ARBITRATION TASK FORCE

1. ARBITRATIONTASKFORCE ARIAS•U.S. 2013 Spring Conference May 2013

2. Arbitration Task Force Status Report • The ATF was formed in the Spring of 2012 to explore improvements to the arbitration process. Some areas of focus are: • Examining the potential use of Neutral Panels • Considering the use of mediation during the arbitration process • Recapturing streamlined past practices • Exploring whether an arbitration appeal procedure should be offered • In addition to these four areas, the Task Force will also explore other ideas to improve the process.

3. Progress Report • This is a Progress Report on five ATF ideas generated to date. • These ATF ideas are preliminary and have not been approved by or formally presented to the Board of Directors of ARIAS•U.S. • These ATF ideas were presented at the Fall Meeting in December • The ATF has conducted two town halls to solicit input from the membership regarding its ideas • Additional membership input on these ATF ideas is being sought before presenting or proposing them to the Board • While no additional town halls are anticipated, you can send in your comments to “ArbitrationTaskForce@arias-us.org • The ATF plans to make its formal recommendation regarding the ATF ideas to the Board by the end of June, 2013

4. Current ARIAS-US Neutral Arbitration Panel Selection Process • Neutral Panel Selection: • Objective: To provide for the neutral selection of an arbitration panel that will minimize the level of perceived bias inherent in utilizing party-appointed arbitrators • Procedure is not intended, and certainly cannot be guaranteed, to produce panel members with “neutral” mind sets • The current process has been rarely used by the ARIAS-US membership

5. ATF Idea #1: Neutral Arbitration Process • Perceived deficiencies with respect to the existing Arbitration Process: • Bias of Arbitrators/Umpires • Perceptions of gamesmanship • Arbitrators as advocates • Result may be determined by coin flip • High cost of proceedings

6. ATF Idea #1: Neutral Arbitration Process- con’t • International standard outside US is neutrality. • Provide neutral option for parties to ARIAS arbitration proceedings. • Restore confidence in the arbitration process. • Continue to maintain position of ARIAS as leader in industry with respect to the reinsurance arbitration process. • Will not disrupt existing arbitration process, but merely provide a neutral option for the parties that choose to utilize it.

7. ATF Idea #2: Private Appeal Process • Greater confidence in ultimate result of arbitral proceeding. • Opportunity to provide for private appellate review process with industry experts. • Additional value that ARIAS can bring to the arbitral process should the parties choose to avail themselves of it.

8. ATF Idea #2 Exists in Other Organizations • Organizations Providing for a Private Appeal Process: • Judicial Arbitration and Mediation Service (“JAMS”) – optional arbitration appeals procedures • International Institute for Conflict Prevention and Resolution (“CPR”) – arbitration appeal procedure • American Arbitration Association (“AAA”) – Private appeals procedure re NY “no-fault” insurance law

9. ATF Idea #2: Private Appeal Considerations to Explore • If provided, parties would have to contractually agree to utilize. • Additional service to be provided by ARIAS to members and parties that choose to utilize . • Parties or members concerned that a Private Appellate Process would unnecessarily lengthen proceedings or increase the cost of proceedings, could choose not to utilize.

10. ATF Idea #3: Use of Mediation During Arbitration • Explore updating the ARIAS-US Practical Guide to outline a best practice for arbitration panels to suggest mediation at appropriate junctures within the arbitration schedule. • The arbitration panel would not be required or encouraged to mandate mediation in the absence of party agreement or disclosure of any information during the mediation process . • The Parties alone would have the authority to select a mediator; if they cannot reach agreement on mediator selection, they could utilize ARIAS-US qualified mediator list and adopt the selection process. • At ARIAS-US conferences, educational mock mediations could be offered to demonstrate how mediation can be effective in arbitration proceedings.

11. ATF Idea #4: Conversion of ARIAS-US Practical Guide • Explore converting the ARIAS-US Practical Guide into “ARIAS-US Rules and Procedures,” to which parties may bind themselves by agreement. • Such new Rules and Procedures may include: • Sample Arbitration Clauses • Concrete panel selection rules, including the option of electing neutral panels • A uniform format for the initial organizational meeting and conduct of proceedings that all ARIAS-US arbitrators would follow • Procedures for mediation of disputes during the arbitration process (as discussed earlier in this deck) • A timeframe for the panel to issue an award • An optional procedure for parties to have a separate panel of neutral arbitrators review the original panel’s award before it becomes final

12. ATF Idea #5: Recapturing Desirable Past Practices • The Sub-Committee is evaluating a series of programs designed to increase active industry executive participation in the dispute resolution process . • ARIAS*US Industry Outreach – obtain senior management commitment to the importance of active executive involvement in the dispute resolution process. • ARIAS*US Guidance Panels – foster the amicable resolution of disputes by creating an optional process for submitting a dispute to a panel of active industry executives on a no-names basis to obtain guidance on resolution based on current, prevailing industry custom and practice. • Industry Mediation – engage active industry executives to act as mediators in routine and smaller disputes to enhance the likelihood of “business solutions to business disputes.”

13. ATF Idea #5: Desirable Past Practices: Streamlined Procedures • Considering a set of comprehensive procedures to be followed in all matters, unless the parties specifically agree otherwise, where the amount in dispute is less than $2M, with the goal of: • Reducing costs and delays • Enhancing the efficiency of the process • Procedures under consideration include specific scheduling parameters and timetables, as well as limitations on: • Briefing • Document and deposition discovery • Motion practice • Use of expert witnesses • Considering whether to further streamline procedures for matters involving amounts in controversy of less than $500,000.