes, tornados, lightning, lava flows and windstorms.

Your Predictions

What change would have the greatest impact on coastal insurance affordability and availability?

Establishment of more state reinsurance cat funds -- 9%.

Establishment of a federal reinsurance program -- 7%.

Elimination of price controls -- 31%.

Enactment and enforcement of stricter building codes -- 54%.

What will be the most contentious insurance issue debated by state legislatures in 2008?

Use of credit scores in underwriting -- 66%.

Efforts to limit insurers' ability to refer/recommend auto body repair shops to consumers -- 8%.

Efforts to expand bad faith laws -- 27%.

What's the best way for the industry to enhance its image?

Embark on a national advertising campaign promoting the good things the industry does -- 56%.

Focus on gaining the respect and trust of public policymakers and opinion leaders -- 28%.

Pay claims and keep our heads down -- 16%.

What's the most important issue in congressional discussions on TRIA that could defeat its extension?

The trigger level for a federal backstop that allows small insurance companies to participate in the program -- 21%.

The inclusion of nuclear, biological, chemical and radiological attacks -- 42%.

Expansion of coverage to include group life and farm owners insurance -- 10%.

Extension of the program to 15 years instead of seven years -- 21%.

Making a distinction between foreign- and domestic-backed terrorism -- 6%.

TerrorRisk, a unique terrorism risk assessment model,
created by Pitney Bowes MapInfo and Exclusive Analysis, employs location-specific metrics to score the propensity and likely severity of violent and political risk on more than 3,700 global points of interest.

PCI 2008 Events

PCI events

01/01/2008	2008 Seminar Schedule	Various
03/16/2008	Joint Marketing and Underwriting Seminar	New Orleans, La.
03/30/2008	Human Resources Conference	Las Vegas, Nev.
07/23/2008	ACIC General Counsel Seminar	Las Vegas, Nev.
09/07/2008	Investment Seminar	Austin, Texas
10/05/2008	Information Technology Conference	Las Vegas, Nev.
10/26/2008	Annual Meeting	Scottsdale, Ariz.

Visit http://www.pciaa.net/sitehome.nsf/main for more details.

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