TAKING CONTROL OF YOUR GLOBAL INSURANCE PROGRAM BY

TAKING CONTROL OF YOUR GLOBAL INSURANCE PROGRAM BY DAVID HERSHEY, CPCU, CRM, CRIS, CPSR, AMIM, ARM, MLIS, TRIP DAVID HERSHEY© 1

TAKING CONTROL OF YOUR GLOBAL INSURANCE PROGRAM Who is Lexa International? 10+ Countries, 25+ States $5. 5 B USA annual sales (2020) $9 B European sales Petroleum wholesale & distribution NYSE: SRLP (international) 2 B+ gallons of petroleum, 100 BCu. Ft Nat Gas, 17 Terminals Municipal water treatment equip. mfg. (international) Treats 7 T+ gal / year Residential water treatment systems mfg. and dist. (international) Medical device manufacturing & distribution (international) Razors, machine knives, syringes, hand held cutting tools (international) Medical device manufacturing (international) knee replacement devices • Lumber recycling (international) - Mount Vernon, Truman Library, home of James Madison College student housing (regional) Precision aluminum tube and refrigeration component manufacturing (international) Contract food manufacturing, packaging and distribution (international) Food supply (Europe) Retail grocery stores (Europe) Cosmetics (Europe) Department stores (Europe) DAVID HERSHEY© 2

TAKING CONTROL OF YOUR GLOBAL INSURANCE PROGRAM When considering the need foreign insurance coverage, review the current coverage grant for customary lines of coverage: Property, Liability, Auto, Employers Liability, Cargo Coverage applies to bodily injury and property damage for an occurrence that takes place in the national coverage territory, which is defined as the United States of America (including its territories and possessions), Puerto Rico, and Canada. DAVID HERSHEY© 3

TAKING CONTROL OF YOUR GLOBAL INSURANCE PROGRAM What is the difference between: Standard coverage territory ? § See previous slide Limited World Wide Liability ? § International coverage, suit must be brought in the Standard Coverage Territory International / Foreign Coverage ? § International coverage, suit can be brought (and covered), in foreign country DAVID HERSHEY© 4

TAKING CONTROL OF YOUR GLOBAL INSURANCE PROGRAM Are There Limitations as to the Territory? Yes – https: //sanctionssearch. ofac. treas. gov/ Are there ways around the restrictions: Specific concern should be exercised when trying to determine limitation in coverage when trading with a prohibited country – not all countries exercise these restrictions. Careful review should be exercised when reviewing destination sales from foreign subsidiaries & joint ventures as to avoid conflicts. Coverage will most likely need to be procured through an alien insurer and alien insured (be careful of ownership commonality). Also, be sure the excluded countries list at time of binding coverage is applied, NOT at the time of loss. DAVID HERSHEY© 5

TAKING CONTROL OF YOUR GLOBAL INSURANCE PROGRAM General Structure: Broker selection – local presence Broker Resources – local market intelligence / requirements Local Statutory Policies FOS – Freedom of Service, combined universally accepted standardized coverage among several EU countries (not the UK anymore – separate policies) Some insurers actually issue BOTH (local statutory, FOS, GMP). The result can be a coverage conflict in the event of a claim and possible (likely), duplicative billing Repatriation – domestic WC, foreign coverage or part of K&R? Global Master Program Combined Umbrella / Excess program Traveling employees – Travel assistance and / or non-work related healthcare modification Business Travel Accident Currency determination (premium, claim and tax obligations) Deductible or Self-insured Retention (collateral – amount requested is likely not regulated) DAVID HERSHEY© 6

XYZ Corporation Foreign Casualty Insurance Program Structure June 1, 2020 – 2021 page 1 of 5 US Consortium – Excess Bumbershoot Liability Policy: $100, 000 General Aggregate Limit – Excess of Underlying Lloyd’s – Excess Umbrella Liability Policy: $100, 000 General Aggregate Limit – Excess of Underlying Insurer B – Lead Umbrella Liability Policy: $10, 000 General Aggregate Limit $10, 000 Each Occurrence Limit Insurer A – Foreign General Liability: Insurer A – Foreign Auto Liability: Insurer A – Employee Benefits Liability (Claims Made Form): Insurer A – Employers Liability: GL (XXX ) Limit: $2, 000 SIR: $50, 000 Pure Financial Loss Limit: USD $1, 000 PFL Ded. : 10%, min. $5, 000 *** WC/EL (Local BBB) Indemnifies according to the Belgian Act on Workers Compensation Canada Belgium GL (XXXX) Limit: US$2, 000 SIR: $50, 000 Pure Financial Loss Limit: USD $1, 000 PFL Ded. : 10%, min. $5, 000 *** Auto Liab (Loca l. AAAA) Limit: GBP 50 M TP PD Private cars GBP 5 M TP PD other vehicles Unlimited for Death/injury to any person UK $6, 000 Controlled Master Program Aggregate: $6, 000 General Aggregate $2, 000 Each Occurrence $2, 000 Products/Completed Operations Aggregate $1, 000 Personal and Advertising Injury Aggregate $2, 000 Damage Premises Rented (any one premises) $100, 000 Medical Expenses Limit (any one person) $50, 000 Each Claim Self-Insured Retention $2, 000 Each Accident $1, 000 Each Claim and Annual aggregate /$1, 000 per claim Deductible, $1, 000 Each Accident – Bodily Injury by Accident $1, 000 Each employee – Bodily Injury by Disease including ‘endemic disease’ $1, 000 Policy Limit – Bodily Injury by Disease including ‘endemic disease’ GL (XXXX) Limit: US$2, 000 SIR: $50, 000 Pure Financial Loss Limit: USD $1, 000 PFL Ded. : 10%, min. $5, 000 *** Auto Liab (Local zzzzz) Limit: DKK 50, 000 TPL (BI) DKK 10, 000 TPL (PD) Denmark GL (XXXX) Limit: US$2, 000 SIR: $50, 000 Pure Financial Loss Limit: USD $1, 000 PFL Deductible: 10%, min. $5, 000 *** Auto Liab (Local Coveage) Limit: Statutory GL (XXXX) Limit: US$1, 000 SIR: $50, 000 *** Auto Liab (Local - XXX Limit: MXN 2, 000 MXN 3, 000 TP Death France Mexico GL (XXXX) Limit: US$2, 000 SIR: $50, 000 *** Auto Liab (AAAA) Limit: CAD 1, 000 Canada – Railcar Liability (XXXX) Limit: US$5 M per occ US $10 M gen agg SIR: $25, 000 *** UK EL (XXXX) - High. Res Limit: GBP 25, 000 *** UK EL (XXXX) – Name Subsidiary Limit: GBP 25, 000 Directly Scheduled to Umbrella

TAKING CONTROL OF YOUR GLOBAL INSURANCE PROGRAM General Structure cont. : Claims administrator – approved by local insurer Legal network – review negotiated fees and hourly rate / retainer for non-claims work Certificates Deductible or SIR on certificates – should be carry down from global master program and not disclosed on certificate as it is an endorsed obligation between Insurer and Insured Hours of operation Language / translation Vetting process for invoices and policies as to prevent improperly procured coverage DAVID HERSHEY© 8

TAKING CONTROL OF YOUR GLOBAL INSURANCE PROGRAM General Structure cont. : Claims administrator – approved by GMP insurer OR Claims administrator – in-house, approved by GMP insurer Legal network – review negotiated fees and hourly rate / retainer for nonclaims work Certificates: currency, limit – contract or policy limit Deductible or SIR on certificates – should be carry down from global master program and deductible should not disclosed on certificate as it is a formal (usually collateralized), obligation between Insurer and Insured cautionary process Hours of operation Language / translation Vetting process for invoices and policies as to prevent improperly procured coverage DAVID HERSHEY© 9

TAKING CONTROL OF YOUR GLOBAL INSURANCE PROGRAM Allocations: By exposure base – payroll, values, fleet count By specific policy – entity / country By limit By governmental determination By policy limits (local statutory tax assessments) Fees & assessments DAVID HERSHEY© 10

TAKING CONTROL OF YOUR GLOBAL INSURANCE PROGRAM Administration: Understand local entity needs Understand local colloquialisms Be sure locals understand the procurement process for contract review, invoice vetting, certificate requests, claim reporting and claim management Who is the local contact Know your stake holders and be sure they know you (distance and customs will be a barrier) Know your program and the process as you will likely know more than your broker Be prepared for broker leveraging for account volume and control DAVID HERSHEY© 11