Business Studies: Insuarance

1. Based on the project timelines, how would you anticipate developing and transacting SSH’s immediate and longer-term insurance requirements?

The long-term insurance requirements will be addressed through a strategy that is mutually agreed upon with Dar SSH. We have suggested several proposals and recommendations for your insurance program as more detailed in our answer to question 6 of the proposal questionnaire. Preliminary discussions including the RFI presentation on 25th November will align both of us (Gulf Insurance as insurance provider and Dar SSH as partner) on objectives, timeline and process. The discussions should include input from stakeholders within Dar SSH such as regional offices and projects teams as on what are their expectations from the insurance and how they can contribute to effective and efficient insurance solution.

The preliminary discussions will lead to the following:

A. Development of requirements

B. Development of KPIs

C. Internal Information gathering

D. Approaching the insurance market for offering

It is difficult to set a time frame of the above exercise because it will depend on how sophisticated the ultimate strategy and based on internal dynamics within Dar SSH.

While discussions take place internally on the long-term insurance requirements, we believe the immediate requirements can be met through the current procedure, ad-hoc renewal of existing policies. The objective in the immediate/short term will be to ensure coverage continues without interruption so that exposure has protection to a good degree. The requirements 3-8 in Appendix Two will be critical in this stage. Requirement 2 can be met partially through tendering process, which is discussed in more details in following sections.

We propose the following measures to improve the process of achieving the immediate insurance requirements:

· Tabulate all 79 policies within your Appendix 3 by expiry date.

· Start the renewal exercise two months prior to expiry.

· Obtain internal feedback about current policy on the following aspects:

· Claims experience

· What is outstanding, how long and why

· What was not covered and why

· How long the paid claims took time and what was the average time of resolution?

· Survey on insurer handling of the claims

· Financial reconciliations

· Any claims agreed but not paid

· Any outstanding premiums

· What is the aging analysis of outstanding premiums

· Assess the renewal offer of incumbent insurer based on claims experience

There are requirements that are associated with long-term strategy such as 1, 9, 10 and 12. These requirements will be implemented at that stage.

We are prepared and delighted to support you on requirements 11 and 15 with immediate effect as follows:

· Requirement 11:

By end of January, we shall provide you with market update following the results of treaty renewals on 1st January. This is a milestone that insurance markets follow closely since it represents the general momentum of the market rather than specific line of insurance.

We can further commit to quarterly newsletter starting Q1-2019 about the market updates.

· Requirement 15:

We are pioneers in professional training and this will be discussed in more details in our response to question 7 of the proposal questionnaire. The practical aspect is that Dar SSH is invited to nominate 2 staff to attend our training program for the year 2019. We are currently preparing our annual master training plan. The training is mainly on insurance and supported with soft skills. Our own staff attend these programs as well so your nominated staff will have good opportunity to build relationships and understand our process and at the same time share your expectation. This is what we call alignment at different layers.

We are further happy to inform there are no costs on Dar SSH in respect of the requirements 11 and 15 above.

2. From your knowledge of SSH planned operations, what aspects do you believe will be critical in participant service offering and transacting a successful insurance placement for SSH?

Reviewing Appendix Three of the proposal, we believe the following are critical for SSH:

A. Your service provider should be regional

Since SSH is operating in different countries, you will need a partner that is also of the same caliber and operating in the same countries or more. Working with a regional insurance provider will reduce your workload and remove the need to approach local insurers. You may depend on your local office, but there is risk in this process as a local insurer may not meet your financial security conditions, such as credit rating or solvency.

Working with a regional insurer will provide you with insight on the overall insurance cost across your organization and by region. It is indirect mechanism to assess the insurance cost from the head office and allows proper monitoring of this activity.

B. The account team within the service provider should include bilingual skillset

Since many of the insurance contracts involves government projects, it is critical that your insurance provider has bilingual skills. This is critical to negotiate insurance provisions within the Contract or discussing feedback of project principal on insurance contracts. It maybe required to attend meetings with local government offices to discuss and finalize the insurance contract.

In other cases, the service provider needs to provide Arabic version of the Insurance Policy. Local or regional brokers or even international reinsurers (in DIFC or others) will have very hard time to help on this request. They will certainly resort to third party translators. According to our experience, the output was not up to our expectation. We have worked with translation offices in Dubai and Jordan and can inform that we did not obtain good results. If good translation is required, it will have a major cost on SSH and for certain an additional cost above the insurance premium.

Assuming translation is obtained, it will be extremely difficult to obtain the insurance/reinsurance agreement to follow the Arabic wording in case it contradicts the English wording. Even if the provider accepts the Arabic wording at the time of insurance contract, SSH needs to be convinced that insurance provider is aware about the potential consequences and will honor their obligation if this scenario occurs.

We believe this is one of our competitive advantage compared to local and regional markets. Our work force is divers and include a large share of Arabic speaking staff. We were successful in attending meetings with the Public Authority for Housing Welfare (PAHW) and produced wording to their satisfaction. The translation was carried in-house and was reviewed and approved by legal and claims teams. We can replicate this process on other accounts with fine tuning at short notice.

Our commitments to SSH project principals (government entities and others) are well studied and understood.

C. Strong Professional Indemnity specialization and capabilities

26 Policies in Appendix Three are for professional indemnity out of 79 (33%). This suggests that your insurance provider should have strong capabilities in this particular field. The strength can be assessed by understanding the function within the organizational structure that handles professional indemnity. If it is part of larger function, it will imply that it is not a major value proposition by the service provider. If the organizational structure of the participant contains an independent function for handling these insurances, it will imply a strategic focus on developing and improving these lines of business. When an employee is assigned with few lines of business, they will certainly groom and develop their expertise.

Professional indemnity is part of liabilities line of business and handled by Casualty Underwriting division. The local and regional practice is to focus on property and engineering lines and assign casualty as secondary responsibility to this function. We are pioneers in the local market by being the first to establish an independent underwriting division for casualty lines. Many regional markets also or re/insurance consultants do not have dedicated casualty or professional indemnity personnel.

In 2017, our casualty department was established, and handover was made. Client visits were made to our important clients including SSH to introduce these changes. We can share with you that one of the major factors for our decision to separate casualty was to support professional liability business such as those of SSH, medical malpractice and D&O.

Gulf Insurance is unique in within the local and regional market. Even some international brokers within Dubai International Financial Center (DIFC) may not have this function or depend on one person and will need to refer the risk to London for review or expert feedback.

One achievement for the newly established department was the successful bidding on the Director’s & Officers Liability Program for Kuwait Petroleum Corporation – KPC and all its subsidiaries worldwide. The limit of liability for the program exceeds USD.100 Million and involves arranging local certification in different countries such as China, Canada, Pakistan, etc.

We are certain that with our recent experience in the above program and others, we are stronger equipped to meet the requirements of SSH in the immediate and long terms.

3. What strategies would you recommend to SSH to make its insurance program as efficient and comprehensive as possible in terms of risk mitigation, premium spend, coverage and claims resolution? This may include pooling and potential leverage of subconsultants insurance and negotiations of appropriate clauses and/or exclusions as appropriate?

First: Insurance in Work Flow

The work flow within Dar SSH needs to incorporate and emphasize on the insurance element at all stages of the flow. Detecting insurance requirements at early stages of the work chain will certainly enable the insurance provider to provide better solution and more importantly more efficient and cost effective to Dar SSH. The challenges that currently occur with insurance placement are due to difficult time limits that are imposed by either project principal or project cash payments. The purpose of this strategy is to forecast these situations in advance so that necessary preparations are made.

The role of insurance starts before submitting the tender document. Insurance cost is part of the contract cost that will be built and calculated for contract price. Making internal estimates about insurance claims poses the risk of underpricing. Obtaining indicative quotations for costing purpose will further facilitate the process after the contract is awarded. The pressure to secure the insurance cover after contract award will ease significantly if insurance quotation was obtained prior to contract submission.

On obtaining indicative quotation, it will be possible to serve quickly if the contract is small in size, short period without large extended reporting period. However, if these parameters are unusual or significant, it will take time to process and assess the pricing. Therefore, proper time needs to be allowed even for indicative quotation for contract pricing.

What we ideally look for is proper sharing of information well in advance so that things fall in place quickly when the time comes. For instance, we approached SSH for their new contract as joint venture with the Turkish Consultant Proyapi Insaat to upgrade Damascus Street for the Ministry of Public Works. Cooperation at this stage or even earlier will facilitative the future running of this and other projects.

Another critical aspect is the insurance scope that is required for the tender. We have seen, for instance, contracts of Dar SSH with Bahrain Government on housing projects. The issue with these tenders were about the limit of liability being on without aggregate basis. In some cases, you will need to go back to the project principal to discuss the insurance provisions of the contract because what they seek is either not a market standard or will be extremely expensive. Not having an agreement among project principal, contractor and insurance partner on such issue will have serious impact on the feasibility of the whole contract. The challenge in this case was discussing this point in the middle of the project. While we are unsure on the outcome of this business, but we are proud of being able to secure terms for this contract. Even London market was unable to give such coverage.

We hope the above demonstrate the various scenarios on which it is critical to obtain insurance input at tender submission stage. As we said in the beginning, this is not a one-time exercise. It continues at all stages of the process. Project management team should have this as check list within their project requirements. The below scenario will explain this idea in detail.

When the contract reaches the end, Dar SSH must be proactive in securing extension agreement. We can support by sending notice on the projects that will expire and have sent on several cases notices few months in advance. One scenario that need to be fixed is approaching the insurance for extension at the time of obtaining payment from project principal and when the period is over. The difficulty is not about the cost, but rather on the concept of giving coverage retroactive even if No Claim Declaration is given. The gap in coverage will make it hard to identify what is covered, when it stopped and when started again because the actual insured activity is continuous for the same project. The complications will manifest at the time of claim. Such technicalities certainly delay the work process. It will be useful to return to the basic concept of insurance. It is a promise to pay for fortuities in the future and not a document to complete formalities.

Second: Risk Management Function

The work flow needs to be supported and enforced by organizational structure. We highly recommend establishing a risk management function that is accountable and responsible for insurance among other responsibilities. Having a dedicated function for insurance and risk management is critical for a company in the size of Dar SSH. Many companies in Kuwait and overseas already made this step including companies smaller than Dar SSH. Apart from banks and telecommunication companies, we know there is risk management department within Kuwait Petroleum Corporation, Al-Shaya Retail Group, Mezzan Food Group, ACICO Industries, Abyat Megastore and Heavy Engineering Industries & Shipbuilding Co. – HEISCO.

The cost of supporting the organizational structure with risk management function will be lower compared to outsourcing this task, or more correctly part of it since insurance is part of risk management strategy of an organization. It is not conventional to outsource the risk management function in a whole. It can be arranged for specific exercises such as creating a risk register. Additional benefit of internalizing this function is the efficiency in communication. Risk is an integral part of operation and having a dedicated person within the organization who is in constant touch with all stakeholders will no doubt speed up the process.

Efficiency will be created for the insurance as a program, cost and cover because it will be part of an overall strategy of risk management that is applied across the organization. Having a strategy for risk management will mean carrying internal and external assessment of the organization and determining the areas that needs protection. Mitigation measures will be planned for the areas that need improvement. Accordingly, the scope of insurance coverage will be aligned and fit with the overall risk management strategy.

There is additional value for having risk management. It should reduce the insurance cost by maintaining a healthy and low loss ratio. The frequency and severity of claims should reduce, if effective risk management controls are put in place.

The above lead us to recommend not to appoint an insurance or reinsurance consultant. We appreciate the approach of SSH in emphasizing protection of risk exposure. We anticipate various limitations in terms of capabilities and scope in the handling of broker(s) that will lead to higher cost in the long term and detrimental to the interest of SSH in case of claims.

Third: Consolidation of Insurance Placements

This strategy is about pooling/combining of insurance policies that are repeated across different countries. We can assess the consolidation strategy based on the expected insurance requirements (Appendix Two) and actual insurance requirements (Appendix Three). Please find the below table that highlights the overlap between expected vs. actual and corresponding territories:

No.	Coverage	Appendix 2	Appendix 3	Countries
1.	Professional Indemnity			MENA, Bahrain, Kuwait, Qatar, Oman
2.	Decennial Liability
3.	Workmen’s Compensation/Employer’s liability			MENA, Kuwait, Oman and UK
4.	Third Party Liability/Commercial General Liability			Bahrain, Kuwait, Oman
5.	Travel
6.	Life
7.	Director’s & Officers
8.	Medical Benefits
9.	Property All Risks			Kuwait, UAE
10.	Plant & Machinery			Kuwait

The above shows that 8 types of insurances are required, but 5 are actually enforce. Different approach and timeline need to be adopted for the coverage that is currently in place vs. coverage that is obtained for the first time.

With further analysis of the current policies, we find that four out of five are spread in different countries and they are professional indemnity, workmen compensation, third party liability and property all risks. For these policies we recommend consolidation as detailed in the following paragraphs.

Consolidation will allow you to obtain wider scope of coverage at reasonable cost due to economies of scale. The minimum cost on individual risk (Policy) will aggregate the overall cost but unifying the insurance program will have one minimum cost. Certainly, consolidation cannot be made for different types of insurance coverage such as workmen compensation and medical or professional indemnity and travel. What we mean by consolidation is for the same type of risk. The number of current policies is 45 according to Appendix Three (excluding plant and machinery in Kuwait). These will be replaced by four master policies only.

For jurisdictions that require locally admitted policies, the same can still be achieved through consolidated programs. The insurer of the master insurance program will communicate with its local partner to issue a fronting policy based on minimum fee. This is faster and economical.

The above suggests the necessity to have the master insurance program with a regional insurance provider that has subsidiaries or local partners in different countries. This supports our answer to question 2 of the proposal questionnaire. Gulf Insurance Group enjoys the position of a regional insurance provider. We have subsidiaries in Bahrain, KSA, Egypt, Jordan, Iraq, Syria, Algeria and Turkey. We have associated company in UAE. Our network of partners extends to all corners of the world through our shareholders (Kuwait Projects Company – KIPCO) and the Canadian Insurance Conglomerate (Fairfax) that has insurance subsidiaries in Latin America, East Asia, USA and within Lloyds of London.

The recommended approach to consolidate the insurance programs is as follows:

A. Analyze the current policies in-force and then carrying detailed review of coverages such as similarities and differences and claims experience. This will involves gathering documents from different companies and obtaining loss ratio from the insurance companies. Detailed list of claims to be obtained to understand where losses are coming from and what is their extent. Feedback to be obtained from internal stakeholders.

B. Conducting gap analysis between current policies, market standard and risk exposure of the operation. The first element is establishing thorough understanding of SSH own operation and associated risks – operation, liquidity and market dimensions. Then checking how these exposures can be covered by either current policies or market clauses.

C. Preparing the technical specification of your insurance policy along with preparation of the underwriting information.

D. Inviting prices based on the technical specification and making market presentations. Please refer to our discussion of tendering and in particular to your requirement no. 2 of the Service Requirements in Appendix Two.

The timeline for steps A and B is estimated at 2 months per each type of insurance. Step C is estimated to take one month. Step D is expected to take 2 months. Applying the timeline of our proposal will mean 5 months per Policy. This will produce 15 months for three policies. They can be conducted in parallel, but with additional resources.

For policies such as Travel, Life, Director’s & Officer and Medical Benefits that are new to SSH, the following is recommended:

A. Determine the objective of obtaining the respective insurance coverage by either benefit or risk protection. It is important to set this objective and keep it in mind at all stages of the insurance placement. For instance, medical benefits are form of benefits. The cost of said scheme is substantial and will have an impact on the cost of other classes of insurance if the placement is on portfolio basis. The size and scope of coverage should be set properly based on this objective.

B. Gathering underwriting information for respective type of insurance. You will find multiple versions of proposal forms for a given class of business such as Director’s & Officers. Care should be given in using the most common form to collect information. This will involve communication with various divisions within the organization and will certainly take time.

C. Preparing the technical specification for each line of business based on the market standards and your program scope.

D. Selection of insurance carrier based on market competition.

It some situations, it can be found that insurance price exceeds the budget allocated for the given insurance scheme. In this case, it will be necessary to return to project scope to modify it in order to meet the budget. Or alternatively, the management has to decide if to accept the increase in budget cost or postpone the project for next financial year.

We like to share with you one example to show the difficulty in budgeting process for insurance cost. A client prepared the technical specification and obtained rough estimate of the insurance cost. The management decided to shift the program to next financial year. When the client came to the market, it was found that market conditions changed and the initial estimates were no longer valid.

Fourth: Consolidation of Specific Project Professional Indemnity (SPPI) Policies

It is required to have a separate discussion on the consolidation of professional indemnity policies. As we saw earlier, PI represents a third of SSH insurance business. Seeing the number of policies per country, there are 20 policies in Kuwait only. So the consolidation is not required across countries, but within Kuwait as well in the case of PI.

We expect the different PI policies were procured as Specific Project Professional Indemnity (SPPI). We appreciate there are various reasons to obtain SPPI such as duration of coverage, different extended reporting period, different limit of liability or simply because the project was not part of the estimated fees under the annual blanket coverage.

We propose an insurance facility to cover all SPPIs. This facility will expedite SSH workflow, better pricing and wider scope of coverage. This idea was proposed during last year as part of discussions to improve the process. What is important to make this strategy work is obtaining good information from SSH on the business forecast. Deploying insurance capacity for many projects with good pricing requires strong business case. We need the following details to prepare an offering:

· Number of SPPI policies that were procured during the past five years.

· Expected number of SPPI policies in the coming 24 months which SSH is in processing of tendering or working to participate

For each of the above, the following information is required:

· Project description, scope of work, value, fees, period and insurance requirements

· For past projects, we need to analyze the limits, extended reporting period and duration of coverage.

It will be useful as well to understand the main project principals or identify the pattern of insurance requirements per government entity/project principal. We can develop template for each principal although it does occur that same principal make contradictory requests for different projects.

It is important to emphasize that information needs to be credible. Many customers provide ambitious business forecasts for the purpose of obtaining competitive insurance package. If the information is not prepared well, the insurance package will be unsustainable.

Fifth: Consolidating Insurance Portfolio

This is about the pooling of different insurance programs with one single insurer to create a portfolio. It is certainly possible to obtain premium advantage on a case by case basis since some insurers are aggressive on certain lines and not the others. However, creating and maintaining a portfolio with one single insurer will create leverage on claims, especially exceptional ones or those that fall in the borderline of insurance coverage. The attitude of insurers toward these gray issues will be based on the economic viability of the client – continuity and portfolio. The leverage does bring cost but will be marginal compared to greater benefit/value.

The proposed pooling strategy should be implemented properly to achieve the desired objective. It will not work with international reinsurance market. Reinsurers are usually specialized in one line of business or few and will not cover all spectrum of Dar SSH requirements. Even if they do, the size of regional business will not be sufficient to create the intended leverage. The same logic applies to insurance intermediaries, whether local or regional. The broker may place the business with different carriers. Assuming they direct majority of the business to a single source, the decision of claim resolution will not be at their hand because they are not risk carriers. This strategy is more suitable with local insurers and more specifically those regional and leading markets. Gulf Insurance once again enjoys this leading market position. What matters more in business is the support and partnership that each party demonstrate to others. The appetite to absorb small losses over short term or in one risk will definitely strengthen the partnership. This is clearly evident in the insurance business and portfolio/pooling strategy will support the long term of objectives of the Company.

4. How would you expect to develop the SSH program structure over the next three years?

5. Please provide details of the proposed account management, broking and other risk management resources required to service SSH including but not limited to reporting lines, service personnel roles, etc.

Account management in Gulf Insurance is assigned to the technical department that has the largest share of client’s portfolio. If we assess the insurance requirements in Appendix Two, 6 out of 8 (75%) are casualty lines. These lines are professional indemnity, decennial liability, workmen compensation, third party liability, travel and director’s & officers. The insurance requirements in Appendix Three, 3 out of 5 (60%) are again casualty lines and they are professional indemnity, workmen compensation – including employer’s liability, third party liability – including commercial general liability. The client relation function or account management is merged with the technical department. Our account management decision seeks to provide direct contact for the client with decision making party and action doer. The technical team has stake and incentive to service the client through internal KPIs – client retention and satisfaction. The client, on the other hand, will have real time update on the progress of the task.

For insurance requirements within other divisions, the technical department will have greater incentive to service the client. If the technical department cannot service the client in other lines of business, they will face competition in their own line of business. So the negotiation taken by technical department on your behalf will be stronger. This represents indirectly the broking role to service your account, assuming that you adopt the pooling/portfolio strategy. The role of account management is part of the department management responsibility. We believe this business module brings superior value to Dar SSH in terms of effectiveness and efficiency.

Being a large, multinational and leading insurance group, all different functions that are necessary to support the risk of our clients are available. One of the main driven factors for achieving ‘A’ rating by Gulf Insurance is our risk management function. In addition, we are one of the few, if not only one, in the local market that has a risk engineering function. The purpose of risk engineering is to carry site survey to assess the safety procedures. As a testimony of our capabilities and expertise, our reinsurers accept the reports and findings of our risk engineering rather than seeking third party services. This function can only be found within international reinsurance carriers. We are proud that our standard of operation is advanced to be in line with international reinsurers.

In addition, Gulf Insurance is well advanced in IT solutions and undertaking major strategic initiatives to support our clients. We are pleased to share with you the following initiatives that we believe are both relevant and important to Dar SSH:

· Client portal – Liferay

· New IT system

6. What will be the composition of the account team in terms of critical strategic and technical skillsets? How do you envision the continuity of these skills sets on the SSH account in the future?

The account team will be the technical team that handles majority of your insurance requirements (60-75%). Since your insurance requirements are dominantly in casualty lines, the casualty underwriting team will be your account team. The team composition as follows:

We believe the critical strategic perspective of your account is achieved through the assignment of your account management to one of our executive management team members. Ahmad Husain - Executive Manager of Marine and Casualty lines will be your account manager. The assignment demonstrates our commitment to support Dar SSH at the highest level. Your account manager reports directly to Deputy CEO – Operation.

Ahmad holds bachelor’s degree (honor) in computer engineering from Oregon State University, USA and master’s in business administration from Kuwait Maastricht Business School (KMBS). The strategic skillset is supported not only through position and experience, but through strong academic record.

In terms of skillsets, we are delighted to share with you our organizational culture that encourage personal development. Training is a critical element of our team development and performance review. Our Company started this year a comprehensive training program to all staff so that technical staff (underwriting and claims) have minimum qualification of Certificate in Insurance from the Chartered Insurance Institute, UK. The certificate is composed of three exams that needs to be passed, introduction, underwriting and claims. We can advise that all your handling team members in casualty achieved the said qualification. The account manager, on the other hand, holds the Associateship of Chartered Insurance institute, UK.

The team is made up of young and energetic staff. The average age of our team members is (with Roy or without).

7. How would you describe the added value and differentiated qualities that your firm will bring to the SSH operation?

8. Explain your methodology and KPI performance criteria to monitor, evaluate and maintain the quality of participant services and performance during the course of the agreement.

9. What claims support / structure would you envision adopting in the event of a commercial market loss to SSH?

Discussion of requirement No. 2 of the service requirements in Appendix 2

The first step for formulate a renewal strategy is to obtain internal feedback. We have highlighted several aspects that can be looked upon during this process. Based on the outcome of this step, renewal strategy is developed. The usual practice involves inviting three different quotations, including one from the incumbent insurer. The purpose is to create a competitive environment for better insurance solution.

Although the declared purpose of this exercise is to achieve the best coverage at the best price, it normally leads to a single benchmark which is the premium cost. We do not deny that there will be discussions about some benefits, but the ultimate deciding factor will be price. Our objection on this approach are given below:

· The insurance benefit is usually jettisoned for the sake of price. When the price is agreed with the insurance carrier, it will be difficult to obtain further improvements on coverage. There will be always sacrifice on coverage. This supports the perception that standard tendering is a price driven process that does not provide proper balance between risk protection and cost.

· The frequent invitation of bids on a yearly basis provides a negative reputation to insurance market. The market will not be inclined to participate on a yearly basis. Even if they do so, the flexibility for commercial considerations at the time of claims or others will be much less.

· It emphasizes short term gains and does not create sustainable economic value. It is critical to create a long partnership in insurance, similar to credit history for individuals, to secure necessary support when the risk materializes. Insurance companies may invest in certain accounts or decide to absorb losses in a given year for the sake of achieving better results in the future. When the client denies the insurance company the opportunities to building a sufficient cushion during several years, the insurance company will not provide competitive pricing that is “superior” to market standard.

· Inviting tenders after having many losses or high loss ratio will signal negative attitude toward the business partnership.

The crucial objective for insurance business is to establish solid and deep relationship with the insurance carrier so that necessary support is obtained at the time of crises/claims. The cost of one single incident will worth the premium of many years and sometime decades. The insurance carrier that will support you is the one who has been your partner for many years. Shifting the business frequently or sending signals that partnership is not a priority will certainly reflect on the handling of your insurance claims.

Our suggestion is to formulate a balanced evaluation matrix on weighted average for different KPIs. Price will be one element of this criteria. A tender is made every three years including incumbent insurer. The purpose of the periodic tendering, rather than yearly, is to allow the insurance carrier to invest on SSH insurance account and generate economic value. The yearly tendering will not encourage insurance carriers to aggressively compete. After obtaining the market feedback, our recommendation, based on market practice, is to share the terms with the preferred insurance partner for matching. This step will demonstrate SSH commitment to work with the preferred partner but based on fair and reasonable insurance program that is aligned with industry standard.

Discussion on the Reinsurance