d i a g n o s i s : F r a u d a n n u a l r e p o r t

Transcription

1 d i a g n o s i s : F r a u d 2011 annual report

2 table of contents President s Letter: Applying the Right Antidotes Data Analytics: The Art and Science of Fraud Diagnosis Investigations: Improving a Well-Oiled Machine Training: Expanding Your Options Legislative Advocacy: When Bigger Really is Better Public Awareness: Let s Put the Insurance Fraud Yahoo on YouTube Membership Listing Board of Governors Advisors to the Board NICB Senior Leadership Team Financial Statements Information Resources

3 President s Letter Applying the Right Antidotes 2 There s a highly popular, Emmy-winning television show that has aired for nine seasons called House M.D. It s about an unconventional, yet brilliant, doctor and his team of inquisitive young physicians who diagnose the undiagnosable. All within the span of an hour, they encounter an extraordinarily challenging medical problem, debate various hypotheses and treatments, and save the patient. They do it episode after episode, year after year, with a 100 percent cure rate. And through it all, Dr. House and his team keep us entertained in the process. If only diagnosing and curing insurance fraud and vehicle theft were that easy. In 2011, the National Insurance Crime Bureau (NICB) completed its 99th season of providing the propertycasualty insurance industry, self-insured organizations and the n public with unique solutions for detecting, deterring and stopping insurance crime. In that long time span, we haven t eradicated this annual multi-billion dollar disease. But each year, we make progress in diagnosing its symptoms, treating the root causes and stopping its infectious spread. The NICB s progress can be attributed to several factors, beginning with the support of our nearly 1,100 members and hundreds of partners in the law enforcement and prosecutorial communities who have rallied behind the anti-fraud cause for so many years. Your continuing interest in uncovering fraudulent claims and holding criminals accountable for their actions is the starting point for every NICB solution. Secondly, we have a powerful internal guide for every successful NICB diagnosis: the Integrated Business Plan, or IBP. Enacted three years ago, this strategic plan continues paying dividends for our members and other stakeholders. As you ll read in this year s annual report, our five operational disciplines made measurable progress in achieving and exceeding IBP performance metrics during The NICB s adaptability is another key contributing factor. We ve recognized in recent years that our 350-plus employees must maintain constant flexibility when developing and deploying resources against shifting crime trends. For example, as a result of a myriad of factors that include data analytics advancements, expanded investigative and training capabilities, aggressive law enforcement and prosecution, legislative improvements and boosted public awareness initiatives, vehicle thefts nationwide declined 60 percent from 2000 to While many vehicle criminals certainly went to prison, thanks to our collective efforts, others migrated to alternative scams that offered lower risks and higher potential payoffs. Given this changing landscape, the NICB has shifted upward of 10 percent of our investigative resources since 2008 from vehicle theft to other growing criminal priorities affecting members, particularly medical and commercial fraud, specialized equipment crimes and cargo theft. Critically, we ve made these adjustments without detrimentally affecting our vehicle theft recoveries, as evidenced by the more than 4 percent increase in NICB agent vehicle recoveries last year from Credit the IBP s adaptive structure and our team s ingenuity for achieving these transitions, as well as the $326 million in minimum estimated value which we returned to member companies last year. What these factors all clearly point to is that there is no single cure for fraud and theft. We know this well after nearly 100 years of applying various remedies. But by sharing information, applying new technologies and integrating our collective expertise, together we are the long-term cure-all to crimes affecting every insurance policyholder nationwide. Like the fictional Dr. House and his colleagues, the NICB has yet to be stumped by the global pandemic known as insurance crime. We simply need more than an hour each week to diagnose the problem and apply the right antidotes. 3 Joseph H. Wehrle, Jr. President and Chief Executive Officer

4 Statistics 100, medical providers, 144 medical clinics, 251 different locations in 17 states Questionable Claim Submissions ForeWARN SM Strategic Alerts Published Medical Fraud Task Force Alerts Published Public ForeCAST SM Reports Published MedAWARE SM Alert Identifications Vice President of Data Analytics Brian Smidt addresses medical fraud technologies and our new MedAWARE program at the International Association of Special Investigation Units (IASIU) Annual Seminar and Expo in San Antonio. Data Analytics The Art and Science of Fraud Diagnosis NICB data analytics professionals examine insurance crimes in a one-of-a-kind living laboratory comprised of millions of data records, advanced technologies and specialized software applications. Using high-tech tools, we diagnose fraud and theft trends, uncover organized crime patterns, and produce volumes of analysis with the skill and accuracy of laboratory scientists. There s an art behind this science. In 2011, we reorganized the NICB analytics staff into medical, commercial and vehicle teams to more effectively address member priorities and paint a better fraud-fighting landscape nationwide. Designed to root out medical provider fraud, waste and abuse, the Aggregated Medical Database continued along its development path for a 2012 launch. However, we began distributing its initial deliverable, MedAWARE SM Alerts, to participating members last year. We published and disseminated 155 MedAWARE Alerts in 2011, which resulted in connections to existing cases and several new case initiations. The alerts diagnosed questionable upcoding and unbundling billing practices, modifier abuses, and template billing practices in which medical facilities billed large percentages of patients with identical diagnoses and procedure codes. The Commercial Liability Claims Project demonstrates another unique skill of our data analytics discipline. To identify individuals potentially engaged in commercial liability fraud, we analyzed claimants from 2008 to 2011 to uncover those with elevated numbers of relevant commercial liability claims. Unlike their applicability to many other NICB analyses, questionable claims are not necessary for producing effective commercial liability claim investigative leads. Oftentimes, the suspicious nature of elevated claims rather than questionable indicators is cause enough to issue Strategic Information Reports to NICB field staff and subsequent ForeWARN SM Alerts to members. During this project, we issued 50 ForeWARN Alerts, opened 44 cases, and identified many individuals submitting potentially fraudulent commercial liability claims who previously went undetected. While we redeployed some NICB resources to new and expanding crime categories, our vehicle theft analytics expertise flexed its 99 years of collective strength in 2011 through the Vehicle Theft Leads Initiative. This program analyzes vehicle history and vehicle identification number (VIN) information to proactively identify stolen vehicles, vehicle fraud, counterfeit VINs and organized crime ring activity. Working with the New York Department of Motor Vehicles, as well as Experian (a global information services company that manages an online automotive history service) and Carco (a leading provider of vehicle pre-inspections nationwide), we disseminated 126 investigative leads through the Vehicle Theft Leads Initiative that resulted in 59 vehicle recoveries valued at $1.75 million. Further, the effort supported a law enforcement investigation of a large-scale vehicle theft ring that led to several arrests. 5

5 Statistics 15,394/ $48,460, / $12,250,552 66/ $5,441,967 $37,113,087 $22,982,236 NICB Agent Vehicle Recoveries/ Estimated Value NICB Agent Specialized Equipment Recoveries/ Estimated Value NICB Agent Cargo Theft Property Recoveries/ Estimated Value Member-Reported Loss Mitigation Restitution Ordered Senior Vice President and Chief Operating Officer Jim Schweitzer discusses vehicle repatriation issues with NICB staff at the Foreign Operations Office in Chula Vista, Calif. Investigations Improving a Well-Oiled Machine Since the days of our predecessor organizations, the National Automobile Theft Bureau and Insurance Crime Prevention Institute, the NICB has been characterized as the grease between the two huge gears of law enforcement and the insurance industry. In a year when shrinking municipal budgets stretched law enforcement resources nationwide, NICB Field Operations provided extraordinary operational support in 2011 to help law enforcement agencies battle such crimes as medical fraud, specialized equipment theft, catastrophe fraud, and domestic and international vehicle theft. And who were the beneficiaries of this welloiled investigative expertise and field support? NICB members and the n public. While we did not start any new Major Medical Fraud Task Forces in 2011, we improved our existing groups by ensuring they worked at full capacity, leveraged their access to investigative leads provided by NICB data analysts, and efficiently prioritized their organized crime ring cases. NICB agents and Medical Fraud Task Force team members also expanded their efforts to educate local prosecutors on the scope and seriousness of medical fraud crimes, and why they should pursue these cases. Diagnosing and investigating medical fraud crimes is just the start we must also work collectively to prosecute them as well. Specialized equipment theft continued to capture more NICB investigative attention in We strengthened our partnerships with several manufacturers of agricultural and heavy equipment, boats and power sports equipment by building the technical infrastructure to obtain their shipping and assembly records, warranty data and updated vehicle marking information that can prove crucial to NICB investigations and recoveries. Further, we provide training to manufacturers and law enforcement agencies on specialized equipment theft scams and identification techniques. Through these outreach efforts and information exchanges, we create faster and more effective diagnoses of criminal problems and promote more powerful solutions. Our field operations staff was also quick to respond to the outbreak of natural disasters that devastated many U.S. communities last year. For instance, following massive tornadoes in Alabama and Missouri, we immediately published Catastrophe Advisories to alert members about potential fraud scams, many of which are perpetrated by criminals who arrive on-site after the initial damage period with offers to repair houses and commercial properties. Their resulting shoddy work and fraudulent claims contribute billions of dollars in losses to NICB members and can imperil the safety of innocent policyholders. We also served as a catastrophe investigative liaison for local law enforcement agencies. Another change implemented in 2011 was a reorganized field structure that streamlined our investigative discipline into nine regions, and now allows us to place greater investigative emphasis and additional resources toward growing medical-related fraud crimes. 7

6 Statistics 15,247/582 Member Students Trained in the FraudSmart SM Classroom/ Number of Sessions Training Expanding Your Options Benjamin Franklin famously said that an ounce of prevention is worth a pound of cure, meaning that it is better to avoid problems in the first place, rather than fixing them after they arise. NICB training programs and educational services are that ounce of prevention when tackling weighty insurance crime problems. 73,900 $6,222,125 88,500 20,800/510 62,700 14,188 NICTA Online Offerings Taken Value of Member Classroom and Online Training Training and Job Aid Materials Distributed and Downloaded Law Enforcement Student Classroom Enrollment/ Number of Sessions Visitors to nicbtraining.org, the NICB s Free Law Enforcement Training Website Continuing Education Credits Processed by the NICB and NICTA Special Agent Dennis Handley presents during a 2011 Medical Investigations Academy course. Since our training group s inception, we have continually developed educational programming that provides options for NICB members and law enforcement agents to improve their anti-fraud knowledge. From printed training guides and indicators, to videos, to classroom and academy training, to online learning methodologies, we realize one training size doesn t fit everyone s needs. Introduced in 2011, our Interactive Indicator Guide takes one of our most tried-and-true educational tools NICB anti-fraud paper indicators and elevates them to an electronic level that improves fraud diagnoses. Years in the making, this software application puts the NICB s nearly 30 anti-fraud indicator documents at your fingertips so members can immediately identify potential red flags in claims submissions. The electronic guide is more than just a laundry list of indicators: You can interact with the software by selecting specific indicators; which then provides additional information concerning the indicator, potential resolution steps and the insurance lines most frequently affected by the indicator. With nearly 12,000 relationships programmed into the Interactive Indicator Guide, this diagnostic tool is a major evolution in anti-fraud detection and sets the framework for redesigned NICB paper indicators in Another new training option for NICB members is the TrueStory SM Case Study program. Developed with the International Association of Special Investigation Units (IASIU) and available via the NICB Document Download Center (nicbdocs.org), these 13-and-counting interactive case studies eliminate the ageold teaching challenge of lecturing to nonengaged students. They can be used as a standalone training tool or in conjunction with other educational activities thanks to leader s guides that accompany each study. Designed to last 30 minutes or less, the case studies have students examine a claim actually submitted to a carrier (a true story), identify the scenario s fraud indicators, describe potential steps to resolve the indicators, and determine how to process the claim. At the end of each study, students learn what happened in the true case. Finally, your options for learning how to diagnose and apply appropriate treatments for medical fraud crimes expanded last year with the introduction of the NICB Medical Investigations Academy. Our latest academy format, the Medical Investigations Academy is an intensive four-day learning experience taught at our headquarters training facility by NICB special agents and Matt Kuschner, D.C., of the Travelers Medical Investigative Unit. This academy can facilitate 30 students per session and focuses especially on organized groups committing medical fraud crimes. 9

7 Legislative Advocacy When Bigger Really is Better Bigger isn t always better. But in big states like Texas that have experienced significant increases in insurance crime in recent years, little changes weren t good enough in Statistics Federal/Mid-Atlantic Insurance Fraud Summit Attendees Federal/Mid- Atlantic Insurance Fraud Summit Recommendations Florida PIP Town Hall Meetings States Where the NICB Has Direct Legislative Involvement on Fraud and Theft Issues Government Affairs Director Tim Lynch moderates a panel discussion on organized fraud rings at the Federal/Mid-Atlantic Insurance Fraud Summit. Stepping back a year, among the key issues we diagnosed during our 2010 Texas Insurance Fraud and Vehicle Theft Summit was a loophole in the state s immunity statute that hampered information sharing with the NICB. As a result, some NICB members in Texas were reluctant to share files with us, thus inhibiting our ability to detect, deter and stop the Lone Star state s growing staged accident, property fraud, cargo theft and towing fraud problems...not to mention potential links between these crimes and organized rings nationwide. Working with the Texas Department of Insurance in the state capital of Austin, our government affairs team mobilized an effort to fix this statute in More than a simple technical correction that offers our members immunity assurance when sharing information with the NICB, the statute adjustment produced big improvements in how you share information and investigate cases with NICB agents in our Dallas-based Southwest Region. Just 80 miles south of Austin in San Antonio, we made our debut last year as an exhibitor at the National Conference of State Legislatures (NCSL) Legislative Summit. With more than 5,000 attendees, this event is the premier annual gathering of state lawmakers from around the country, and we were the only insurance advocacy group represented there. Being an NCSL exhibitor provided us with a new opportunity to educate legislators and influential public policy experts on fraud issues affecting their communities. Not only did we provide them with critical information and data, but NICB President and Chief Executive Officer Joe Wehrle also met with Texas House Speaker Joe Strauss during the conference. This San Antonio premiere set the stage for expanding our NCSL presence when the event comes to our hometown of Chicago in Speaking of summits, our own highly successful fraud summit program also got bigger and better last year as we expanded it from the single-state format to a multistate approach combined with a federal component. The 2011 Federal/Mid-Atlantic (FMA) Insurance Fraud Summit assessed insurance crime issues affecting Virginia, Maryland and Washington, D.C., and reviewed the NICB s involvement in such federal initiatives as the National Motor Vehicle Title Information System and the regional health care fraud summits cosponsored by the Departments of Justice and Health and Human Services. The FMA Summit convened more than 230 attendees and distinguished panelists from the insurance industry, federal government agencies and local prosecutorial offices. Together, we discussed and devised meaningful action steps for such big regional crime issues as medical fraud, staged accidents, towingrelated fraud, and abuses by property and public adjusters. Finally, in preparation for the Florida 2012 legislative session, we hosted public town hall meetings in Tampa, Orlando and Miami to highlight the effects and impact of the personal injury protection (PIP) reform issue for consumers. 11

8 Public AWAreness Let s Put the Insurance Fraud Yahoo on YouTube Like any disease, diagnosing fraud is one thing. Halting its spread and curing it altogether is another. From our experience, we know that two key components to stopping insurance crime are: 1) public awareness, and 2) public outrage. Statistics 4,352/ $33,429,657 4,216/ $4,132,910 1,577/ $1,830,877 $39,393,444 Online News Media Stories/ Coverage Value Print News Media Stories/Coverage Value Broadcast News Media Stories/ Coverage Value Total Coverage Value of All Media Vice President and Chief Communications Officer Roger Morris is interviewed by WBBM-TV/ Chicago Investigative Reporter Pam Zekman regarding our 2011 towing fraud campaign. In 2011, the communications and membership group deployed proven public relations methods, along with new media technologies, to spread the word about fraud and theft crimes and get the n public as mad about them as we are. The past year was an especially difficult one for many areas of the country hit hard by catastrophic tornadoes, hurricanes and wildfires. Using the multimedia reach of news releases, billboards and radio ads, we unleashed a storm of our own by warning consumers about contractor scams that oftentimes occur following these acts of nature. Our campaign to stop storm chasers and prevent towing scams resulted in hundreds of stories, including several by investigative reporters at Chicago s WBBM-TV and CBS News. However, the NICB public awareness whirlwind didn t stop after the storms passed. Our ongoing communications campaigns about PIP fraud and staged accidents in Florida and New York informed consumers about how fraud impacts their household vehicle insurance budgets. These publicity efforts helped generate some of the nearly 7,000 tips that came in to our 800-TEL-NICB and TIP411 text messaging hot lines. In total, the NICB was mentioned in more than 10,000 print, television, radio and online news stories during 2011, with the corresponding media coverage value surging 53 percent to $39 million from the previous year. These statistics are dramatically higher than those from just three years ago when we launched the Integrated Business Plan, and directly related to our enhanced public awareness focus as one of the NICB s five core disciplines. We also expanded our video production and distribution capabilities, with more than 50 videos now available on our website and YouTube channel. Among other initiatives, we launched NICB News, a quarterly newscast on insurance fraud, and began producing live webinars that included more than 9,000 views from the 26th Annual IASIU Seminar & Expo. Our communications team members also maintained an active NICB social media presence on Twitter, Facebook, LinkedIn and the new NICB Blog ( Communicating our crime-fighting efforts to NICB members and the n public is something we work hard at every day, and we were pleased to have our 2010 Annual Report recognized for top Gold Award honors by the Washington, D.C.-based Association TRENDS All Media Contest. 13

9 2011 Active member groups 14 AAA Northern California, Nevada & Utah Insurance Exchange AAA Mid-Atlantic Insurance AAA Mid-Atlantic Insurance of New Jersey ACA Insurance California State Automobile Association Inter-Insurance Bureau Keystone Insurance Western United Insurance ACCC Insurance Access Insurance Accident Fund Group Accident Fund General Insurance Accident Fund Insurance of Accident Fund National Insurance Compwest Insurance Third Coast Underwriters United Wisconsin Insurance ACE USA Group ACE n Insurance ACE n Lloyds Insurance ACE n Reinsurance ACE Fire Underwriters Insurance ACE Indemnity Insurance ACE Insurance of Illinois ACE Insurance of Ohio ACE Insurance of the Midwest ACE Property and Casualty Insurance Atlantic Employers Insurance Bankers Standard Fire and Marine Bankers Standard Insurance Century Indemnity Century Reinsurance Illinois Union Insurance Indemnity Insurance of North Insurance of North Pacific Employers Insurance Westchester Fire Insurance Westchester Surplus Lines Insurance Affirmative Insurance Group Affirmative Insurance Affirmative Insurance of Michigan Insura Property and Casualty Insurance, Inc. US Agencies Casualty Insurance, Inc. US Agencies Direct Insurance Alliance Insurance Companies Alliance Indemnity Alliance Insurance, Inc. Farmers Alliance Mutual Insurance Alliance United Insurance Allianz U.S. Group Allianz Global Risks U.S. Insurance Allianz Life Insurance of New York Allianz Life Insurance of North Allianz Underwriters Insurance n Automobile Insurance n Insurance n Standard Lloyd s Insurance Associated Indemnity Corporation Chicago Insurance Euler n Credit Indemnity Fireman s Fund County Mutual Insurance Fireman s Fund Indemnity Corporation Fireman s Fund Insurance Fireman s Fund Insurance of Georgia Fireman s Fund Insurance of Hawaii, Inc. Fireman s Fund Insurance of Louisiana Fireman s Fund Insurance of Ohio Interstate Fire & Casualty Interstate Indemnity Jefferson Insurance National Surety Corporation San Francisco Reinsurance Vintage Insurance Allstate Insurance Group ALIC Reinsurance Allstate Assurance Allstate County Mutual Insurance Allstate Floridian Insurance Allstate Indemnity Allstate Insurance Allstate Life Insurance of New York Allstate New Jersey Insurance Allstate New Jersey Property and Casualty Insurance Allstate North Insurance Allstate Property and Casualty Insurance Allstate Texas Lloyd s n Heritage Life Castle Key Indemnity Castle Key Insurance Charter National Life Insurance Deerbrook Insurance Encompass Floridian Indemnity Encompass Floridian Insurance Encompass Home and Auto Insurance Encompass Indemnity Encompass Independent Insurance Encompass Insurance Encompass Insurance of Encompass Insurance of Massachusetts Encompass Insurance of New Jersey Encompass Property and Casualty Encompass Property and Casualty Insurance of New Jersey First Colonial Insurance Intramerica Life Insurance Lincoln Benefit Life North Light Specialty Insurance (North Light) Northbrook Indemnity Surety Life Insurance Ally Insurance Holdings, Inc. CIM Insurance Corporation MIC Property and Casualty Insurance Corporation Motors Insurance Corporation AMERCO Corp Group Amerco Corp North n Fire & Casualty Insurance Republic Western Insurance n Alliance Casualty n European Group n European Insurance Rutgers Casualty Insurance Rutgers Enhanced Insurance United International Insurance n Family Insurance Group n Family Insurance n Family Life Insurance n Family Mutual Insurance n Standard Insurance of Ohio n Standard Insurance of Wisconsin n Freedom Insurance n General Holdings, Inc. Apollo Casualty of Florida Apollo Casualty Insurance Delphi Casualty n Insurance Acquisition, Inc. (AIAI) n Country Insurance n Service Insurance, Inc. n Modern Insurance Group n Family Home Insurance n Modern Home Insurance n Modern Insurance of Florida n Modern Lloyds Insurance n Modern Select Insurance n Modern Surplus Lines Insurance n Southern Home Insurance n Western Home Insurance First Marine Insurance n National P&C Group n National County Mutual Insurance n National General Insurance n National Lloyds Insurance n National Property and Casualty Anpac Louisiana Insurance Farm Family Casualty Insurance Pacific Property & Casualty United Farm Family Insurance n Road Insurance, Inc. n Safety Insurance Companies n Safety Casualty Insurance n Safety Indemnity n Safety Risk Retention Group Ameriprise Auto & Home Insurance Ameriprise Auto & Home Insurance IDS Property Casualty Insurance Amica Mutual Group Amica Life Insurance Amica Lloyds of Texas Amica Mutual Insurance Amica Property and Casualty Insurance Anchor Insurance Holdings Group Anchor General Insurance Pacific Star Insurance Arbella Insurance Group Arbella Indemnity Insurance Arbella Mutual Insurance Arbella Protection Insurance, Inc. Commonwealth Mutual Insurance Commonwealth Reinsurance Covenant Insurance Assurance Insurance Assurant Solutions n Bankers Insurance of Florida n Reliable Insurance n Security Insurance Caribbean n Property Insurance Financial Insurance Exchange Reliable Lloyds Insurance Voyager Indemnity Insurance Voyager Property and Casualty Insurance Auto Club Group - Michigan Auto Club Group Insurance Auto Club Insurance Association Auto Club Property and Casualty Insurance MEEMIC Insurance Memberselect Insurance Auto Club Insurance of Florida Auto Club South Insurance AutoOne Insurance AutoOne Insurance AutoOne Select Insurance Auto-Owners Insurance Group Auto-Owners Insurance Home-Owners Insurance Owners Insurance Property-Owners Insurance Southern-Owners Insurance Balboa Insurance Group Balboa Insurance Balboa Life Insurance Balboa Life Insurance of New York Balboa Lloyds Insurance Fleet Insurance General Fidelity Insurance Meritplan Insurance Newport Insurance Baldwin & Lyons Group Protective Insurance Sagamore Insurance BCS Insurance Group BCS Insurance BCS Life Insurance Plans Liability Insurance Berkshire Hathaway Insurance Group Columbia Insurance GEICO Casualty GEICO General Insurance GEICO Indemnity Government Employees Insurance National Fire & Marine Insurance National Indemnity National Indemnity of Mid- National Indemnity of the South National Liability & Fire Insurance Brethren Mutual Insurance BrickStreet Mutual Insurance California Casualty Group California Casualty & Fire Insurance California Casualty General Insurance of Oregon California Casualty Indemnity Exchange California Casualty Insurance Capital Insurance Group California Capital Insurance Eagle West Insurance Monterey Insurance Nevada Capital Insurance CASCO Indemnity Caterpillar Insurance Centennial Casualty Central Services Group A. Central Insurance New York Central Mutual Fire Insurance Century-National Insurance Chubb Group of Insurance Companies Chubb Custom Insurance Chubb Indemnity Insurance 15

10 2011 Active member groups 16 Chubb Insurance of New Jersey Chubb Lloyds Insurance of Texas Chubb National Insurance Executive Risk Indemnity, Inc. Executive Risk Specialty Insurance Federal Insurance Great Northern Insurance Northwestern Pacific Indemnity Pacific Indemnity Texas Pacific Indemnity Vigilant Insurance Cincinnati Financial Corporation Cincinnati Casualty, The Cincinnati Indemnity, The Cincinnati Insurance, The Cincinnati Specialty Underwriter, The Citizens Property Insurance Corporation Civil Service Employees Group Civil Service Employees Insurance CSE Safeguard Insurance CNA Insurance Companies n Casualty of Reading, Pennsylvania Columbia Casualty Continental Casualty Continental Insurance Continental Insurance of New Jersey, The First Fire & Casualty Insurance of Hawaii, Inc. First Indemnity Insurance of Hawaii, Inc. First Insurance of Hawaii, Ltd. First Security Insurance of Hawaii, Ltd. National Fire Insurance of Hartford Surety Bonding of Transportation Insurance Universal Surety of Valley Forge Insurance Western Surety Commerce Insurance, a MAPFRE n Commerce Insurance Citation Insurance (MA) Commerce Insurance, The Commerce West Insurance MAPFRE Insurance of Florida Statewide Insurance Companion Property and Casualty Insurance Concord Group Insurance Companies Concord General Mutual Insurance Green Mountain Insurance, Inc. State Mutual Insurance (ME) Sunapee Mutual Fire Insurance Vermont Accident Insurance, Inc. Consumers Insurance USA, Inc. CorePointe Insurance Cornerstone National Insurance COUNTRY Financial Cotton States Mutual Insurance Country Casualty Insurance Country Mutual Insurance Country Preferred Insurance Holyoke Mutual Insurance in Salem Middlesex Mutual Assurance Modern Service Insurance MSI Insurance Shield Insurance Country-Wide Insurance CUNA Mutual Group CUMIS Insurance Society, Inc. CURE Auto Insurance DHC Group Danielson Insurance Danielson National Insurance National n Insurance of California Valor Insurance, Inc. Direct Auto Insurance Direct General Group Direct General Insurance Direct General Insurance of Louisiana Direct General Insurance of Mississippi Direct Insurance Direct National Insurance Donegal Insurance Group Atlantic States Insurance Donegal Mutual Insurance Le Mars Insurance Michigan Insurance Peninsula Indemnity Peninsula Insurance Sheboygan Falls Insurance Southern Insurance of Virginia Southern Mutual Insurance DTRIC Insurance, Limited Electric Insurance EMC Insurance Companies Dakota Fire Insurance EMC Insurance Companies EMC Property and Casualty EMC Reinsurance EMCASCO Insurance Employers Modern Life Farm and City Insurance Hamilton Mutual Insurance of Cincinnati, Ohio, The Illinois EMCASCO Insurance Union Insurance of Providence Erie Insurance Group Erie Family Life Insurance Erie Insurance Erie Insurance of New York Erie Insurance Exchange Erie Insurance Property & Casualty Flagship City Insurance Esurance Esurance Insurance Esurance Insurance of New Jersey Esurance Property and Casualty Insurance Eveready Insurance Everest Re Group Everest Indemnity Insurance Everest National Insurance Everest Reinsurance Everest Security Insurance Mt. McKinley Insurance Fairfax Financial Group Crum & Forster Indemnity Crum & Forster Insurance Crum & Forster Underwriters of Ohio Fairmont Specialty Insurance North River Insurance, The United States Fire Insurance Zenith Insurance Zenith Star Insurance ZNAT Insurance Farmers Insurance Exchange 21st Century Casualty 21st Century Insurance 21st Century Insurance of the Southwest AIG Advantage Insurance AIG Auto Insurance of New Jersey AIG Centennial Insurance AIG Hawaii Insurance, Inc. AIG Indemnity Insurance AIG National Insurance, Inc. AIG Preferred Insurance AIG Premier Insurance n Federation Insurance n International Insurance n International Insurance of California, Inc. n International Insurance of Delaware n International Insurance of New Jersey n International Pacific Insurance n Pacific Insurance, Inc. Bristol West Casualty Insurance Bristol West Insurance Bristol West Preferred Insurance Civic Property and Casualty Coast National Insurance Exact Property and Casualty Farmers Insurance of Arizona Farmers Insurance of Idaho Farmers Insurance of Oregon Farmers Insurance of Washington Farmers Insurance, Inc. Farmers Insurance of Columbus, Inc. Farmers New Century Insurance Farmers New World Life Insurance Farmers Reinsurance Farmers Texas County Mutual Insurance Fire Insurance Exchange Foremost County Mutual Insurance Foremost Insurance Grand Rapids, Michigan Foremost Lloyds of Texas Foremost Property and Casualty Insurance Foremost Signature Insurance Illinois Farmers Insurance Mid-Century Insurance Mid-Century Insurance of Texas Neighborhood Spirit Property and Casualty New Hampshire Indemnity, Inc. Security National Insurance (FL) Texas Farmers Insurance Truck Insurance Exchange FBL Financial Group, Inc. Farm Bureau Mutual Insurance KFB Insurance, Inc. Western Agricultural Insurance FCCI Insurance Group, Inc. Brierfield Insurance FCCI Advantage Insurance FCCI Commercial Insurance FCCI Insurance Monroe Guaranty Insurance National Trust Insurance Federated Mutual Group Federated Mutual Insurance Federated Service Insurance Fidelity National Group Fidelity National Insurance Fidelity National Lloyds Fidelity National Property and Casualty First Acceptance Insurance Group First Acceptance Insurance of Georgia, Inc. First Acceptance Insurance of Tennessee First Acceptance Insurance, Inc. First n Corporation First n Home Buyers Protection Corp First n Property & Casualty Insurance First n Specialty Insurance First Chicago Insurance Florists Mutual Group Florists Insurance Florists Mutual Insurance Founders Insurance Gateway Insurance Georgia Farm Bureau Group Georgia Farm Bureau Casualty Insurance Georgia Farm Bureau Mutual Insurance GeoVera Holdings, Inc. Group GeoVera Insurance GeoVera Security Insurance GeoVera Specialty Insurance Pacific Select Property Insurance Germania Mutual Group Germania Farm Mutual Insurance Association Germania Fire & Casualty Germania Insurance Germania Select Insurance Texas Heritage Insurance Global Liberty Insurance of New York GMAC Insurance Personal Lines Group GMAC Insurance Online, Inc. GMAC Insurance Holding Integon Casualty Insurance Integon General Insurance Corporation Integon Indemnity Corporation Integon National Insurance Integon Preferred Insurance MIC General Insurance Corporation National General Assurance National General Insurance New South Insurance Gramercy Insurance Grange Mutual Casualty Group Grange Indemnity Insurance Grange Insurance of Michigan Grange Mutual Casualty Grange Property & Casualty Insurance Integrity Mutual Insurance Integrity Property & Casualty Insurance Trustgard Insurance Great n Property and Casualty Insurance Group n Empire Insurance n Empire Surplus Lines Insurance Great n Alliance Insurance Great n Assurance Insurance Great n Casualty Insurance Great n Contemporary Insurance Great n E & S Insurance Great n Fidelity Insurance Great n Insurance Great n Insurance of New York Great n Lloyd s Insurance Great n Protection Insurance Great n Security Insurance Great n Spirit Insurance Mid-Continent Assurance Mid-Continent Casualty National Interstate Insurance 17

11 2011 Active member groups 18 National Interstate Insurance of Hawaii, Inc. Oklahoma Surety Triumphe Casualty Greater New York Group GNY Custom Insurance Greater New York Mutual Insurance Insurance of Greater New York Strathmore Insurance GUARD Insurance Group AmGUARD Insurance EastGUARD Insurance NorGUARD Insurance WestGUARD Insurance GuideOne Insurance GuideOne Insurance GuideOne n Life Insurance GuideOne Elite Insurance GuideOne Life Insurance GuideOne Lloyds Insurance GuideOne Mutual Insurance GuideOne Property & Casualty Insurance GuideOne Specialty Mutual Insurance Hallmark Financial Services, Inc. n Hallmark Insurance of Texas Hallmark County Mutual Insurance Hallmark Insurance Hallmark Specialty Insurance Hanover Insurance Group AIX Specialty Insurance Allmerica Financial Alliance Insurance Allmerica Financial Benefit Insurance Citizens Insurance of Citizens Insurance of Illinois Citizens Insurance of Ohio Citizens Insurance of the Midwest Hanover n Insurance Hanover Insurance Hanover Lloyd s Insurance Hanover National Insurance Hanover New Jersey Insurance Massachusetts Bay Insurance NOVA Casualty Professionals Direct Insurance Verlan Fire Insurance, MD Harleysville Insurance Berkshire Mutual Insurance Harleysville Insurance Harleysville Insurance of New Jersey Harleysville Insurance of New York Harleysville Insurance of Ohio Harleysville Lake States Insurance Harleysville Life Insurance Harleysville Mutual Insurance Harleysville Pennland Insurance Harleysville Preferred Insurance Harleysville Worcester Insurance Harleysville-Atlantic Insurance Harleysville-Garden State Insurance Mid- Insurance Penn Mutual Insurance Hartford Insurance Group, The First State Insurance Hartford Accident and Indemnity Hartford Casualty Insurance Hartford Financial Services WC Hartford Fire Insurance Hartford Insurance of Illinois Hartford Insurance of the Midwest Hartford Insurance of the Southeast Hartford Lloyd s Insurance Hartford Underwriters Insurance New England Insurance Nutmeg Insurance Pacific Insurance, Ltd. Property and Casualty Insurance of Hartford Sentinel Insurance, Ltd. Trumbull Insurance Twin City Fire Insurance Hastings Mutual Insurance Hawaii Employer s Mutual Insurance (HEMIC) HCC Insurance Holdings, Inc. n Contractors Indemnity Avemco Insurance HCC Specialty Insurance Houston Casualty Pioneer General Insurance Suretec Insurance United States Surety US Specialty Insurance Hiscox Insurance Group Hiscox Insurance, Inc. Hiscox Specialty Insurance, Inc. Homesite Insurance Group Homesite Indemnity Homesite Insurance Homesite Insurance of California Homesite Insurance of Florida Homesite Insurance of Georgia Homesite Insurance of Illinois Homesite Insurance of New York Homesite Insurance of the Midwest Homesite Lloyds of Texas Horace Mann Insurance Group Horace Mann Insurance Horace Mann Lloyds Horace Mann Property & Casualty Insurance Teachers Insurance IAT Acceptance Casualty Insurance Acceptance Indemnity Insurance Commercial Alliance Insurance Harco National Insurance Occidental Fire & Casualty of North Carolina Transguard Insurance of, Inc. Wilshire Insurance ICW Group Explorer Insurance, The Independence Casualty & Surety Insurance of the West Westward Insurance IFA Insurance Imperial Management Group Imperial Fire and Casualty Insurance IMT Group, The IMT Insurance (Mutual) Wadena Insurance Infinity Property & Casualty Insurance Group Hillstar Insurance Infinity Assurance Insurance Infinity Auto Insurance Infinity Casualty Insurance Infinity County Mutual Insurance Infinity General Insurance Infinity Indemnity Insurance Infinity Insurance Infinity Preferred Insurance Infinity Premier Insurance Infinity Reserve Insurance Infinity Safeguard Insurance Infinity Security Insurance Infinity Select Insurance Infinity Specialty Insurance Infinity Standard Insurance Insuremax Insurance Interboro Insurance Interinsurance Exchange of the Automobile Club AAA Texas County Mutual Insurance Auto Club Casualty Auto Club Family Insurance Auto Club Indemnity Automobile Club Inter-Insurance Exchange Automobile Club of Southern California Life Insurance Interstate Auto Insurance, Inc. Interstate Bankers Casualty Island Insurance Group Island Insurance, Ltd. Island Premier Insurance, Ltd. Tradewind Insurance, Ltd. Kemper Preferred Alpha Property & Casualty Insurance Capital County Mutual Fire Insurance Charter Indemnity Financial Indemnity Kemper Independence Insurance Merastar Insurance Mutual Savings Fire Insurance National Merit Insurance Old Reliable Casualty Response Indemnity Response Indemnity of California Response Insurance Response Worldwide Direct Auto Insurance Response Worldwide Insurance Trinity Universal Insurance Union National Fire Insurance United Casualty Insurance of Unitrin Advantage Insurance Unitrin Auto and Home Insurance Unitrin County Mutual Insurance Unitrin Direct Insurance Unitrin Direct Property & Casualty Unitrin Preferred Insurance Unitrin Safeguard Insurance Valley Insurance Valley Property & Casualty Insurance Warner Insurance Kentucky Farm Bureau Group FB Insurance Kentucky Farm Bureau Mutual Insurance Kingstone Insurance Kingsway Group Amigo Insurance Mendakota Insurance Mendota Insurance Universal Casualty Lancer Insurance Group Lancer Insurance North Sea Insurance Lebanon Valley Insurance Liberty Mutual Group First Insurance First Lloyd s Insurance n Ambassador Casualty n Economy Insurance n Fire and Casualty n States Insurance n States Insurance of Texas n States Life Insurance n States Lloyds Insurance n States Preferred Insurance Atlas Assurance of Bridgefield Casualty Insurance Bridgefield Employers Insurance Colorado Casualty Insurance Consolidated Insurance Empire Life Insurance Employers Insurance of Wausau A Mutual Excelsior Insurance First Liberty Insurance Corporation, The First National Insurance of First Safeco National Life Insurance General Insurance of Globe n Casualty Go Golden Eagle Insurance Corporation Hawkeye Security Insurance Indiana Insurance Insurance of Illinois Liberty County Mutual Insurance Liberty Insurance of Liberty Insurance Corporation Liberty Insurance Underwriters, Inc. Liberty Life Assurance of Boston Liberty Lloyds of Texas Liberty Mutual Fire Insurance Liberty Mutual Insurance Liberty Mutual Personal Insurance Liberty Northwest Insurance Corporation Liberty Personal Insurance Liberty Surplus Insurance Corporation LM General Insurance LM Insurance Corporation LM Personal Insurance LM Property and Casualty Insurance Merchants and Business Men s Mutual Insurance Mid-n Fire & Casualty Midwestern Indemnity, The Montgomery Mutual Insurance, The National Insurance Association Netherlands Insurance North Pacific Insurance Ohio Casualty Insurance, The Ohio Security Insurance Oregon Automobile Insurance Peerless Insurance Safeco Insurance of Safeco Insurance of Illinois Safeco Insurance of PA Safeco Life Insurance Safeco Lloyds Insurance Safeco National Insurance Safeco National Life Insurance Safeco Surplus Lines Insurance San Diego Insurance Wausau Business Insurance Wausau General Insurance Wausau Underwriters Insurance West n Insurance Loya Group Fred Loya Insurance Loya Casualty Insurance 19

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