Consulting architects of albertaAnnual General Meeting October 29, 2013Jill EaglesonExecutive Claims ConsultantXL Insurance, Design Professional1 2012, XL Group plc companies. All rights reserved. I MAKE YOUR WORLD GOYellow 2R= 213G= 206B= 146Orange 2R= 203G= 125B= 101Mag 2R= 182G= 114B= 146Red 2R= 239G= 63B= 107LG2R= 156G= 162B=63Green 2R= 0G= 137B= 143Cyan 2R= 0G= 182B= 190DB2R= 0G= 65B= 89YellowR= 255G= 255B= 0OrangeR= 244G= 121B= 32MagentaR= 236G= 0B= 141RedR= 237G= 28B= 36Lt GreenR= 141G= 198B= 63GreenR= 57G= 181B= 74CyanR= 0G= 174B= 239Dk BlueR= 45G= 49B= 146 2012, XL Group plc companies. All rights reserved. I MAKE YOUR WORLD GOYellowR= 255G= 255B= 0OrangeR= 244G= 121B= 32MagentaR= 236G= 0B= 141RedR= 237G= 28B= 36Lt GreenR= 141G= 198B= 63GreenR= 57G= 181B= 74CyanR= 0G= 174B= 239Dk BlueR= 45G= 49B= 146Yellow 2R= 213G= 206B= 146Orange 2R= 203G= 125B= 101Mag 2R= 182G= 114B= 146Red 2R= 239G= 63B= 107LG2R= 156G= 162B=63Green 2R= 0G= 137B= 143Cyan 2R= 0G= 182B= 190DB2R= 0G= 65B= 89115 October 2013Classification of CausesThe XL Insurance Risk Drivers research highlights the interrelationship between technical and non-technical factors that contribute to an A/E firms risk exposure 2012, XL Group plc companies. All rights reserved. I MAKE YOUR WORLD GOYellowR= 255G= 255B= 0OrangeR= 244G= 121B= 32MagentaR= 236G= 0B= 141RedR= 237G= 28B= 36Lt GreenR= 141G= 198B= 63GreenR= 57G= 181B= 74CyanR= 0G= 174B= 239Dk BlueR= 45G= 49B= 146Yellow 2R= 213G= 206B= 146Orange 2R= 203G= 125B= 101Mag 2R= 182G= 114B= 146Red 2R= 239G= 63B= 107LG2R= 156G= 162B=63Green 2R= 0G= 137B= 143Cyan 2R= 0G= 182B= 190DB2R= 0G= 65B= 89Classification of CausesTechnicalError and/or omission of a technical nature which resulted in a loss prevention file or claimNon-technicalBreakdown in project or practice management processes which contribute to a loss prevention file or claim being made 2012, XL Group plc companies. All rights reserved. I MAKE YOUR WORLD GOYellowR= 255G= 255B= 0OrangeR= 244G= 121B= 32MagentaR= 236G= 0B= 141RedR= 237G= 28B= 36Lt GreenR= 141G= 198B= 63GreenR= 57G= 181B= 74CyanR= 0G= 174B= 239Dk BlueR= 45G= 49B= 146Yellow 2R= 213G= 206B= 146Orange 2R= 203G= 125B= 101Mag 2R= 182G= 114B= 146Red 2R= 239G= 63B= 107LG2R= 156G= 162B=63Green 2R= 0G= 137B= 143Cyan 2R= 0G= 182B= 190DB2R= 0G= 65B= 89Top 4 Non-Technical Risk DriversPercentage of Claims Affected 2001 (beige) v 2012 (blue) 2012, XL Group plc companies. All rights reserved. I MAKE YOUR WORLD GOYellowR= 255G= 255B= 0OrangeR= 244G= 121B= 32MagentaR= 236G= 0B= 141RedR= 237G= 28B= 36Lt GreenR= 141G= 198B= 63GreenR= 57G= 181B= 74CyanR= 0G= 174B= 239Dk BlueR= 45G= 49B= 146Yellow 2R= 213G= 206B= 146Orange 2R= 203G= 125B= 101Mag 2R= 182G= 114B= 146Red 2R= 239G= 63B= 107LG2R= 156G= 162B=63Green 2R= 0G= 137B= 143Cyan 2R= 0G= 182B= 190DB2R= 0G= 65B= 89ARCHITECTSWho Sues Architects?

2012, XL Group plc companies. All rights reserved. I MAKE YOUR WORLD GOYellowR= 255G= 255B= 0OrangeR= 244G= 121B= 32MagentaR= 236G= 0B= 141RedR= 237G= 28B= 36Lt GreenR= 141G= 198B= 63GreenR= 57G= 181B= 74CyanR= 0G= 174B= 239Dk BlueR= 45G= 49B= 146Yellow 2R= 213G= 206B= 146Orange 2R= 203G= 125B= 101Mag 2R= 182G= 114B= 146Red 2R= 239G= 63B= 107LG2R= 156G= 162B=63Green 2R= 0G= 137B= 143Cyan 2R= 0G= 182B= 190DB2R= 0G= 65B= 89JILLS TOP TEN TRENDS

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2012, XL Group plc companies. All rights reserved. I MAKE YOUR WORLD GOYellowR= 255G= 255B= 0OrangeR= 244G= 121B= 32MagentaR= 236G= 0B= 141RedR= 237G= 28B= 36Lt GreenR= 141G= 198B= 63GreenR= 57G= 181B= 74CyanR= 0G= 174B= 239Dk BlueR= 45G= 49B= 146Yellow 2R= 213G= 206B= 146Orange 2R= 203G= 125B= 101Mag 2R= 182G= 114B= 146Red 2R= 239G= 63B= 107LG2R= 156G= 162B=63Green 2R= 0G= 137B= 143Cyan 2R= 0G= 182B= 190DB2R= 0G= 65B= 891. Delays/Extras/overruns WHO IS TO BLAME These claims might be madeby owner or contactor Will often be substantial; multi million dollar claims notunusual. Tighter margins; higher expectations

Typical allegations: Errors and omissions in design Late responses to shop drawings and RFIs 7 2012, XL Group plc companies. All rights reserved. I MAKE YOUR WORLD GOYellowR= 255G= 255B= 0OrangeR= 244G= 121B= 32MagentaR= 236G= 0B= 141RedR= 237G= 28B= 36Lt GreenR= 141G= 198B= 63GreenR= 57G= 181B= 74CyanR= 0G= 174B= 239Dk BlueR= 45G= 49B= 146Yellow 2R= 213G= 206B= 146Orange 2R= 203G= 125B= 101Mag 2R= 182G= 114B= 146Red 2R= 239G= 63B= 107LG2R= 156G= 162B=63Green 2R= 0G= 137B= 143Cyan 2R= 0G= 182B= 190DB2R= 0G= 65B= 89715 October 2013Loss Prevention Tips 8Client Selection and Education Budget is adequate Project SelectionAdequate FeesSet Realistic Expecations

2012, XL Group plc companies. All rights reserved. I MAKE YOUR WORLD GOYellowR= 255G= 255B= 0OrangeR= 244G= 121B= 32MagentaR= 236G= 0B= 141RedR= 237G= 28B= 36Lt GreenR= 141G= 198B= 63GreenR= 57G= 181B= 74CyanR= 0G= 174B= 239Dk BlueR= 45G= 49B= 146Yellow 2R= 213G= 206B= 146Orange 2R= 203G= 125B= 101Mag 2R= 182G= 114B= 146Red 2R= 239G= 63B= 107LG2R= 156G= 162B=63Green 2R= 0G= 137B= 143Cyan 2R= 0G= 182B= 190DB2R= 0G= 65B= 89Trend 1 ITS NOT EASY BEING GREEN9Loss Prevention Tips Are owners expecations realistic? Appropriate contract languageYour firms expertise

2012, XL Group plc companies. All rights reserved. I MAKE YOUR WORLD GOYellowR= 255G= 255B= 0OrangeR= 244G= 121B= 32MagentaR= 236G= 0B= 141RedR= 237G= 28B= 36Lt GreenR= 141G= 198B= 63GreenR= 57G= 181B= 74CyanR= 0G= 174B= 239Dk BlueR= 45G= 49B= 146Yellow 2R= 213G= 206B= 146Orange 2R= 203G= 125B= 101Mag 2R= 182G= 114B= 146Red 2R= 239G= 63B= 107LG2R= 156G= 162B=63Green 2R= 0G= 137B= 143Cyan 2R= 0G= 182B= 190DB2R= 0G= 65B= 892. More technical mistakes being madeWHY IS THIS? POSSIBLE ANSWERSToo much workNot enough timeSense of urgencyInsufficient training and continuing education opportunitiesNew techologyBottom line impact on fees

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2012, XL Group plc companies. All rights reserved. I MAKE YOUR WORLD GOYellowR= 255G= 255B= 0OrangeR= 244G= 121B= 32MagentaR= 236G= 0B= 141RedR= 237G= 28B= 36Lt GreenR= 141G= 198B= 63GreenR= 57G= 181B= 74CyanR= 0G= 174B= 239Dk BlueR= 45G= 49B= 146Yellow 2R= 213G= 206B= 146Orange 2R= 203G= 125B= 101Mag 2R= 182G= 114B= 146Red 2R= 239G= 63B= 107LG2R= 156G= 162B=63Green 2R= 0G= 137B= 143Cyan 2R= 0G= 182B= 190DB2R= 0G= 65B= 893. CONTRACT ISSUES Unreasonable terms and conditions being imposed. Examples: Indemnity and hold harmlessStandard of Care; fiduciary Set off & withholding of feesAbsence of Limitation of Liability; no waiver of consequential damage11

2012, XL Group plc companies. All rights reserved. I MAKE YOUR WORLD GOYellowR= 255G= 255B= 0OrangeR= 244G= 121B= 32MagentaR= 236G= 0B= 141RedR= 237G= 28B= 36Lt GreenR= 141G= 198B= 63GreenR= 57G= 181B= 74CyanR= 0G= 174B= 239Dk BlueR= 45G= 49B= 146Yellow 2R= 213G= 206B= 146Orange 2R= 203G= 125B= 101Mag 2R= 182G= 114B= 146Red 2R= 239G= 63B= 107LG2R= 156G= 162B=63Green 2R= 0G= 137B= 143Cyan 2R= 0G= 182B= 190DB2R= 0G= 65B= 89Contracts Tips 12Use your firm standard form agreement; failing that, professional association Consult with insurance advisors and legal counsel Create awareness within your firm and always carefully review agreements prior to execution

2012, XL Group plc companies. All rights reserved. I MAKE YOUR WORLD GOYellowR= 255G= 255B= 0OrangeR= 244G= 121B= 32MagentaR= 236G= 0B= 141RedR= 237G= 28B= 36Lt GreenR= 141G= 198B= 63GreenR= 57G= 181B= 74CyanR= 0G= 174B= 239Dk BlueR= 45G= 49B= 146Yellow 2R= 213G= 206B= 146Orange 2R= 203G= 125B= 101Mag 2R= 182G= 114B= 146Red 2R= 239G= 63B= 107LG2R= 156G= 162B=63Green 2R= 0G= 137B= 143Cyan 2R= 0G= 182B= 190DB2R= 0G= 65B= 894. WRITTEN COMMUNICATIONS Good & bad Exercise caution; formalize communication when necessaryYour RFP; friend or foe?

13 2012, XL Group plc companies. All rights reserved. I MAKE YOUR WORLD GOYellowR= 255G= 255B= 0OrangeR= 244G= 121B= 32MagentaR= 236G= 0B= 141RedR= 237G= 28B= 36Lt GreenR= 141G= 198B= 63GreenR= 57G= 181B= 74CyanR= 0G= 174B= 239Dk BlueR= 45G= 49B= 146Yellow 2R= 213G= 206B= 146Orange 2R= 203G= 125B= 101Mag 2R= 182G= 114B= 146Red 2R= 239G= 63B= 107LG2R= 156G= 162B=63Green 2R= 0G= 137B= 143Cyan 2R= 0G= 182B= 190DB2R= 0G= 65B= 891315 October 20135. Small projects/fees generating large claims Remember! Risk vs. Reward

Due diligence Client selection

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2012, XL Group plc companies. All rights reserved. I MAKE YOUR WORLD GOYellowR= 255G= 255B= 0OrangeR= 244G= 121B= 32MagentaR= 236G= 0B= 141RedR= 237G= 28B= 36Lt GreenR= 141G= 198B= 63GreenR= 57G= 181B= 74CyanR= 0G= 174B= 239Dk BlueR= 45G= 49B= 146Yellow 2R= 213G= 206B= 146Orange 2R= 203G= 125B= 101Mag 2R= 182G= 114B= 146Red 2R= 239G= 63B= 107LG2R= 156G= 162B=63Green 2R= 0G= 137B= 143Cyan 2R= 0G= 182B= 190DB2R= 0G= 65B= 891415 October 2013Small Projects Loss Prevention 15Same level of due diligence requiredAlways have a written agreementBe aware of scope creep and doing things for free.

2012, XL Group plc companies. All rights reserved. I MAKE YOUR WORLD GOYellowR= 255G= 255B= 0OrangeR= 244G= 121B= 32MagentaR= 236G= 0B= 141RedR= 237G= 28B= 36Lt GreenR= 141G= 198B= 63GreenR= 57G= 181B= 74CyanR= 0G= 174B= 239Dk BlueR= 45G= 49B= 146Yellow 2R= 213G= 206B= 146Orange 2R= 203G= 125B= 101Mag 2R= 182G= 114B= 146Red 2R= 239G= 63B= 107LG2R= 156G= 162B=63Green 2R= 0G= 137B= 143Cyan 2R= 0G= 182B= 190DB2R= 0G= 65B= 896. Design Build and P3 ProjectsThese non traditional project delivery methods are becoming more commonDifferent risks, different risk managementAs always due diligence is criticalCareful review of contracts required16

2012, XL Group plc companies. All rights reserved. I MAKE YOUR WORLD GOYellowR= 255G= 255B= 0OrangeR= 244G= 121B= 32MagentaR= 236G= 0B= 141RedR= 237G= 28B= 36Lt GreenR= 141G= 198B= 63GreenR= 57G= 181B= 74CyanR= 0G= 174B= 239Dk BlueR= 45G= 49B= 146Yellow 2R= 213G= 206B= 146Orange 2R= 203G= 125B= 101Mag 2R= 182G= 114B= 146Red 2R= 239G= 63B= 107LG2R= 156G= 162B=63Green 2R= 0G= 137B= 143Cyan 2R= 0G= 182B= 190DB2R= 0G= 65B= 891615 October 20137. Fee Issues; Accounts receivable Client Selection (consider retainer) Procedure to collectContract provisions re: payment17

2012, XL Group plc companies. All rights reserved. I MAKE YOUR WORLD GOYellowR= 255G= 255B= 0OrangeR= 244G= 121B= 32MagentaR= 236G= 0B= 141RedR= 237G= 28B= 36Lt GreenR= 141G= 198B= 63GreenR= 57G= 181B= 74CyanR= 0G= 174B= 239Dk BlueR= 45G= 49B= 146Yellow 2R= 213G= 206B= 146Orange 2R= 203G= 125B= 101Mag 2R= 182G= 114B= 146Red 2R= 239G= 63B= 107LG2R= 156G= 162B=63Green 2R= 0G= 137B= 143Cyan 2R= 0G= 182B= 190DB2R= 0G= 65B= 898. Condominiums 18Continue to be risky projects in terms of liability claimsHighly leveragedLow fees for designLow bidderUnsophisticated purchasers/ownersDeveloper and contractors likely judgement proof when the claim is made

2012, XL Group plc companies. All rights reserved. I MAKE YOUR WORLD GOYellowR= 255G= 255B= 0OrangeR= 244G= 121B= 32MagentaR= 236G= 0B= 141RedR= 237G= 28B= 36Lt GreenR= 141G= 198B= 63GreenR= 57G= 181B= 74CyanR= 0G= 174B= 239Dk BlueR= 45G= 49B= 146Yellow 2R= 213G= 206B= 146Orange 2R= 203G= 125B= 101Mag 2R= 182G= 114B= 146Red 2R= 239G= 63B= 107LG2R= 156G= 162B=63Green 2R= 0G= 137B= 143Cyan 2R= 0G= 182B= 190DB2R= 0G= 65B= 89Condominiums Loss Prevention 19Project and Client Selection Quality contractor in place? Appropriate contract Appropriate fee

2012, XL Group plc companies. All rights reserved. I MAKE YOUR WORLD GOYellowR= 255G= 255B= 0OrangeR= 244G= 121B= 32MagentaR= 236G= 0B= 141RedR= 237G= 28B= 36Lt GreenR= 141G= 198B= 63GreenR= 57G= 181B= 74CyanR= 0G= 174B= 239Dk BlueR= 45G= 49B= 146Yellow 2R= 213G= 206B= 146Orange 2R= 203G= 125B= 101Mag 2R= 182G= 114B= 146Red 2R= 239G= 63B= 107LG2R= 156G= 162B=63Green 2R= 0G= 137B= 143Cyan 2R= 0G= 182B= 190DB2R= 0G= 65B= 899. Field Observation Services

20This should always be part of your scope of serviceAppropriate intervalsDone by the right peopleAppropriately documented

2012, XL Group plc companies. All rights reserved. I MAKE YOUR WORLD GOYellowR= 255G= 255B= 0OrangeR= 244G= 121B= 32MagentaR= 236G= 0B= 141RedR= 237G= 28B= 36Lt GreenR= 141G= 198B= 63GreenR= 57G= 181B= 74CyanR= 0G= 174B= 239Dk BlueR= 45G= 49B= 146Yellow 2R= 213G= 206B= 146Orange 2R= 203G= 125B= 101Mag 2R= 182G= 114B= 146Red 2R= 239G= 63B= 107LG2R= 156G= 162B=63Green 2R= 0G= 137B= 143Cyan 2R= 0G= 182B= 190DB2R= 0G= 65B= 8910. Consolidation and Competition 21Jumbo firmsMore competition

2012, XL Group plc companies. All rights reserved. I MAKE YOUR WORLD GOYellowR= 255G= 255B= 0OrangeR= 244G= 121B= 32MagentaR= 236G= 0B= 141RedR= 237G= 28B= 36Lt GreenR= 141G= 198B= 63GreenR= 57G= 181B= 74CyanR= 0G= 174B= 239Dk BlueR= 45G= 49B= 146Yellow 2R= 213G= 206B= 146Orange 2R= 203G= 125B= 101Mag 2R= 182G= 114B= 146Red 2R= 239G= 63B= 107LG2R= 156G= 162B=63Green 2R= 0G= 137B= 143Cyan 2R= 0G= 182B= 190DB2R= 0G= 65B= 89QUIZ 6 QUESTIONS TRUE OR FALSE? 22Requesting financial information from a potential client is unprofessional and almost a guarantee to lose the accountOne of the best things about doing projects for public agencies is their creditworthiness. They always pay their billsVirtually all professional liability insurance policies cover the indemnifications clients commonly request.

2012, XL Group plc companies. All rights reserved. I MAKE YOUR WORLD GOYellowR= 255G= 255B= 0OrangeR= 244G= 121B= 32MagentaR= 236G= 0B= 141RedR= 237G= 28B= 36Lt GreenR= 141G= 198B= 63GreenR= 57G= 181B= 74CyanR= 0G= 174B= 239Dk BlueR= 45G= 49B= 146Yellow 2R= 213G= 206B= 146Orange 2R= 203G= 125B= 101Mag 2R= 182G= 114B= 146Red 2R= 239G= 63B= 107LG2R= 156G= 162B=63Green 2R= 0G= 137B= 143Cyan 2R= 0G= 182B= 190DB2R= 0G= 65B= 89Questions continued 234. Condominiums are relatively low risk projects because a simple design can be repeated throughout the project. 5. Most claims against architects and engineers are filed w-i 6 months of project completion. 6. Threatening to sue a client for overdue fees is a good way of getting paid

2012, XL Group plc companies. All rights reserved. I MAKE YOUR WORLD GOYellowR= 255G= 255B= 0OrangeR= 244G= 121B= 32MagentaR= 236G= 0B= 141RedR= 237G= 28B= 36Lt GreenR= 141G= 198B= 63GreenR= 57G= 181B= 74CyanR= 0G= 174B= 239Dk BlueR= 45G= 49B= 146Yellow 2R= 213G= 206B= 146Orange 2R= 203G= 125B= 101Mag 2R= 182G= 114B= 146Red 2R= 239G= 63B= 107LG2R= 156G= 162B=63Green 2R= 0G= 137B= 143Cyan 2R= 0G= 182B= 190DB2R= 0G= 65B= 89THANK YOUQuestions?

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2012, XL Group plc companies. All rights reserved. I MAKE YOUR WORLD GOYellowR= 255G= 255B= 0OrangeR= 244G= 121B= 32MagentaR= 236G= 0B= 141RedR= 237G= 28B= 36Lt GreenR= 141G= 198B= 63GreenR= 57G= 181B= 74CyanR= 0G= 174B= 239Dk BlueR= 45G= 49B= 146Yellow 2R= 213G= 206B= 146Orange 2R= 203G= 125B= 101Mag 2R= 182G= 114B= 146Red 2R= 239G= 63B= 107LG2R= 156G= 162B=63Green 2R= 0G= 137B= 143Cyan 2R= 0G= 182B= 190DB2R= 0G= 65B= 89About XL Group plcXL Group plc, through its subsidiaries, is a global insurance and reinsurance company providing property, casualty and specialty products to industrial, commercial and professional firms, insurance companies and other enterprises throughout the world. XL Group plcs insurance companies offer property, casualty, professional and specialty insurance products globally. Businesses that are moving the world forward choose XL as their partner. To learn more, visit xlgroup.com/insurance. XL Group plcs reinsurance companies are among the worlds leading reinsurers. They offer products that include aerospace, property, casualty, marine and specialty. The worlds top insurers choose XL to help move their businesses forward. To learn more, visit xlgroup.com/reinsurance. We are the organization clients look to for answers to their most complex risks and to help move their world forward. To learn more, visit xlgroup.com 25 2012, XL Group plc companies. All rights reserved. I MAKE YOUR WORLD GOYellowR= 255G= 255B= 0OrangeR= 244G= 121B= 32MagentaR= 236G= 0B= 141RedR= 237G= 28B= 36Lt GreenR= 141G= 198B= 63GreenR= 57G= 181B= 74CyanR= 0G= 174B= 239Dk BlueR= 45G= 49B= 146Yellow 2R= 213G= 206B= 146Orange 2R= 203G= 125B= 101Mag 2R= 182G= 114B= 146Red 2R= 239G= 63B= 107LG2R= 156G= 162B=63Green 2R= 0G= 137B= 143Cyan 2R= 0G= 182B= 190DB2R= 0G= 65B= 892515 October 2013Legal DisclaimerUS26

In the US, the insurance companies of XL Group plc are: Greenwich Insurance Company, Indian Harbor Insurance Company, XL Insurance America, Inc., XL Insurance Company of New York, Inc., XL Select Insurance Company, and XL Specialty Insurance Company. Not all of the insurers do business in all jurisdictions nor is coverage available in all jurisdictions. This presentation is intended for informational purposes only and does not constitute legal advice. For legal advice, seek the services of a competent attorney.

Any descriptions of insurance provisions are general overviews only. THE INSURANCE POLICIES, NOT THIS PRESENTATION, FORM THE CONTRACT BETWEEN THE INSURED AND THE INSURANCE COMPANY. Insurance coverage in any particular case will depend upon the type of policy in effect, the terms, conditions and exclusions in any such policy, and the facts of each unique situation. No representation is made that any specific insurance coverage would apply in the circumstances outlined herein. Please refer to the individual policy forms for specific coverage details. All coverages are subject to individual underwriting judgments and to state legal requirements.

XL Group is the global brand used by XL Group plcs insurance subsidiaries. 2012, XL Group plc companies. All rights reserved. I MAKE YOUR WORLD GOYellowR= 255G= 255B= 0OrangeR= 244G= 121B= 32MagentaR= 236G= 0B= 141RedR= 237G= 28B= 36Lt GreenR= 141G= 198B= 63GreenR= 57G= 181B= 74CyanR= 0G= 174B= 239Dk BlueR= 45G= 49B= 146Yellow 2R= 213G= 206B= 146Orange 2R= 203G= 125B= 101Mag 2R= 182G= 114B= 146Red 2R= 239G= 63B= 107LG2R= 156G= 162B=63Green 2R= 0G= 137B= 143Cyan 2R= 0G= 182B= 190DB2R= 0G= 65B= 892615 October 2013