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Overview and Goals

• Led by an Experienced Management Team

• Focused on growing an already strong surplus

• Dominant MPL Carrier in WV

• Seeking an “Excellent” rating

2

Agenda I. Introductions II. Company Description III. Market Overview IV. Underwriting V. Risk Management VI. Claims VII. Reinsurance VIII.Financial Highlights IX. Enterprise Risk Management X. Conclusion

3

I. Introductions

4

Introductions • R. Austin Wallace, M.D. – Chairman of the Board • David L. Rader – President and CEO - 40 years MPL

experience

• Tamara D. Huffman, CPCU – Executive Vice President and COO - 40 years insurance, 27 years MPL

• Gary J. Schultz, CPA – Senior Vice President and CFO - 34 years MPL experience

• Scott A. Atkins – Vice President, Underwriting - 17 years insurance experience, 9 years MPL

• Michael T. Harmon – Director of Compliance - 11 years in healthcare compliance, 8 years in insurance, 3 years MPL See Appendix A for full bios

5

II. Company Description

6

Company Overview

• Medical Professional Liability insurance company domiciled in West Virginia

• Founded on July 1, 2004 • Leading Medical Professional Liability insurer

controlling sixty-five percent of commercial market

7

Mission

The West Virginia Mutual Insurance Company will provide professional liability Insurance to West Virginia physicians on a

sound and enduring basis.

8

Core Values

In all that the Mutual does, it will be: Physician Driven, Professional, Principled,

Fair, Honest, Transparent, Efficient

9

History

• Up to 1981 – MPL written on general liability policies until Aetna developed a single-line policy in mid-1970s.

• 1981-1994 – CNA acquired the endorsement of the West Virginia State Medical Association. Maintained majority of market until PIE Mutual entered in mid-1980s, then the two Companies shared the market.

• 1994-2003 – Medical Assurance of West Virginia, now ProAssurance acquired the WVSMA endorsement and shared the market with PIE Mutual until PIE’s liquidation in 1997. MMI Companies had a special program for Charleston Area Medical Center medical staff, and St. Paul had a special program for Logan General medical staff. St. Paul purchased MMI Companies then exited the market in 2002.

10

History (cont.)

• 2003-2004 – West Virginia Board of Risk and Insurance Management (BRIM) began providing MPL coverage to West Virginia physicians, physician corporations and hospitals as the result of legislation allowing the State to assume these risks. This was not a market of last resort, risks continued to be underwritten.

• 2004-Present – West Virginia Mutual Insurance Company novated the BRIM physician policyholders in July, 2004, and continues to be the dominant insurer of physician medical professional liability insurance in West Virginia.

11

Improved Environment

• In 2009, Medical Economics Magazine listed West Virginia as one of the top ten states in which to practice.

What are the friendliest states for physicians? Here are America's best places to practice. Medical Economics Magazine. July 22, 2009.

12

Board of Directors

• R. Austin Wallace, M.D., Chairman and Medical Director • MaryAnn Cater, D.O., Vice-Chairman • Michael A. Stewart, M.D., Treasurer • Stephen L. Sebert, M.D, Secretary • Robert L. Ghiz, M.D. • Robert L. Wheeler, M.D. • B. Frederick Becker, Esq. • Joseph V. Funderburk, III, LCU, ChFC • Bruce R. Martin, CIC, CRM • Tamara D. Huffman, CPCU • David L. Rader

14

Board Structure

• Geographically dispersed Board members • Bi-monthly Meetings • Members serve 4 year term without term

limits • All Board members but one have served since

2004 • Members comprise the seven Committees

15

Board Committees

• Claims • Underwriting • Risk Management • Audit • Compensation • Finance • Nominating

All Committees have been in place since inception

16

Business Strategy

Approach in West Virginia • Maintain 65% of available market • Partner with hospitals to write physician exposure • Maintain disciplined underwriting with sound results • Target combined ratio of 95% focusing on bottom line

profitability • Maintain excellent relationship with loyal agency

force • WV State Medical Association endorsement

17

Business Strategy

Approach in Kentucky, Ohio and Virginia • Accommodate existing WV insureds in bordering

counties • Establish relationships with key agents and influential

physician groups • Establish relationships with WV affiliated hospitals • Maintain disciplined underwriting with sound results • Target combined ratio of 95% focusing on bottom line

profitability 19

Managing the Cycle

• Maintain strong reserves

• Well positioned with strong surplus

• Do not chase market share with low premium

• Do not overreach our territory footprint

20

Key Accomplishments

• Grew surplus to $81M in seven years • Grew assets to $182M in seven years • Paid off $24M surplus note 26 years early • Maintained market share while not compromising

underwriting standards in face of competition • Obtained Certificate of Authority in three additional

states

21

III. Market Overview

22

Competitive Landscape

• Soft Market expected through 2012 • Predatory pricing began with the licensure of

Medicus in WV in 2008 • WVMIC has 94% retention even with Medicus’

predatory pricing

23

Physician Market

• Physician population has been historically stable – 3500 licensed physicians – 2400 available in the retail market

• Rural physician practices • Individual or small group practices

24

Current Market Conditions

• Competitors – Medicus, Medical Protective, MAG Mutual, Specialty RRGs

and Federal Tort Claims Act

• Lost Business due to: – Predatory Pricing – Physicians Retirement/Death/Relocation

• New Business growth recently impeded due to Hospitals employing physicians

• National trends are not impacting WV to the same extent due to rural environment 25

Legal/Regulatory Environment

• Have an excellent relationship with WV Commissioner and Staff

• Significant reform implemented in 2002 and 2003 – Non-economic cap - $250,000/$500,000 – Trauma total cap - $500,000 – Certificate of Merit – Elimination of Joint Liability – Collateral Source

• Legislation reduced the number of lawsuits filed

26

Legal/Regulatory Environment

• Non-economic cap upheld in June 2011 by West Virginia Supreme Court of Appeals

• The court concluded the following: – Constitution authorizes Legislature to set reasonable limits

on recoverable damages – Judiciary may not act as a superlegislature to judge the

wisdom of legislative policy – Not within the Court’s prerogative to substitute its

judgment for that of the Legislature

27

0

50

100

150

200

250

300

350

2002 2003 2004 2005 2006 2007 2008 2009 2010

Suits Filed Annually in WV through December 2010

28

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Distribution Sources

• Strong Independent Agency Relationships – 38 agencies, geographically dispersed – 115 agents

• Loyal agency force due to: – Past market inconsistency – Product Predictability – Only admitted carrier for most agents – Competitive agent compensation

• Cautious agent appointment process • In 2010, 96% of business was produced by

independent agents

29

Competitive Advantages

• Cutting edge Risk Management Programs • Excellent Claims Services • Knowledgeable & Experienced Underwriting staff • Strong relationships with Insureds and agents • Strong connections within the insurance and

healthcare communities • Endorsement by the WV State Medical Association

and support from Family Medicine Association • Geographically dispersed Board of Directors

30

IV. Underwriting

31

Underwriting Philosophy

• Maintain disciplined underwriting approach with acceptable underwriting results – Principled – Responsible – Sustainable

• Target combined ratio 95% focusing on bottom line profitability

• Maintain excellent relationships with agency force

32

Underwriting Staff

• Scott Atkins, Vice President – 17 years insurance experience in WV, 9 years MPL

• Andrea Lively, Senior Underwriter – 14 years MPL in WV, 7 years as senior MPL Underwriter

• Laura Pozega, Underwriting Assistant – 17 years MPL in WV

• Beth Lively, Underwriting Assistant and Systems Analyst – 8 years MPL in WV

• Diane Neubaum, Customer Service Representative – 14 years MPL

33

Book Composition

• 1,467 insured physicians – all specialties • 802 policies – 1.8 physicians per policy

– Largest policy – 50 physicians

• Average premium per physician is $19,935 • Limits offered of $1M/$3M and $2M/$4M

($2M/$6M in Virginia) • 92% of physicians purchase $1M/$3M • Corporate limits and Ancillary coverage are available

on a separate or shared basis

34

Specialty Classifications Class Total Insured Specialties

1 47 Dermatology

2 14 Ophthalmology, Pathology

3 671 Cardiovascular, Family Practice, Gynecology, Internal Medicine, Oncology, Ophthalmology, Otorhinolaryngology (Minor Surgery) Urology (No Surgery)

4 16 Neurology, Pulmonary Disease, Urology (Minor Surgery) Ophthalmology (Major Surgery)

5 400 Cardiovascular, Dermatology, Family Practice, Gastroenterology, Gynecology, Internal Medicine, Oncology, Otorhinolaryngology, Pediatrics (Minor Surgery), Radiology including Radiation Therapy

6 59 Anesthesiology, Urology (Major Surgery)

7 57 Emergency Medicine, Otorhinolaryngology (Major Surgery, no Elective Plastics)

8 18 Gynecology (Major Surgery)

9 2 Colon/Rectal Surgery, Otorhinolaryngology (Major Surgery incl. Elective Plastics)

10 90 General Surgery, Plastic Surgery

11 13 Orthopedics No Spine, Vascular Surgery

12 23 Cardiovascular (Major Surgery),Orthopedics Including Spine, Thoracic Surgery

13 49 Obstetrics/Gynecology

14 0

15 8 Neurosurgery 35

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Retention

• Retention rate has averaged 94% • Retention remains strong despite competition • Strong support among physician community • Only admitted medical professional liability carrier

for the majority of agents • Agents do not underwrite or price • Direct bill

36

Pricing Structure

• Actuarially formulated by Ernst and Young using national and WVMIC data

• Class Relativity Distribution – 15 classes • Utilization of underwriting credits and debits • Retention accomplished without the use of

scheduled credits • Other credits allowed only when reduction in price is

commensurate with reduction in risk

37

Types of Credits

• Risk Management • Claims Free • Part-time • Group • New Physician

38

Sustaining Results in a Soft Market

• High retention rate while maintaining adequate pricing

• Rural physician base • Limited number of hospitals purchasing physician

practices • Strong support amongst political, physician and

agent communities.

39

V. Risk Management

40

Risk Management Philosophy

• Focus on patient safety and Best Practices • Emphasis on integrating Best Practices into daily

operations of a physician practice • Strong Board support for resource allocation to Risk

Management • The goal is to be a trusted leader in the area of

patient safety and risk management

41

Risk Management Staff

• Austin Wallace, M.D., Medical Director – Board certified in otolaryngology for 30 years, Vice

Chairman of the Board and Chairman of Claims Committee for 7 years.

• Elizabeth S. Bridgeman, BSN, RN, LNCC, Director of C.A.R.E.® – Registered nurse for 36 years, legal nurse consultant for 21

years

• Judy Davis, RN, BS, ARM, CPHQ, Director of Risk Services – Registered Nurse for 37 years, 30 years risk and quality

management 42

Risk Management Staff

• Michael T. Harmon, MPA, Compliance Specialist – 11 years in healthcare compliance, 8 years in insurance, 3

years MPL

• Cheryl Payton RN, MSN, Risk Manager – Registered Nurse for 20 years, legal nurse consultant for

16 years, certified Nurse Practitioner for 6 years, 3 years MPL.

• Debbie Henceroth, RN, BS, CPHQ, Risk Manager – Registered Nurse for 36 years, 17 years risk and quality

management

43

Services Available

• C.A.R.E.® (Communicate and Respond Effectively) • Onsite Visits • Staff In-service • CME Programs • Online CME • HIPAA Support • Health information technology support • All services are 100% voluntary

– 98% of physicians insured as of January 2011 have participated in at least one Risk Management program.

44

C.A.R.E.® Program

• Flagship Risk Management program unique to WV • Innovative approach to loss control • Goal is to preserve the physician-patient relationship

in the presence of an adverse or unexpected outcome

• Provides the necessary support to physician that encourages a physician to be open, honest and empathetic and resources to participants to help offset additional expenses

• Very successful program with extremely high physician participation

45

Onsite Visits

• WVMIC Staff meets with Office Manager and/or physician

• All aspects of the practice are reviewed including clinical and patient support services

• Final report prepared in conjunction with participants utilizing proprietary software

46

CME Programs

• All programs are developed in-house based on the evolving needs of physicians

• Program examples: – Transfer of Care and Communication Errors – HIPAA Compliance: Reality and Perspective – Prescription Drug Abuse: the Physician’s

Responsibility

47

Risk Management Program Participation 2010

• Nearly 70% of insured physicians participated in C.A.R.E. skills development Workshop

• 60% of insured physicians’ offices participated in an onsite visit

• Nearly 40% of insured physicians attended one of the CME programs

48

VI. Claims

49

Claims Philosophy

• Claims-made Coverage Form • Definition of a Claim – Written demand for money or

services arising out of a medical incident • Aggressive defense of non-meritorious claims while

settling claims with merit early in order to minimize expenses

• All medical and non-medical factors are considered when determining chance of prevailing if claim is taken to trial

• Every claim is reviewed by the Claims Committee which is comprised of six physician Board members and one Board member with insurance management experience

50

Claim Professionals

• Bob Ryan – VP of Claims – 40 years industry, 37 years MPL claims management

• Lois Cashdollar – Senior Claims Consultant – 33 years MPL claims experience in WV

• Nora Lantz – Claims Consultant – 13 years working as a paralegal for private defense firms

and as 5 years as a claims consultant

51

Claims Data Averaged Over Time

Pending Claims per year 172 New Claims per year 120 Settlement Amount $175,243 Judgment Amount $176,470 Percent Closed without Pay 68% Cases Taken to Trial 20 Effectiveness 16 wins/4 losses

52

Claims Opened by Year per 100 Physicians

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

9.00

10.00

2005 2006 2007 2008 2009 2010 Jun-11

Claims Opened by Year 53

New Claims Opened by Year as of 6/30/2011

0

20

40

60

80

100

120

140

160

2005 2006 2007 2008 2009 2010 2011

54

Attorney Selection Criteria

• 67 attorneys from 8 firms • Prior working relationship with claims professionals • Reputation and experience defending medical

malpractice cases • Analysis of medical malpractice trial experience including

number of cases tried, results, and win/loss record • Specific experience & knowledge of medical specialties • Young attorney development • Claims Committee review

55

VII. Reinsurance

56

Reinsurance Structure Overview

• July 1 renewal • Primary Excess of Loss

– $500,000 xs $500,000 each loss – $2,000,000 ECO/XPL – $1,500,000 xs $750,000 Clash

• Excess Cession – $2,000,000/$4,000,000 WV, KY, OH – $2,000,000/$6,000,000 VA

57

Reinsurance Structure Overview

• First Awards Made – $8,000,000 xs $2,000,000

• Excess Awards Made – $10,000,000 xs $10,000,000

58

Reinsurance Manages Risk in Three Areas

1. Working Layer Losses – Primary Excess of Loss - Losses over $500,000 reinsured using swing-rated

program – clash cover included

2. Large Losses – Excess of Loss - Limits over $1 million fully reinsured

3. Extra Contractual – Awards Made - $20,000,000 limit

59

Reinsurance Coverage

20 Million 1 Million 500K

Primary Excess

Excess

Awards Made (5% Retention)

Primary Layer

2 Million

Retained Reinsured 60

Reinsurance Security Intermediary: Willis Re Principal Reinsurers: Participation Rating

Lloyd’s of London 32.5% A

Odyssey Reinsurance 20.0% A

Platinum Underwriters 10.25% A

Alterra Reinsurance 7.5% A

Transatlantic Reinsurance 7.5% A

Others: Endurance Re (A), Aspen UK (A); Protective Ins (A+), Partner Re (A+),

Hannover Re (A) 22.25%

100.00% 61

Reinsurance Experience

2004-2007 2007-2010

Primary Excess Refunds $12.3 million $2 million

Excess -----------------No Losses-----------------------

Awards Made -----------------No Losses-----------------------

62

Summary of Primary Excess ($500,000 xs $500,000)

2004-2007 2007-2010 2010-2013

Provisional Rate (A) 11.5% 9.0%

Minimum Rate 6.0% 4.5% 4.25%

Maximum Rate 30.0% 23.0% 18.0%

Developed Rate 7.9% 9.4% 9.0%

Likely Flat Rates 18% 14% 11%

(A) 17% for the first two years, 15% in the third year

63

VIII. Financial

64

Financial Highlights

• Initial surplus included $24 million of surplus notes from State of West Virginia and $7.3 million of assessments to physicians and insurance companies

• Surplus notes retired by 2008 (26 years early) • Ratios projected through 2013:

– Premiums to surplus .27 – Reserves to surplus .65 – RBC Ratio 1550%

65

Financial Highlights

Profitable operations • Underwriting profit every year since inception • Average combined ratio for last 4 years of 79.5 versus 81.6

for industry • Reserving has resulted in consistent profitable run-off

Investments • Unrealized gains of $8 million at June 30, 2011 • Overall AA rated portfolio • All investments NAIC Class 1

66

Summary of Loss Ratio Development

Loss Year 2004 2005 2006 2007 2008 2009 2010 Calendar Year

2004 86.2%

2005 60.0% 74.2%

2006 39.4% 52.3% 48.0%

2007 34.5% 52.4% 39.8% 78.5%

2008 37.3% 44.2% 31.4% 65.0% 80.3%

2009 34.6% 38.0% 22.6% 56.8% 86.1% 87.4%

2010 33.1% 32.6% 19.9% 50.1% 76.9% 74.3% 86.1%

67

Summary Balance Sheets $(000’s)

2006 2007 2008 2009 2010 June 11 Assets:

Cash $6,100 $4,069 $21,270 $8,770 $12,888 $11,493

Investments 139,853 140,682 134,543 147,944 162,794 163,860

Other Assets 9,415 9,463 7,832 8,397 6,555 6,705

$155,368 $154,214 $163,645 $165,111 $182,237 $182,058

Liabilities & Surplus

Reserves $48,349 $62,589 $67,576 $76,109 $71,895 $72,672

Unearned Premiums 27,052 22,282 24,099 18,752 24,922 22,059

Other Liabilities 12,039 1,158 2,358 2,612 5,687 5,377

$87,440 $86,029 $94,033 $97,473 $102,504 $100,108

Policyholders’ Surplus 67,928 68,185 69,612 67,638 79,733 81,950

$155,368 $154,214 $163,645 $165,111 $182,237 $182,058 68

Summary Balance Sheets $(000’s)

2006 2007 2008 2009 2010 June 11 Policyholders'

Surplus:

Surplus Notes 26,100 18,100 9,600 - - -

Special Funds - - - 961 1,101 950

Paid in Surplus 7,560 7,647 7,651 7,651 7,651 7,651

Unassigned Surplus 34,268 42,438 52,361 59,026 70,981 73,350

67,928 68,185 69,612 67,638 79,733 81,951

$155,368 $154,214 $163,645 $165,111 $182,237 $182,058

69

Summary Income Statements $(000’s)

2006 2007 2008 2009 2010 Jun 11 Earned Premium $44,959 $44,390 $40,021 $36,800 $35,077 $13,314

Losses & LAE 1,837 28,544 20,816 22,760 14,604 8,792

Underwriting Expenses 11,808 11,315 10,068 9,159 8,616 4,104

31,314 4,531 9,137 4,881 11,857 418

Investment income 4,085 4,739 4,888 4,628 5,112 2,775

Net Income $23,049 $6,970 $9,525 $6,909 $12,335 $2,454

70

Key Ratios

KEY RATIOS 2006 2007 2008 2009 2010 Jun 11

Premium to Surplus 0.74 0.64 0.58 0.52 0.40 0.42

Loss Reserves to Surplus 0.71 0.92 0.97 1.12 0.90 0.89

RBC ratio 1430% 1177% 1143% 973% 1152%

3 Year Average Loss Ratio 46.0% 35.9% 39.6% 59.5% 52.0% 54.2%

71

Held Reserves $ (millions)

2006 2007 2008 2009 2010

High $48.4 $62.7 $67.7 $76.2 $74.3

WVMIC $48.3 $62.5 $67.6 $76.1 $71.9

Mid $37.2 $53.4 $57.9 $65.5 $61.9

Low $30.9 $45.3 $49.2 $56.2 $53.6

72

Projections

73

Balance Sheet Projections 2011 2012 2013

Assets

Cash & Investments $175,918 $176,763 $179,248

Other Assets 6,336 6,002 5,860

$182,254 $182,765 $185,108

Liabilities & Surplus

Reserves for Losses & LAE $69,801 $66,104 $63,544

Unearned & Advanced Premium 22,625 21,496 21,462

Other Liabilities 2,372 1,879 2,122

94,798 89,479 87,128

Policyholder Surplus 87,456 93,286 97,980

$182,254 $182,765 $185,108 74

Income Statement Projections

2011 2012 2013 Earned Premium $30,619 $27,795 $26,653

Losses & LAE 19,443 17,844 17,644

Underwriting Expenses 8,357 8,637 8,542

2,819 1,314 467

Investment Income 6,761 6,078 5,983

Net Income $7,442 $5,803 $5,095

75

Key Ratio Projections

KEY RATIOS 2011 2012 2013

Premium to Surplus .32 .29 .27

Loss Reserves to Surplus .80 .71 .65

RBC ratio 1297% 1440% 1550%

3 Year Average Loss Ratio 55.4% 55.5% 64.6%

76

Investments

77

Investments

• Board approved investment policy

• Portfolio management by Conning & Co.

• Quality and liquidity priority

• Bulk of portfolio laddered to 5 year maturities

78

Summary of Investments Statutory Book Values ($000’s)

2008 2009 2010 Treasuries $7,993 $3,245 $5,245

Agencies 5,118 16,610 21,133

Municipal 89,078 86,332 85,109

Corporate 13,949 21,695 34,131

GNMA 18,405 20,062 17,176

134,543 147,944 162,794

Market Value 137,895 154,141 169,274

Duration 3.0 3.4 3.2

Quality AA AA AA

Yield 3.64% 3.66% 3.39%

Taxable Equivalent Yield 4.68% 4.65% 4.25% 79

80

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IX. Enterprise Risk Management

81

Enterprise Risk Management Overview

• Primarily Traditional Risk Management Approach

• Recent Focus on elements of ERM Framework

82

Internal Risk Management

• Updated procedures using NAIC Market Regulation Handbook – Subsequent Comprehensive Market Conduct Exam

revealed that the Mutual passed 96% of standards reviewed

• Modified Business Continuity and Disaster Recovery Plan – Updated quarterly and reviewed annually

• Train staff on Privacy and Security issues • Annual privacy notices sent to policyholders • Created a Business Associate Agreement

83

External Risk Management

• Macroeconomic Analysis – WV and National economic outlooks were used to

determine the primary factors that could negatively impact the company’s long term profitability.

84

Inventory of Other ERM Activities

• Board Planning Retreat • Weekly staff meetings • Strong relationships with Physician Insurers

Association of America (PIAA) and WV State Medical Association

• Partner with professional investment managers, reinsurers and actuaries

• Audit Committee

85

Primary Risks

• Operational

• Strategic

• Underwriting

86

Operational Risks

• Maintain appropriate expense ratios – Closely monitor employee expenses – Meet financial projections – Reduce defense expenses

• Compliance with regulatory requirements – CMS Reporting – Model Audit Rule – HIPAA – SDN Compliance

87

Operational Risks

• Protection of confidential information – Conduct information security assessment

• Maintenance of operating policies and procedures – Implement recommendations resulting from

market conduct exam

• Employee development and retention – Encourage educational opportunities – Competitive salaries, positive work environment

88

Strategic Risks

• Healthcare reform efforts – Closely monitor federal involvement in healthcare

• Competition – Closely monitor insurance market conditions – Maintain positive relationship with insurance

Department

• Business disruptions – Business Continuity Planning – Succession

89

Underwriting Risks

• Profit Sharing mechanisms – Board actions on rates and renewal credits

• Underwriting Trends – Closely monitor underwriting profits

• Risk Management programs – Core of ERM – More robust program than vast majority of

industry

90

Future Planning Initiatives

• Consultants’ continued participation in Annual Retreat with regard to Best Practices – Corporate culture, including ethics – Business Expansion

• Development of new Risk Management Programs

91

ERM Framework Annual Board Planning Retreat (Newly identified risks are addressed by Board,

Management and Staff)

Business Plan Development (staff and management create plan to address

identified risks)

Progress reported at weekly staff meetings (Staff discusses issues that

could impede achieving Business Plan goals)

Progress reported at bi-monthly Board meetings (Relevant issues are brought to

the Board’s attention)

Senior Management Identifies key risks (ongoing assessment and

evaluation of risks)

Annual status report provided to Board at Planning Retreat (Board is

updated on results of previous year’s Business Plan)

92

X. Conclusion

93

IX. Appendices

94

Appendix A Staff and Board Member Bios

Appendix A – Select Biographies

Executive Staff Profiles

David L. Rader

President and CEO

Mr. Rader is an experienced professional liability insurance executive, having been involved in start-up operations in many parts of the country. He has assisted in forming or operating physician controlled companies in Ohio, Michigan, Kentucky, Indiana, Wisconsin, Florida and Puerto Rico. He has 40 years of experience in MPL and is extremely supportive of the mutual concept of insurance operations. Mr. Rader is a graduate of The Ohio State University.

Tamara Huffman, CPCU

Executive Vice President and Chief Operating Officer

Ms. Huffman has 27 years of experience in the medical professional liability arena in West Virginia having served with the McDonough/Caperton insurance agency and its successor, Wells Fargo. She has been the prime officer for the West Virginia malpractice pool and has been one of the principal proponents of the West Virginia Legislative efforts to enact tort reforms and establish the new Mutual. Ms. Huffman holds the Chartered Property Casualty Underwriter (CPCU) designation. She has lived all her adult life in West Virginia. Ms. Huffman has ultimate responsibility for Underwriting, Claims and Risk Management as well as Marketing and general administration at the Mutual.

Gary Schultz

Senior Vice President and Chief Financial Officer

Mr. Schultz has 34 years of experience in MPL. Mr. Schultz is a graduate of the University of Maryland and has spent most of his professional career in Pennsylvania. Mr. Schultz is responsible for the Accounting divisions of the Company and also holds major responsibilities for Auditing, Actuarial, Tax and Reinsurance issues.

Board Member Profiles R. Austin Wallace, M.D. Chairman of the Board and Medical Director Dr. Wallace has been an integral contributor to the Mutual, serving on the Board of Directors since its formation. In January 2012, Dr. Wallace will become President and CEO of the Mutual. Dr. Wallace attended college at the University of Virginia in Charlottesville, VA, and graduated from the West Virginia University School of Medicine in 1977. Subsequently, Dr. Wallace completed his Otolaryngology residency at West Virginia University Hospitals after a General Surgery internship at Carilion Health Systems in Virginia. Specializing in Otolaryngology/Head and Neck Surgery, Dr. Wallace has been in private practice for more than 27 years at the Eye and Ear Clinic, now Charleston Surgical Hospital, located in Charleston, WV, where he serves as Board Member and is a past President. Dr. Wallace is also an active staff member at Charleston Area Medical Center where he has served as Department of Otolaryngology Chief, and he is a courtesy staff member at both St. Francis Hospital and

Thomas Memorial Hospital in Charleston, WV. He has also been recognized as one of “America’s Top Physicians” by the Consumers’ Research Council since 2003. Dr. Wallace is a member of a variety of professional societies and associations, including: the American Academy of Otolaryngology, the American Academy of Otolaryngic Allergy/Head and Neck Surgery, for which he is a board examiner, and the American Medical Association. Additionally, Dr. Wallace is the past president of the West Virginia State Medical Association, the Physician’s Alliance of WV, and the West Virginia Academy of Otolaryngology.

Committee Participation Audit

Claims Compensation

Finance Nominating Risk Management Underwriting MaryAnn Cater, D.O. Vice-Chairman of the Board of Directors Dr. Cater has worked diligently for the Mutual first as a member of the provisional Board of Directors in 2003 during the formation of the company, then as Secretary of the Mutual’s Board since operations began in 2004. Dr. Cater graduated Magna Cum Laude with a Bachelor of Arts from West Virginia University and continued her education at the West Virginia School of Osteopathic Medicine, where she earned a Doctor of Osteopathy degree in 1988. Subsequently, Dr. Cater completed an anesthesia residency at Northside Medical Center in Youngstown, OH. She is a member of the Ohio County Medical Society, the West Virginia State Medical Association, the West Virginia Society of Anesthesiologists, the American Society of Anesthesiologists, the West Virginia Society of Osteopathic Medicine, the American Osteopathic Association and the International Anesthesia Research Society. Dr. Cater is actively involved in the West Virginia medical community. She helped to initiate the first White Coat Day at the West Virginia Legislature, which sought to end the provider tax and provide tort reforms to West Virginia physicians. Dr. Cater was the first female president of the Ohio County Medical Society and currently serves on the Ohio Valley Hospice Advisory Board. She also served as the Vice Speaker of the House for the West Virginia State Medical Association and is currently President-Elect of the Association. Dr. Cater has practiced with Medical Park Anesthesiologists in Wheeling since 1992, where she now holds the office of Treasurer. Dr. Cater resides in Wheeling, WV.

Committee Participation

Audit Claims

Finance Underwriting – Chair Michael A. Stewart, M.D. Treasurer

Dr. Stewart has served as Treasurer of the Mutual Board of Directors since 2004. Dr. Stewart earned his Bachelor of Arts from Lehigh University in Bethlehem, PA. He graduated from the Medical College of Pennsylvania in Philadelphia, PA, before completing residencies at the Albert Einstein Medical Center in Philadelphia, PA, the University of Chicago in Chicago, IL, and the State University of New York in Brooklyn, NY. Dr. Stewart is board certified in Radiation Oncology by the American Board of Radiology. He is also a member of the American Society for Therapeutic Radiology and Oncology, the American College of Radiology and the West Virginia Medical Association. Dr. Stewart has been the Medical Director for the Department of Radiation Oncology at United Hospital Center in Clarksburg, WV, since 1990. He also serves as the Medical Director for the Fairmont Regional Cancer Center in Fairmont, WV. Dr. Stewart moved to West Virginia from New York in 1990.


Audit Claims Compensation

Finance – Chair Nominating - Chair Underwriting Stephen Sebert, M.D Secretary Dr. Sebert has served on the Mutual Board of Directors since 2004. Dr. Sebert earned his Bachelor of Arts in Chemistry from West Virginia Wesleyan College in 1973 and graduated from West Virginia University School of Medicine in 1977. He completed his family practice residency at CAMC’s Kanawha Valley Family Practice Center in Charleston. Dr. Sebert is a Diplomat with the American Board of Family Practice and a Fellow with the American Academy of Family Physicians. Dr. Sebert has practiced at Huntington Internal Medicine Group since 2002. His background includes Medical Directorships at Greenbrier Center in Lewisburg and Monongalia County Hospice in Morgantown. He has served as an Associate Professor for the WVU Department of Family Physicians in Morgantown and as Team Physician for Greenbrier East High School and the WVU Mountaineers. Dr. Sebert is former President of the West Virginia State Medical Association. He currently serves on the Board of Directors of the West Virginia Chapter of the American Academy of Family Physicians. Dr. Sebert is also a member of the American Medical Association and the Cabell County Medical Society.


Claims Risk Management - Chair Underwriting B. Frederick “Rick” Becker Mr. Becker has served the Mutual as a member of the Mutual’s Board of Directors since its inception in 2004. Mr. Becker chairs the Compensation Committee and also serves on the Risk Management Committee. Rick is a senior executive with more than thirty-five years of professional experience within the insurance and health care industries.

Currently, Mr. Becker is co-founder and chairman of Chicago-based Clarity Group, Inc., a company that assists health care providers in managing professional liability risk by integrating risk financing and quality/safety management solutions. He has a long and varied career in the insurance industry that includes serving as Chairman and CEO of MMI Companies, Inc., and CEO of McDonough Caperton Employee Benefits, Inc. Earlier in his career, Mr. Becker served as State Compensation Commissioner for the State of West Virginia and practiced law in Pennsylvania. Mr. Becker holds a Bachelor’s Degree in Finance and a Juris Doctorate from West Virginia University.


Compensation - Chair Risk Management Joseph V. Funderburk Mr. Joseph V. Funderburk was born and educated in South Charleston, West Virginia. He is a graduate of West Virginia State University. He began his insurance career in 1966 with The Equitable Life Assurance Society of US, later known as AXA - Equitable. Mr. Funderburk opened a new district office for the Equitable in Parkersburg, WV in 1968. He was appointed West Virginia State Manager in 1983 with offices in Wheeling, Morgantown, Martinsburg, Huntington, Beckley and Charleston. He moved to Charleston in 1987 to continue in his management position and retired from management in 1995. Mr. Funderburk is an experienced insurance agent. He brings to the Mutual a strong public policy background and more than thirty years of hands-on knowledge of the retail distribution and market conditions of medical malpractice in the region.


Audit Claims Compensation Nominating

Underwriting Robert L. Ghiz, M.D. Robert L. Ghiz, M.D. has contributed to the health and well-being of his patients for more than thirty years as a proven and respected orthopedic surgeon. Throughout his career, Dr. Ghiz held significant leadership roles in his profession by serving a variety of appointments for his specialty profession, the West Virginia State Medical Association, and most recently as former Medical Director and Past Chairman of the West Virginia Mutual Insurance Company.

Committee Participation Claims – Chair Compensation Finance Nominating Risk Management Underwriting Bruce Martin, CIC, CRM

Mr. Martin has served the Mutual as a member of the West Virginia Mutual Insurance Company’s Provisional Board and as an original member of the Mutual’s Board of Directors since its inception in 2004. He chairs the Audit Committee and serves on the Underwriting Committee. Mr. Martin graduated from Fairmont State University in 1990 with a Bachelor of Science in Business Administration. He later became a Certified Insurance Counselor for the National Alliance for Insurance Education and Research in Austin, Texas. He is currently a member of the Professional Independent Insurance Agents of West Virginia, with past accomplishments including Young Agent of the Year in 1991, Past President in 1995 and Agent of the Year in 1997. He also acts as the Vice-Chairman of the WV Board of Risk & Insurance Management. Mr. Martin was a Board member of the Independent Insurance Brokers of America from 1998-2003. He currently serves as the President and CEO of WesBanco Insurance Services Inc., with locations in Pennsylvania, West Virginia and Ohio.


Audit - Chair Underwriting Robert L. Wheeler, M.D. Dr. Wheeler was elected to the Mutual’s Board and began his tenure on July 1, 2009. Dr. Wheeler was born in Gainesville, Florida. In 1978, he received his medical degree from University of Florida and completed his residency at the University of Colorado. Specializing in Obstetrics and Gynecology, Dr. Wheeler began his practice at Greenbrier Physicians in Lewisburg, West Virginia in July of 1982. Dr. Wheeler is certified by The American Board of Obstetrics/Gynecology. He resides in Lewisburg, WV.

Committee Participation Claims Risk Management

Underwriting

Staff Profiles

Claims Robert J. Ryan Vice President of Claims Mr. Ryan holds a Bachelor of Arts Degree from Saint Vincent College, Latrobe, Pennsylvania. Mr. Ryan has more than 35 years of experience in medical professional liability claim management. Mr. Ryan’s most recent position prior to joining the staff at the Mutual was as a Director for a Regional Medical Professional Liability TPA where he was responsible for the development, implementation and management of their Medical Professional Liability consulting unit. Previous positions include Vice President, Claims and TPA Operations with a national Medical Malpractice Insurance Company. Other positions at this carrier included Vice President, Eastern Regional Office where he responsible for the eastern regional operations. The eastern region included seventeen states and Washington, DC with 150 employees. He also previously served as Chief, Tort Claims, for a large governmental self-insured entity which included 45 health care facilities.

Lois Cashdollar Senior Claims Manager Ms. Cashdollar has 35 years’ experience in working with physicians and defense counsel on medical malpractice claims in West Virginia and the Appalachian region. Her knowledge of medicine coupled with her knowledge of West Virginia Circuit Courts and attorneys in the region makes her ideal for this work. Her ability to negotiate a claim is unparalleled. Prior to joining the Mutual in 2004, Ms. Cashdollar was a senior claims manager for Inservco a national third party administrator and worked extensively in the region. Nora Lantz Claims Consultant Nora Lantz joined the Mutual in 2007. Her primary focus is investigating medical malpractice claims made against Mutual policyholders. Prior to joining the Mutual, Ms. Lantz spent thirteen years employed as a paralegal in a leading private law firm devoted to the defense of physicians and hospitals in medical malpractice cases.

Risk Management Elizabeth S. Bridgeman BSN, RN, LNCC Director of C.A.R.E.® - Communicate and Respond Effectively Elizabeth Bridgeman attended West Virginia Wesleyan College where she received her BSN. She achieved her Legal Nurse Consultant certification in 2004 and re-certified in 2009. She has an extensive and diverse experience as a clinical nurse and a Legal Nurse Consultant with a concentrated focus from the defense prospective. Her experience includes management and supervision in both nursing and legal fields, as well as working as a clinical nursing instructor, industrial health nurse and casualty claims adjuster. She is currently the President of the Legal Nurse Consultant Division of the West Virginia Bar Association and member of the Executive Council and Treasurer of the Southern West Virginia Chapter of AALNC. Elizabeth is a risk manager and currently the Director of the C.A.R.E. Program at the Mutual. Judy Davis RN, BS, ARM, CPHQ Director of Risk Services Judy Davis provides risk management, loss prevention and consultation to Mutual policyholders through CME workshops for physicians, on-site risk assessments and on-site education for physicians and office staff. With more than thirty years of experience in the field of risk and quality management, Ms. Davis-Thomas has an extensive background in health care spending more than twenty years as a risk management consultant for insurance carriers that underwrite both physicians and hospitals. Michael T. Harmon Compliance Specialist Mr. Harmon holds a Bachelor of Business Administration from Marshall University and a Master of Public Administration from West Virginia University with a specialization in Healthcare Administration. He has been primarily responsible for overseeing the company’s regulatory compliance issues. He also provides regulatory compliance support to the company’s physician policyholders. Prior to joining the Mutual he has worked as the Compliance Officer for the Public Employees Insurance Agency, a Research

Analyst for the West Virginia Legislative Auditor’s Office and as the Privacy Officer and Quality Improvement Coordinator for the West Virginia Rehabilitation Hospital in Institute, WV. He has obtained the distinction of Certified Information Privacy Professional with an emphasis in Government (CIPP/G) through the International Association of Privacy Professionals. Cheryl Payton RN, MSN Risk Manager Ms. Payton is a Master’s-prepared nurse with more than 20 years’ experience in the medical and legal field. Her experience ranges from delivering care to patients as a Family Nurse Practitioner to assisting in the defense of physicians as a legal nurse consultant prior to joining the Mutual more than four years ago. Ms. Payton provides CME workshops for Mutual policyholders, practice risk-assessments and in-services for office staff throughout West Virginia and its contiguous counties. Debbie Henceroth, RN, CPHQ Risk Manager Ms. Henceroth is a Certified Professional in Healthcare Quality, specializing in Risk Management, Performance Improvement and Patient Safety for the past 14 years . She has served as Director of Risk Management for a wide range of healthcare services: acute care, rehabilitation and specialty hospitals; skilled and long term care units; multiple physician practices and outpatient care settings. Ms. Henceroth’s experience also includes facilitating pro-active risk assessments, root cause analyses, development of risk reduction plans and staff educator on patient safety topics. She has served as a Legal Nurse Consultant in healthcare related litigation and assisted attorneys in the defense of medical malpractice cases for physicians and hospitals. Her clinical background also includes Critical Care Nursing, Infusion Specialist/Patient Educator, Nursing Administration and Case Management. Ms. Henceroth has recently joined the Mutual as a Risk Manager, providing office practice risk assessments and education for physicians and staff.

Underwriting Scott A. Atkins Vice President of Underwriting Mr. Atkins has worked in the West Virginia insurance industry for 17 years, specializing in medical professional liability for 11 years. Prior to serving as the Mutual’s Vice President of Underwriting, Mr. Atkins served as Vice President at Acordia of West Virginia’s Professional Services Division. His responsibilities included coverage placement, staff management, departmental budgeting and new program development. Duties included underwriting the company’s medical professional liability insurance book through General Agency Agreements. Mr. Atkins has served in the capacity of the Mutual’s Vice President of Underwriting since the company’s inception of 2004. He has an MBA from the University of Charleston. Andrea L. Lively Senior Underwriter Mrs. Lively began her insurance career 14 years ago with Acordia of West Virginia. Working exclusively with West Virginia medical professional liability risks throughout this time, Mrs. Lively has developed unparalleled knowledge and familiarity with West Virginia medical exposures. Mrs. Lively has been the Mutual’s primary underwriter since inception.

Elizabeth A. Lively Underwriting Assistant and Systems Specialist Mrs. Lively began her insurance career in 2001 with Acordia of West Virginia. She served as a Customer Service Representative in the Commercial Lines Department assisting producers and providing customer service. In 2004, she began working with the Mutual as an underwriting assistant. Mrs. Lively is a 2001 graduate of Marshall University. Laura A. Pozega Underwriting Assistant Mrs. Pozega is a graduate of the University of Charleston and West Virginia Institute of Technology with degrees in Paralegal Studies and Office Administration. She began her insurance career in 1994 as the Executive Assistant to the Vice Presidents of Underwriting and Claims for Medical Assurance of West Virginia. Mrs. Pozega continued to work for Medical Assurance for 10 years assuming multiple responsibilities for the company across disciplines. She has worked in the Mutual’s Underwriting Department since 2005. Diane A. Neubaum Customer Service Representative Mrs. Neubaum began her insurance career as an administrative assistant in the Marketing Department of the Medical Inter-Insurance Exhange (MIIX) in the Harrisburg, PA office in 1993. She moved to the MIIX Claims Department in 2005, serving as a Claims Assistant. Diane began employment with the Mutual in 2005 working in both Claims and Underwriting.

Appendix B Audit Committee Charter

1

West Virginia Mutual Insurance Company

Audit Committee Charter

May, 2005

The Audit Committee is one of the Board of Directors’ most important committees as it is responsible for monitoring financial and operational controls, overseeing the internal audit function, and engaging the external auditors and maintaining an open line of communication with them. Following is the charter of the West Virginia Mutual Insurance Company’s Audit Committee.

1. The Audit Committee shall be composed of board members who are not members of the

Company’s management. 2. General responsibilities shall include:

a. maintaining an open line of communication between the external auditors and the Board

b. report Committee actions and recommendations to the Board c. conduct or authorize investigations into matters within the Committee’s scope of

responsibilities

3. Responsibilities relating to the external auditors

a. the Committee will select the independent external auditors, subject to Board approval, review fees paid and review and approve dismissal of external auditors

b. the Committee will have the power to appoint, replace, or dismiss the director of internal audit

c. the Committee will confirm and assure the independence of the internal auditor and external auditors

d. the Committee will consider, in consultation with internal and external auditors, the audit scope and procedural plans made by those auditors

4. Responsibilities for reviewing audit results and periodic financial statements

a. the Committee performs inquiry of management, internal audit and external

auditors about significant risks and exposures and will assess management’s steps to minimize them

harmon

Typewritten Text

Appendix B

2

b. the Committee will review with external and internal audit the adequacy of the Company’s internal controls and any significant findings and recommendations made to management

c. the Committee will annually review the Company’s financial statements and the

reports thereon and discuss with auditors the appropriateness of accounting principles and financial disclosures, serious difficulties or disputes encountered during the audit, and other required auditor communication to the Committee

5. Periodic responsibilities include

a. review and update Committee’s charter b. meet in separate executive sessions with external auditors and management to

discuss any matters considered pertinent and necessary to be discussed privately c. review legal/regulatory matters that have material effect on the Company’s

financial statements, compliance policies and programs d. review and assess the results of governmental or other regulatory examinations as

necessary e. assure that the Committee or full Board of Directors meets with the Company’s

appointed actuary as necessary, but at least once annually, to assess and understand the significant components of the Company’s loss reserves and premium rates

f. review significant conflicts of interest and related-party transactions as necessary g. annually, or as necessary, review, assess, and approve the Company’s code of

conduct, and ensure that management has established a system to inform and train employees as needed, and monitor compliance

h. review, as necessary, significant instances of noncompliance with the Company’s code of conduct

i. annually, the Committee will review and evaluate its performance relative to its responsibilities under this charter. The Chair shall present the results of this review, in writing, to the full Board for its review, comments and acceptance.

6. Other responsibilities that the Board of Directors may assign Due to its size and operating structure, it is not economically feasible for the Company to maintain its own internal audit function. The Committee shall, when it deems necessary, employ the services of the external auditor or other experts to perform specific examinations in order to fulfill its role and responsibilities. Because significant operational responsibilities are performed by external organizations, the Committee shall satisfy itself periodically that controls and procedures are appropriate and functioning within these organizations as they relate to the Company. Within this area, the Committee will receive and review the annual SAS 70 examination from its significant operating partners. (rev 10/10)

1

Appendix C Enterprise Risk Management

2

Appendix C

ERM and Business Planning Framework

Enterprise Risk Management Framework Since the company began, resources have been devoted to managing the risk of the company’s

policyholders. This is often referred to as traditional risk management. This approach

concentrated primarily on underwriting risk. This was slightly modified in 2009 when the

Board of Directors and Senior Management decided to place a greater emphasis on Enterprise

Risk Management (ERM). This is illustrated by the inclusion of ERM initiatives in the company

business plan. The company decided to focus on a few key areas. While continuing to focus on

the traditional risk management activities, the Mutual also focused on improving its internal

processes by updating its operating procedures, modifying its business continuity plan,

strengthening its privacy protections on personal information and improving the compliance

function within the company.

Internal Risk Management

Annual Board Planning Retreat (Newly identified risks are addressed by Board,

Management and Staff)

Business Plan Development (staff and management create plan to address

identified risks)

Progress reported at weekly staff meetings (Staff discusses issues that could impede meeting Business Plan

goals)

Progress reported at bi-monthly Board meetings (Relevant issues are brought to

the Board’s attention)

Senior Management Identifies key risks (management reprioritizes risks,

if necessary)

Annual status report provided to Board at Planning Retreat (Board is

updated on results of previous year’s Business Plan)

3

The Mutual began by reviewing its existing procedures using the NAIC Market Regulation

Handbook as a guide. Following that review, the company was subsequently examined by the

West Virginia Offices of the Insurance Commissioner for conformance to those standards. The

Mutual passed 96% of the standards applied by the examiners. The two errors identified by the

examiners occurred very early in the company operations and were corrected prior to being

identified by the examiners. Further, the company modified its business continuity plan. The

previous plan reflected the fact that most services were outsourced. When those services were

brought in house the Mutual wanted to ensure that business disruptions could be adequately

managed. The current plan details emergency operating procedures, prioritizes key personnel

and functions and identifies the risks of various events that could disrupt business. The plan is

communicated to employees annually and revisions are made quarterly. Privacy and security

training is also conducted annually for staff. Policyholders receive annual privacy notices that

detail how the company protects their personal information and also describes the individual

rights of policyholders with regard to that information. The company also created its own

Business Associate Agreement to distribute to its policyholders rather than signing multiple

agreements and having various obligations. Also, the claims department operating manual and

complaint handling procedures were also revised during this period. All of these activities have

not only mitigated the operational risks within the company, but has also further strengthened

the compliance function.

External Risk Management

In 2011, in an effort to address the company’s strategic and operational risk, the Mutual’s staff

conducted a macroeconomic analysis based on the five forces model described by Harvard

business professor Michael E. Porter.1 This analysis reviewed the primary factors that can

negatively impact the long term profitability of the company based on local and national

economic data. This analysis allowed senior management to objectively review company

operations against external risks.

Inventory of Other Risk Management Activities

There are several other activities that translate to company-wide ERM. The Mutual Board of

Directors meets annually to discuss risks that could inhibit the Mutual’s long term performance.

This consists of a three-day planning retreat that includes input from management and staff. The

goal of this retreat is to develop a business plan for the following year. This will be discussed in

the next section.

With regard to short term risks, the current Board Chairman, and future company President,

attends weekly staff meetings along with at least one other outside Board member. These

weekly staff meetings are designed to encourage weekly interdepartmental discussion of the

company’s performance and exchange valuable information among departments. The Mutual’s

lobbyist, public relations firm, and other relevant parties also attend these weekly meetings. The

1 Porter, Michael E. "The Five Competitive Forces That Shape Strategy." Special Issue on HBS Centennial. Harvard Business Review 86, no. 1 (January 2008).

4

Mutual maintains strong relationships with the Physician Insurers Association of America

(PIAA), the WV State Medical Association and other state and national trade groups.

These practices primarily address the Strategic, Operational and Underwriting risks. In an effort

to address the Credit and Market risk, the Mutual partners with professional investment

management contractor as well as its long standing relationships with reinsurers and actuarial

firms. The Mutual maintains extensive oversight with all of its partners. These organizations are

also closely involved with company operations and meet frequently with Senior Managers and

Board Members.

The next section will describe the specific risks identified by Senior Management with input

from Board Members during the most recent retreat.

Primary Risks and Mitigation Plan

The Mutual has determined that its primary risks lie in the following categories:

1. Operational

2. Strategic

3. Underwriting

As with any insurance company, the Mutual closely monitors credit and market risk. The

finance department is regularly briefed on investment activities as well overall market conditions

by its actuaries, reinsurers and investment managers. The CFO relays applicable information to

the staff during the weekly staff meetings and to the Board of Directors during the bi-monthly

Board meetings. Due to its relative small size and lack of complexity, the Mutual believes these

areas are less of a risk to the long term success of the company. This section will describe the

risks that senior management has identified under each primary risk category and describe the

Mutual’s plan to address each of the identified risks.

Operational Risk

1. Maintaining appropriate expense ratios

a. Closely monitor employee expenses – measured by an annual review of expenses

b. Meet annual projections of financial targets – measured by financial information

provided by the finance department.

c. Reduce average annual defense expenses without impacting service – measured

by being below PIAA average expense cost.

2. Compliance with regulatory requirements

a. Centers for Medicaid and Medicare Services (CMS) Mandatory reporting

requirements – measured by successfully submitting error free claims input file.

b. Model Audit Rule - measured by successful review of external auditors

c. HIPAA – measured by implementing business associate agreements with

contractors and policyholders.

d. SDN List – measured by reviewing list against policyholder and vendor list

3. Protection of confidential information

5

a. Conduct security review of company information – measured by reviewing

existing operations against OCTAVE-S methodology.

4. Maintenance of operational policies and procedures

a. Follow up reviews related to MCE – measured by implementing applicable

recommendations issued by the WV Insurance Department.

5. Employee development and retention

a. Encourage educational opportunities – measured by successful completion of

graduate level courses for at least 3 employees.

b. Competitive Salaries – Measured by zero staff turnover

c. Positive working environment – measured by zero staff turnover.

Strategic Risk

1. Claims services

a. Expand efforts to provide timely information to defense panel through annual

meetings – measured by the successful completion defense panel meetings

2. Communication and outreach

a. Improvements to website content – measured by the addition of risk management

material (video descriptions of programs, updated material)

b. Increased involvement in meetings with OH, VA, KY – measured by the

completion of at least one risk management seminar in each of the three states

c. Increased involvement of producers – measured by the Director of Marketing

meeting with the top company producers.

3. Additional revenue sources

a. Assess feasibility of providing risk management services to hospitals on a fee-for-

service basis – measured by meeting with risk managers at five or more small

hospitals in WV to discuss risk management services

4. Business continuity planning

a. Locating off-site office space to use during a business disruption – measured by

entering into an MOU with a partnering organization

5. Competitive environment

a. Closely monitor efforts of competing companies to enter the market in WV –

measured by weekly reports by Marketing Director to staff

b. Maintain existing retention rates – Maintaining retention rate of 98% over time.

6. Healthcare reform efforts

a. Closely monitor how the federal healthcare reform efforts including IPAB impact

the availability of physicians – measured by maintaining retention rate of 98%

overtime and DDR data on retiring physicians.

Underwriting Risk

1. Profit sharing mechanisms

a. Measured by Board actions related to renewal credit changes while still

maintaining 95% combined ratio.

2. Risk Management programs

6

a. Expand risk management programs and update existing risk management site visit

assessment tool and better align it with the initial risk questionnaire – measured

by updating risk management software used to assess policyholders’ offices.

3. Maintaining market share

a. Obtain out of state business – measured by providing proposals to at out-of-state

physicians groups.

b. Ongoing communication regarding the benefits of company ownership - –

measured by providing proposals to at out-of-state physicians groups.

The areas of risk identified address the Mutual’s business strategy beginning in February 2011.

Consequently, this process allows the Board and Senior Management to agree on a business plan

for the upcoming year. The success of the business plan is reviewed annually during the Board

retreat. The Board of Directors is updated by staff on status of each goal. Following this

discussion the Board provides input on next year’s goals and objectives. Following the Board

retreat, a staff working group revises the Business Plan and prepares it for the upcoming next

year. Subsequently, the department heads review relevant portions of the plan with their staff.

The Mutual believes, based on the size and complexity of its operations, that having the support

from its CEO and Board of Directors, taking an incremental approach, staying focused on a

small number of primary risks, and leveraging its existing resources and risk management

activities that it can embed ERM into the culture of the organization and create a successful

ERM initiative going forward.

Appendix D Business Continuity Plan

2011

Prepared by: Michael Harmon

WV Mutual Insurance Company

Business Continuity and Disaster

Recovery Plan

WV Mutual Insurance Company

500 Virginia Street, East

Suite 1200

Charleston, WV 25301

Mission Statement

The WV Mutual Insurance Company will provide

professional liability insurance to West Virginia physicians

on a sound and enduring basis.


CONFIDENTIAL Business Continuity and Disaster Recovery Plan

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Table of Contents

Executive Summary .......................................................................................................... 3

1. Key Roles, Backups and Delegation of Authority ..................................................... 4

1.1. Key Roles and Backups ............................................................................................... 4

1.2. Delegation of Authority ............................................................................................... 5

2. Essential Functions ...................................................................................................... 6

2.1.1. Vital Software ........................................................................................................... 6

2.1.2. Vital Equipment ........................................................................................................ 7

2.1.2.1 Technology Recovery Details .......................................................................... 7

2.1.2.2 Personal Computer and Server Backup Details ................................................ 8

2.1.3. Vital Files, Records ................................................................................................... 8

3. Call List ........................................................................................................................ 8

4. Alternate Location Sites .............................................................................................. 9

5. Evacuation Procedures ................................................................................................ 9

Appendix A: Vulnerability and Hazard Analysis ....................................................... 15

Appendix C: Emergency Operating Procedures ........................................................ 36

Appendix D: Summary of Plan Procedures ................................................................. 40

Appendix E: Testing Scenarios and Results ................................................................ 42

Appendix F: Review Policy ........................................................................................... 45

Appendix G: Organizational Chart ............................................................................. 46



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Executive Summary

Having a plan in place that addresses business interruption is an obvious component of

any good company. This plan was developed with input from Mutual employees and

designed to be a resource e for management when making decisions when business is

disrupted. The methodology involved in creating this plan was based on the Good

Practice Guidelines of the Business Continuity Institute, the Texas Department of

Insurance Disaster Survey, and the NAIC Standards for Disaster Recovery.

The first step in this process was to identify potential threats that could disrupt

business. Generally, the plan is based on the fact that there is a greater likelihood of an

event disrupting business for one week or less. This conclusion was reached after

internet research and discussions with building management. Appendix A describes the

threats in greater detail.

The next step was to identify the company’s essential functions. Essential Functions

are generally defined as “functions that enable an organization to provide mission critical

services and sustain itself financially in the event of a business disruption.” These

essential functions were identified through interviews and discussions with various

Mutual employees. The details of each identified essential function and its respective

recovery priority can be found in Appendix B.

The next step was to identify the company’s key personnel and define the emergency

decision making authority. The company’s key personnel are listed in the first section

of the plan. The Emergency Response Management Team can be found in this section

and in Appendix C. Appendix C also serves as a reminder to decision makers on the steps

that must be taken in the event of a business disruption. These procedures are based on

the amount of time the company’s main office would be unavailable for occupancy. A

summary of these procedures along with the company’s call list will be given to the

employees every six months or when significant changes have occurred. This summary

can be found in Appendix D.

The plan also includes the disaster recovery plan for Information Technology, employee

and key vendor call list, alternate worksite locations, building evacuation procedures and

details on how to access the company’s business continuity website. Further, the plan

includes a description of scenarios to be used for testing the plan. All plan tests will be

recorded and tracked in Appendix E.

This plan should be considered a revision to the previous plan dated July 23, 2008. The

plan will be updated periodically and each page will be dated upon update consistent with

company policy Appendix F.

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1. Key Roles, Backups and Delegation of Authority

The Mutual has identified key role backups and pre-delegated authorities for making

policy determinations and decisions in times of emergency. The company’s

organizational chart can be found in Appendix G.

The Emergency Response Management Team includes the following employees:

1. David Rader, Lead

2. Tamara Lively-Huffman

3. Gary Schultz

4. Scott Atkins

5. Rob Vass

6. Bob Ryan

7. Jim Stover

8. Michael Harmon

9. Others as selected by Lead

The first four listed above are the floor leaders in the event of an evacuation. Each

individual is responsible for ensuring their corners of the building are evacuated. Each

floor leader is responsible for knowing their role during an evacuation and should appoint

a back up if they happen to be out of the office that day. More details on the evacuation

procedures can be found in Section 5.

1.1. Key Roles and Backups

Backup 1 Backup 2 Backup 3 Backup 4

President & CEO

Executive Vice

President &

COO

CFO VP

Underwriting

VP of Risk

Management

Board Chairman Vice Chair Secretary Treasurer

Executive Vice

President & COO President CFO

VP

Underwriting

VP of Risk

Management

VP of Underwriting

Senior

Underwriter

CFO Accountant

VP of Risk

Management

Executive Vice

President &

COO

VP of Claims

Executive Vice

President &

COO

Senior Claims

Consultant

Claims

Consultant

IT Specialist

Office Manager

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Office Manager

HR Manager

HR Manager

Office Manager

Senior Claims

Consultant

Claims

Consultant

Director of Marketing

VP of

Underwriting

Executive Vice

President &

COO

Compliance

Specialist

Executive Vice

President &

COO

Director of C.A.R.E. Medical

Director

Risk Manager

(Nurse)

Director of Risk

Services

Risk Manager

(Nurse)

1.2. Delegation of Authority

Delegations of authority ensure rapid response to an emergency situation that may require

policy determinations and decisions during difficult circumstances. In preparation for

emergency events, the Mutual has:

• Identified which authorities can and should be delegated;

• Described the circumstances under which the authority would be exercised,

including when they would become effective and terminate;

• Identified limitations of the delegation; and

• Documented to whom authority should be delegated.

Authority Type of

Authority

Position

Holding

Authority

Triggering Conditions

Close the office(s) Emergency

authority

1) President,

2)EVP

Operations,

3)CFO

When conditions make

coming to or remaining in the

office unsafe for staff and

customers

Authorize

emergency

expenditures

Emergency

authority

1) President,

2)EVP

Operations,

3)CFO

When the President or

designated official has

declared an official

emergency.

Emergency

Personnel

Appointments

Emergency

authority

1) President,

2)EVP

Operations,

3)CFO

In the event additional

personnel is necessary to

continue the Mutual

operations in the event of an

emergency or time of distress.

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Emergency

Purchases

Emergency

Authority

1) President,

2)EVP

Operations,

3)CFO

In the event of an emergency

need for supplies, technology,

office space or any other

fundamental element.

Signature Authority Administrative

Authority

1) President,

2)EVP

Operations,

3)CFO

When President or EVP of

Operations is not available.

2. Essential Functions

This Business Continuity Plan is based on the company’s essential functions. It serves as

an operational guide to facilitate the relocation of employees to an alternate work location

and the back-up of critical systems and vital records so that essential functions may

continue. The level and manner of support needed to continue essential functions is

dependent upon the nature of an event. A listing of the prioritized essential functions is

provided in the table below and further detailed in Appendix B.

All Functions Priority

Maintain security and privacy

of policyholder’s and employees

information

1

Verifying Certificates of

insurance 2

Collect, deposit and

reconciliation of premiums 3

Classifying and Pricing policies 4

Claims adjudication 5

Provide outreach and

communication to policyholders 6


communication to agents 7

Provide outreach to Board 8

CARE program 9

Site visits CARE/CME

Educational Seminars 10

Filing documents with

Insurance Commissioner 11

Payroll 12

2.1.1. Vital Software

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Vital software includes specific software requirements to re-establish an essential

function. The Mutual’s vital software includes the following:

• LAN

o ImageRight

o Fiserv

� PTE

� Power 2 Pay

� eFreedom

o MS Office

• Internet

o DTI – OASIS

o SERFF – NAIC

o MyAgility

o ADP

o Lincoln Financial

2.1.2. Vital Equipment

Vital equipment includes specific equipment required to re-establish all of the Mutual’s

essential functions. The Mutual’s vital equipment includes the following:

• Servers (supports all essential functions)

• Switches (supports all essential functions)

• PCs/Laptops (supports all essential functions)

• Phone System (supports all essential functions)

• Network (supports all essential functions)

More specifically, the Mutual maintains:

• 2 Cisco 5510 router/firewalls

• 3 Dell 2048 switches

• 8 servers

• 39 computers

2.1.2.1 Technology Recovery Details

Based on determination by the Site Emergency Management Team Leader and the

Technology Recovery Team Leader, technology recovery could include any combination

of the following actions:

• Agility Recovery will provide office space at 100 Tracy Way and the following

equipment:

o 30 PC’s

o 3 Servers

o 2 Tape drives

o 2 Printers

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o 1 Fax machine

• Recovery of any existing office equipment and relocating to the designated site;

• Purchase of any equipment/services via local vendors;

• Purchase from vendors on the vendor list with required delivery schedule.

2.1.2.2 Personal Computer and Server Backup Details

All personal computers store the contents of their My Documents folder on the server.

The file server is backed up nightly using tape drives. The backup plan includes a

rotation of ten backup tapes and includes an offsite tape storage plan. At the end of every

month a full backup is created on a new tape. This tape is then taken offsite and stored

indefinitely. The ImageRight server follows the same backup plan, but also includes a

secondary backup to a CD-rom.

2.1.3. Vital Files, Records

Vital files, records and databases include specific files, records and databases required to

re-establish an essential function. Also, other vital records are stored onsite, at various

law firms and at the Convenient STOR Self Storage unit in Elkview, WV Unit #270,

Gate Access #267716. See Storage Facility Contract for details.

3. Call List

The internal call list contains the names and contact information for persons that will be

contacted should the Mutual experience a situation that would cause a major disruption to

its functions and where it may have to resume operations at an alternate location.

Essential external vendors are also included on this list. Also, within the ‘Vendors’

section, this plan, and other important business continuity documents, are filed under

“internal documents.” The call list can be found on the MyAgility website at

https://www.agilityrecovery.com/agil/login.htm [username: wvmic password: werready].

Call list can also be found in Appendix D.

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4. Alternate Location Sites Available alternate office locations with data and telecommunications connectivity

include:

1. Agility Mobile Work Site – 100 Tracy Way, Charleston, WV, 877-364-9393 or

dial our alternate hotline numbers: 888-242-3740 or 866-894-3336. CALLER

MUST SPECIFY (Alert or Declaration) - Alert – notifies Agility of a potential

declaration, e.g., a server failed or severe storm is predicted (not required, but

allows for early preparation). - Declaration – initiates an Agility response and

they will begin mobilizing our recovery.

5. Evacuation Procedures

The following procedures should be followed when an emergency occurs during normal

work hours. A summary of the procedure can be found in Appendix C.

5.1Emergency Response Team Member Responsibilities

The Emergency Response Management Team includes the following employees:

List of employees

List of vendors

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1. David Rader, Floor Leader

2. Tamara Lively-Huffman, Floor Leader

3. Gary Schultz, Floor Leader

4. Scott Atkins, Floor Leader

5. Rob Vass

6. Bob Ryan

7. Jim Stover

8. Michael Harmon

9. Others as selected by

Lead or Floor Leaders

5.1.1 Know In Advance

• Exits and emergency equipment on your floor

• Common areas to be checked on your floor

• Other Floor Leaders and how to contact them

• How you are notified of an emergency

• The designated Safe Assembly Location

• Employees on your floor requiring assistance during an evacuation.

5.1.2 Perform during an Emergency

These are general responsibilities during any evacuation. Specific responsibilities are

outlined under each individual section.

• Guide employees out of danger area or building. Provide direction to emergency

exits and where to go once people leave the danger area. Employees and

customers will be looking for direction, do speak loudly.

• Search common areas while evacuating. Check copy rooms, restrooms, supply

closets, file rooms and other common areas if it is safe to do so

• Ensure everyone leaves the floor safely and calmly

• Assist employees and visitors who have special evacuation needs. The floor

leaders should assist the individuals to a safe area such as a stairwell.

5.1.2 Assist After an Emergency

• Continue to provide leadership after the evacuation. Assist with keeping

everyone calm.

• Account for employees. Follow instructions under the Safe Assembly Location

section.

5.2 Facility Information

5.2.1 Building Emergency Information

Familiarize yourself with the building emergency equipment on your floor. Be ready to

direct co-workers and visitors to the appropriate exit.

5.2.2 Learning of Emergency Situations

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Emergencies are monitored through local radio and internet by the Emergency Response

Management Team.

5.2.3 Announcing Evacuation

When a station pull box or smoke detection device is set off, audio and visual signals will

sound on all floors. All employees should proceed to the stairwell by the ladies room.

5.2.4 Exits

There are two exits that lead to the stairwells, one on the west side by the elevator, and

one on the east side by the ladies room.

5.2.5 Shelter in Place Location

The internal shelter in place location for the United Building, suite 1200, has been

identified as the center of the floor at the stairwells.

5.2.6 Fire Equipment

There are three fire extinguishers; located to the left of the door in the kitchen area, the

southwest kitchenette and outside the ladies room.

5.2.7 Alarm Pulls

The alarm pulls are located outside of each stairwell.

5.2.8 Emergency Supplies

The first aid kit is located in the kitchen area.

5.2.9 Persons With Special Needs

The employee handbook instructs all employees to let their supervisors know of any

special evacuation needs (e.g., use of a wheelchair). If such needs are defined, a notation

will be made here with specific instructions distributed to any involved employees.

There are no employees at this facility that require evacuation assistance at this time.

If a visitor with special needs is present when an evacuation occurs, the floor leader

should assist the individual to a safe area such as a stairwell, where fire fighters will

assist with the evacuation. The floor leader should do this only if they can do so without

endangering themselves.

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5.3 Evacuation The safety and security of employees and visitors is of the highest priority. Being

prepared and staying calm are the two most helpful aids in coping effectively during an

emergency requiring evacuation.

Floor Leaders or their alternate are responsible to perform the following during an

evacuation:

• Once the evacuation/relocation notice is given, proceed immediately to the

nearest exit. Ensure that the route to the exit is open and access is not blocked.

• Before opening the exit door, feel the door; use the back of your hand. If it is hot

or if smoke is seeping out the sides of the door, instruct all personnel to exit via an

alternate emergency exit. DO NOT OPEN THE DOOR!

• If the exit is usable, open the door and move any obstructions that may hinder an

orderly evacuation.

• Open the emergency exit door as far as possible and direct employees to move

calmly to the designated assembly location in front of the Bowles Rice building.

• Before leaving the floor, check the area quickly to make sure that everyone is

moving toward the evacuation routes. If you can, at no risk to yourself, check the

restrooms, conference rooms, lounges, offices, etc.

• Instruct people to assemble at the Safe Assembly location so that you can account

for everyone.

• Stay at the Safe Assembly location until you receive instruction from the Site

Emergency Management Team, WVMIC management or local authorities to

leave the area or return to work.

• If you are instructed to leave the Safe Assembly location, leave immediately using

designated routes or other safe route. For areas where flooding is a threat, ensure

that evacuation routes follow the highest elevation possible. Contact your local

fire department or emergency management agency for assistance.

5.4 Sheltering

5.4.1 Severe Storm Sheltering

This includes severe thunderstorms, wind storms and tornadoes. All states within the

United States are susceptible to one of these storm types in varying degrees.

Floor Leaders or their alternate is responsible to perform the following:

• Instruct employees to vacate perimeter offices/areas and close doors.

• As time permits, assign people to check restrooms and especially noisy areas, e.g.

copy rooms, computer rooms, for people who may not have heard the alarm or

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announcement.

• Seek shelter in the interior core area near the stairwells. Stay away from windows

and glass. The greatest danger will be from glass and other airborne objects.

• Do not allow or advise people to return to work areas or offices until so advised

by the fire department or property management personnel. Do not use force to

prevent someone from going back into the work area.

• Do not leave the building unless instructed to do so by emergency personnel.

Refrain from contacting property management except in the event of an

emergency. As property management receives updated information, it will be

announced over the public address system. The Floor Leaders or their

alternate will receive updates from the property manager by phone.

5.5 Hazardous Material Sheltering

While hazardous material releases (accidental or intentional) are extremely rare,

sheltering procedures are important. Notice of hazardous material may come from

emergency alert radios or by direct notification from authorities.

Floor Leaders or their alternate:

• Announce to employees and visitors that a shelter in place has been issued.

o Sample Announcement: Please listen to this entire announcement. A

dangerous situation exists outside of the building where a hazardous

material has been (or potentially may be) released. The safest place to be

right now is inside the building, away from open doors and windows.

o Please proceed to the designated safe shelter location (or a room with as

few windows and doors as possible).

• Advise and direct people to move to a designated safe shelter location, if

applicable. If no designated safe shelter location exits, select a room that has as

few windows, vents and doors as possible. A windowless room is best

(bathrooms, storage rooms, kitchen area).

• Notify building management.

• Ensure that everyone has heard the announcement and is proceeding to the shelter

area.

• Shut and lock all windows and doors.

• Take your cell phone and your Site Emergency Procedures and proceed to the

sheltering room/area.

• Account for all employees, customers and visitors in your shelter area.

• Remain in the sheltering location until the “all clear” is given by the Emergency

Coordinator.

5.6 Safe Assembly Locations

5.6.1 Employee Safe Assembly Location

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The Safe Assembly Location for this facility has been designated as the front of the

Bowles Rice building.

5.6.3 Accounting for Employees All managers and supervisors have the responsibility of accounting for their reporting

employees. Emergency Team Leaders have the responsibility for collecting all

information regarding employees from supervisors and managers at the Safe Assembly

Location and communicating to the Emergency Coordinator and/or local authorities (fire,

police, etc.). Do not give any information regarding employees to other people or groups

(e.g., news reporters).

Each Manager will be responsible for accounting for all of their employees at the Safe

Assembly Location and reporting this status to the Emergency Team Leader. The

Emergency Team Leader will communicate this information to the public responders.

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Appendix A: Vulnerability and Hazard Analysis Back to Executive Summary

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Appendix B: Essential Functions Details Back to Executive Summary

Section 1: Company Functions

All Functions Supporting Critical Process &

Service

Essential

Function?

Verifying Certificates of coverage Underwriting section; Y

Collect, deposit and

reconciliation of premiums

Underwriting Section, Finance

Section, Agents Y

Classifying and Pricing policies Underwriting Y

Claims adjudication Claims section, Defense Counsel;

Claims Committee Y


communication agents Marketing section, Y


communication to the Board Marketing section Y

Maintain security and privacy of

policyholder’s and employees

information

Compliance and IT sections;

Legal section; All staff Y

Site visits CARE/CME

Educational Seminars Risk Management Section; Y

CARE program CARE Director Y

Filing documents with Insurance

Commissioner Operations; Actuaries; SERFF Y


communication to policyholders

Marketing Section; Underwriting

section; agents Y

Payroll Human Resources Y

Contract oversight/management Legal Section; Operations N

Prepare information for Board

Finance Section; CEO,

Operations; Risk management;

underwriting; claims

N

Provide for printing and delivery

of all marketing materials and

letters to policyholders and

agents

Marketing Section; Maple

Creative N

Oversee investments Finance Section; Financial

Advisors N

Provide guidance and execution

of legislation and public policy

related to professional medical

liability insurance.

Operations; CEO N

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Section 2: Essential Function Details

Function: Verifying Certificates of insurance

Service this function provides: Provides certificates of insurance to policyholder upon

request.

Other Company Functions and Other Organizations that Depend upon this Function: N/A

1. The loss of this function would have the following effect on the company:

The company would not be able to provide a basic customer service.

2. How long can this company function continue without its usual information

systems support? Assume that loss of support occurs during your busiest, or peak,

period. Select one only.

Hours Up to 1 week X – Temp. use

of email report

Up to 1 day Up to 1 month

Up to 2 days Other

(please specify): Up to 3 days

Month Jan Feb Mar April May June July Aug Sept Oct Nov Dec

Day Mon Tue Wed Thurs Fri Sat Sun

Hour 1 2 3 4 5 6 7 8 9 10 11 12

13 14 15 16 17 18 19 20 21 22 23 24

3. Are there any other peak load or stress considerations?

N/A

4. Have you developed/established any backup procedures (manual or otherwise) to

be employed to continue company functions in the event that the associated

applications are not available? If yes, how often have those procedures been tested? Yes manual processes have been used in the past and could quickly be revised if

necessary. See VP of underwriting for a description of the procedures.

5. The loss of this function would have the following legal ramifications due to

regulatory statutes, contractual agreements, or law: (Specify the area of exposure): Unable to provide a basic customer service.

6. The loss of this function would keep us from supplying the following services to other organizations: Physician groups and hospitals.

7. Specify any other factors that should be considered when evaluating the impact of the loss of the function: N/A

8. Are there ANY other dependencies (staff, partner, vendor, software, unique resources, etc.) not already identified above? Availability of OASIS and Image Right.

Workaround is contingent on the availability of Outlook. Image right is backed up using

encrypted tapes. The tapes are taken off-site to ensure continuity.

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9. Does the analysis of the responses to the above questions indicate that this

function should be considered “essential” to the company? If yes, indicate below

when such label is appropriate.

Always Yes No During the following time of the

week: Yes No

During the following period of the year:

Yes No

Other time period. Specify

Function: Collect, deposit and reconciliation of premiums

Service this function provides: Provides financial stability to the company

Other Company Functions and Other Organizations that Depend upon this Function: This supports every other essential function.

1. The loss of this function would have the following effect on the company: Catastrophic effects.


systems support?

Assume that loss of support occurs during your busiest, or peak, period. Select one

only.

Hours Up to 1 week X


Up to 2 days Other




Hour 1 2 3 4 5 6 7 8 9 10 11 12

13 14 15 16 17 18 19 20 21 22 23 24

3. Are there any other peak load or stress considerations? N/A



applications are not available? If yes, how often have those procedures been tested? Manual Procedures have been established and employed in the past and could be utilized

to reestablish this function on a temporary basis. See VP of underwriting for a description

of the procedures.


regulatory statutes, contractual agreements, or law: (Specify the area of exposure): Would not be able to comply with the terms of the policy.

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6. The loss of this function would keep us from supplying the following services to our policyholders: Claims payment, risk management services, legal representation.

7. Specify any other factors that should be considered when evaluating the impact of the loss of the function: Workarounds and reinsurance would be employed in the event

that this function was discontinued for an extended period of time.

8. Are there ANY other dependencies (staff, partner, vendor, software, unique resources, etc.) not already identified above? Availability of OASIS and ImageRight

required in order for this function to be performed.





week: Yes No

During the following period of the year: Yes

No


Function: Classifying and Pricing policies

Service this function provides: This is a function of the underwriting department.

Ensures premium income adequately covers the amount of risk taken by the company for

a particular policy.

Other Company Functions and Other Organizations that Depend upon this Function: Premium Collection



systems support?

Assume that loss of support occurs during your busiest, or peak, period. Select one

only.



Up to 2 days Other




Hour 1 2 3 4 5 6 7 8 9 10 11 12

13 14 15 16 17 18 19 20 21 22 23 24


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applications are not available? If yes, how often have those procedures been tested? Manual Procedures have been established and employed in the past and could be utilized

to reestablish this function on a temporary basis. See VP of underwriting for a description

of the procedures.


regulatory statutes, contractual agreements, or law: (Specify the area of exposure): Conflict with the company’s filing with the Insurance Department.

6. The loss of this function would keep us from supplying the following services to the policyholders: N/A


8. Are there ANY other dependencies (staff, partner, vendor, software, unique resources, etc.) not already identified above? Dependent on the availability of OASIS

and ImageRight, Internet, Telephone.





week: Yes No


No


Function: Claims adjudication

Service this function provides: Ability to properly defend and settle claims submitted

against policyholders.

Other Company Functions and Other Organizations that Depend upon this

Function: N/A







Up to 2 days Other




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Hour 1 2 3 4 5 6 7 8 9 10 11 12

13 14 15 16 17 18 19 20 21 22 23 24


N/A



applications are not available? If yes, how often have those procedures been tested? N/A


regulatory statutes, contractual agreements, or law: (Specify the area of exposure): Inability to fulfill policy obligations.

6. The loss of this function would keep us from supplying the following services to the policyholders: Unable to supply policyholder with basic service.

7. Specify any other factors that should be considered when evaluating the impact of

the loss of the function: N/A

8. Are there ANY other dependencies (staff, partner, vendor, software, unique resources, etc.) not already identified above? OASIS and ImageRight, Internet,

Outlook, telephone. One major factor identified was the loss of Lois Cashdollar would be

catastrophic due to her in-depth knowledge of claims adjudication and the market in

general in WV. Elizabeth Magra also provides auditing support to the claims adjudication

process. Further, the issuance of indemnity payments is an essential element of the claims

management process. Sometimes at the direction of the courts, an indemnity payment is

required within a specific time period.





week: Yes No


No


Function: Organizing legal support

Service this function provides: This is a function of the claims section. And involves

working with partner defense firms in assigning legal counsel to our policyholder in

various situations.

Other Company Functions and Other Organizations that Depend upon this Function: Claims Adjudication

1. The loss of this function would have the following effect on the company: Catastrophic




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Up to 2 days Other




Hour 1 2 3 4 5 6 7 8 9 10 11 12

13 14 15 16 17 18 19 20 21 22 23 24


N/A



applications are not available? If yes, how often have those procedures been tested? The partner defense firms could perform this function temporarily on our behalf with

input from claims staff or CEO or designee. This has not been tested.


regulatory statutes, contractual agreements, or law: (Specify the area of exposure): Policyholder would not have legal representation during questioning, depos, and/or other

legal proceedings. Could also cause delays in meeting file reporting deadlines.

6. The loss of this function would keep us from supplying the following services to the policyholders: Basic customer service.


8. Are there ANY other dependencies (staff, partner, vendor, software, unique

resources, etc.) not already identified above? Access to telephones and Outlook

calendar.





week: Yes No


Yes No


Function: Provide outreach and communication to agents

Service this function provides: Agents are the first line of contact to our policyholder.

Ensuring they are properly educated is key to the success of the business.

Other Company Functions and Other Organizations that Depend upon this

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Function: Issuance of certificates and other underwriting activities.

1. The loss of this function would have the following effect on the company: Catastrophic effect of the future growth of the company.




Hours Up to 1 week


Up to 2 days X Other




Hour 1 2 3 4 5 6 7 8 9 10 11 12

13 14 15 16 17 18 19 20 21 22 23 24




applications are not available? If yes, how often have those procedures been tested? The Marketing director can communicate with the agents from any location as long as

he/she or she has availability of a landline, cell phone, internet, email system.


regulatory statutes, contractual agreements, or law: (Specify the area of exposure): N/A

6. The loss of this function would keep us from supplying the following services to the policyholder: Access to timely information.

7. Specify any other factors that should be considered when evaluating the impact of the loss of the function: One of the biggest risks expressed was the large amount of

travel associated with the work and not having a predetermined back up.

8. Are there ANY other dependencies (staff, partner, vendor, software, unique resources, etc.) not already identified above? Maple creative is key to communicating

with agents.





week: Yes No

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Yes No


Function: Maintain security and privacy of policyholder’s and employees information

Service this function provides: There is a need to provide the more than 1700

policyholders and 25 employees with adequate safeguards on their personal information.

This builds trust in the Mutual’s services and provides a certain level of confidence to the

policyholders. Maintaining this information also protects the company against certain

incidents that can lead to unnecessary expenses.

Other Company Functions and Other Organizations that Depend upon this Function: N/A

1. The loss of this function would have the following effect on the company: Moderate Negative effect on public perception and potential legal consequences.






Up to 2 days Other




Hour 1 2 3 4 5 6 7 8 9 10 11 12

13 14 15 16 17 18 19 20 21 22 23 24




applications are not available? If yes, how often have those procedures been tested? Processes are in place to backup the data on the company’s servers. This process is

periodically tested by the IT section.


regulatory statutes, contractual agreements, or law: (Specify the area of exposure): The Mutual is required by state and federal law to protect the information it maintains.

Failure to comply could result in monetary penalties as well as other sanctions. The

Mutual also has a contractual relationship with its policyholders related to their claims

records.

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6. The loss of this function would keep us from supplying the following services to

the policyholders: N/A

7. Specify any other factors that should be considered when evaluating the impact of the loss of the function: Information must be protected as much as possible in the event

of an emergency. All company privacy and security policies still apply.


resources, etc.) not already identified above? N/A




Always Yes

No

During the following time of the

week: Yes No


No


Function: Site visits and Educational Seminars (CME and CARE)

Service this function provides: Risk management support for policyholders, premium

credit provided for participation. Helps policyholders identify potential areas that could

lead to a claim.

Other Company Functions and Other Organizations that Depend upon this Function: No essential function depends on site visits.

1. The loss of this function would have the following effect on the company: Lose value added services delivered to policyholders, could increase the number of

claims, inability to provide the checks to patients.




Hours Up to 1 week

Up to 1 day Up to 1 month X

Up to 2 days Other




Hour 1 2 3 4 5 6 7 8 9 10 11 12

13 14 15 16 17 18 19 20 21 22 23 24

3. Are there any other peak load or stress considerations? Site visits increase at periods of renewal. Policyholders will rush to receive the credit

every two years.

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applications are not available? If yes, how often have those procedures been tested? Site visits could be performed by a third party if necessary. No contract has been awarded

at this time, however; accommodations could be made if necessary.



6. The loss of this function would keep us from supplying the following services to the policyholders: Value-added services

7. Specify any other factors that should be considered when evaluating the impact of the loss of the function: Site Visits are voluntary.

8. Are there ANY other dependencies (staff, partner, vendor, software, unique resources, etc.) not already identified above? MS Word, Access for the tracking, PC,

Risk Management reference manual.





week: Yes No


Yes No

Other time period. Specify –

Essential function of the

company, but other services

should be restored first.

Function: CARE Program

Service this function provides: Helps policyholders avoid claims by working closely

with patient to work through a possible medical error.

Other Company Functions and Other Organizations that Depend upon this Function: CARE Educational Seminars

1. The loss of this function would have the following effect on the company: Increased claims, inability to send checks to patients






Up to 2 days Other


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Hour 1 2 3 4 5 6 7 8 9 10 11 12

13 14 15 16 17 18 19 20 21 22 23 24




applications are not available? If yes, how often have those procedures been tested?




the policyholders: N/A


the loss of the function:

8. Are there ANY other dependencies (staff, partner, vendor, software, unique resources, etc.) not already identified above? Check cutting software, Excel

spreadsheet of participating docs.




Always

Yes No

During the following time of the

week: Yes No


Yes No

Other time period. Specify-

Essential function of the

company, and should be restored

following Underwriting and

Claims functions.

Function: Filing documents with Insurance Commissioner

Service this function provides: Allows underwriting to properly assign premiums to

policyholders’ risk and ensures long term stability to the company.

Other Company Functions and Other Organizations that Depend upon this Function: Classifying and pricing policies

1. The loss of this function would have the following effect on the company: Unable to comply with state insurance law, possible fines, inability to serve market.




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Hours Up to 1 week


Up to 2 days Other

(please specify): This is only done

5 to 6 to times per year. Up to 3 days



Hour 1 2 3 4 5 6 7 8 9 10 11 12

13 14 15 16 17 18 19 20 21 22 23 24




applications are not available? If yes, how often have those procedures been tested? Currently being done manually. Manual process will discontinue following SERFF

implementation. Legally not permitted to use manual process.


regulatory statutes, contractual agreements, or law: (Specify the area of exposure): State law and Insurance Regulation


the policyholders: Inability to offer insurance products in the WV market.



8. Are there ANY other dependencies (staff, partner, vendor, software, unique resources, etc.) not already identified above? Actuaries are key in developing the rates.

NAIC SERFF product, https://login.serff.com





week: Yes No


Yes No


Function: Provide outreach and communication to policyholders

Service this function provides: Ensures relevant information is disseminated to the

policyholders in a timely manner.

Other Company Functions and Other Organizations that Depend upon this Function: All essential functions rely on policyholder communication.

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1. The loss of this function would have the following effect on the company:

Poor relationships with policyholder, loss of trust, lost business




Hours Up to 1 week

Up to 1 day X Up to 1 month

Up to 2 days Other




Hour 1 2 3 4 5 6 7 8 9 10 11 12

13 14 15 16 17 18 19 20 21 22 23 24




applications are not available? If yes, how often have those procedures been tested? All employees have cell phones in the event office service is disrupted.




the policyholders:




resources, etc.) not already identified above? Verizon, outlook, website access,





week: Yes No


No


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Section 5: Priority of Essential Functions

Based on the information provided above, the following is a prioritized list of company

functions that must be performed in the event of an emergency. Depending on the

severity of the incident, priority 1 and all resources associated with need to be restored

immediately.

All Functions Priority

Maintain security and privacy of

policyholder’s and employees information 1

Verifying Certificates of coverage 2

Collect, deposit and reconciliation of

premiums 3

Classifying and Pricing policies 4

Claims adjudication 5

Provide outreach and communication to

policyholders 6

Provide outreach and communication

agents 7

CARE program 8

Outreach and Communication to Board 9

Site visits CARE/CME Educational

Seminars 10

Filing documents with Insurance

Commissioner 11

Payroll 12

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Appendix C: Emergency Operating Procedures Back to Executive Summary

DEPENDING ON THE SEVERITY OF THE INCIDENT THESE PROCEDURES MAY

NEED TO BE ADJUSTED TO ACCOMMODATE THE SPECIFIC SITUAUTION.

THESE PROCEDURES SHOULD BE USED TO GUIDE MANAGEMENT IN THE

DECISION MAKING PROCESS.

Introduction

The purpose of these procedures is to outline the actions that should be followed by the Mutual in

the event of an emergency or other disruptive event. These procedures should be implemented

whenever the main facility is unavailable or as directed by the President or designee.

Two important tasks during the entire emergency are:

� Ensure safety and security of our physical property and staff at all times.

� Ensure staff and relevant stakeholders are regularly briefed on the status of the situation.

Scenarios

The Mutual has taken a scenario-based approach to its emergency procedures. The scenarios are

described below.

Building Evacuation Scenario – While employees are at work a minor disruption occurs during

the workday that requires all employees to vacate the premises immediately (fire drill, bomb

threat, etc). This is most likely to be for a very short period of time < 4 hours.

1. Once an announcement is made by building management or by alarm, the four floor team

leaders (President, COO, CFO, VP Underwriting, these individuals are required to have

an assigned back-up) must direct staff to congregate at the safe assembly location using

the safest exit possible. (Front of Bowles Rice building on the corner of Quarrier and

Laidley).

a. The floor leaders should make every attempt to completely check the floor to

ensure all employees and visitors are evacuating.

b. If possible, staff should attempt to take their laptop with them when leaving and

close their respective office doors. This may not be possible due to severity of

the incident.

2. President or Executive VP & COO will evaluate the situation and account for all

employees.

3. Pertinent information will be relayed to employees as soon as possible.

4. Employees not accounted for should be notified immediately. If contact information is

not immediately available, contact John Moore at Bowles Rice he will have the most

recent copy of the plan that includes contact information or be able to access the

MyAgility website to obtain contact info.

5. President or Executive VP & COO, or designee, will communicate with building

management and local authorities to determine severity of the situation.

6. Depending on the severity, the President or Executive VP & COO, or designee, will

decide to follow the procedures listed below.

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The procedures listed for each scenario are broken down by significance of the event and build

upon one another. For example, all tasks necessary to respond to scenario #1 still need to be

completed in scenario #2.

• Scenario #1 – A minor disruption of less than two days in duration; all systems are

operational in some form; all key vendors are fully operational.

• Scenario #2 – Still classified a minor disruption, but will likely last 3 to 30 days; the

company’s offices are not accessible; all key Vendors are fully operational.

• Scenario #3 – A significant incident; the United Center is unavailable for more than 30

days and less than 180 days; all key vendors are fully operational.

• Scenario #4 – Worst case, a major incident has occurred; The United Center is destroyed

with loss of life; More than 180 days. All key Vendors are fully operational.

Scenario #1

2. If incident occurs during normal work hours, evacuate the building using the required

evacuation procedures listed in the previous section.

3. Emergency Response Management Team assesses situation.

1. David Rader, Lead

2. Tamara Lively-Huffman

3. Gary Schultz

4. Scott Atkins

5. Rob Vass

6. Bob Ryan

7. Jim Stover

8. Barbara Walker

9. Michael Harmon

10. Others as selected my Lead

4. Emergency Response Management Team initiates a MyAgility notification to all Mutual

staff and Board members, informing them of the situation and their specific

responsibilities, if necessary. A follow up phone call may be required. All employees’

phone numbers can be found on the MyAgility Website

https://www.agilityrecovery.com/agil/login.htm username: wvmic password:werready.

1. All employees have been given an updated list of all employees’ home, cell and

pager numbers.

5. Employees may be directed to work from home.

6. Affected staff cancel/reschedule scheduled meetings, if necessary. Meetings occurring

offsite should be attended regardless.

7. Office Manager record voicemail message concerning situation generally, as well as key

emergency staff contact numbers.

8. IT Specialist should implement an auto-response for all incoming emails describing the

situation, if deemed necessary.

9. IT Specialist should post message on the website outlining the situation.

1. Jim Stover has administrative access to the website and can change the content

from any location with internet access.

10. A notification to the all applicable vendors using the MyAgility Website. Appropriate

staff person or their alternate should follow up with a phone call.

11. The Insurance Commissioner should be contacted, if necessary.

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Scenario #2

1. Steps 1-8 under Scenario #1 will be carried out in this situation. Additionally:

2. Emergency management team will make a decision, depending on the severity of the

incident, whether or not to establish presence at one of the available alternate locations.

If decision is made not to relocate then STOP.

3. Inform, via MyAgility Notification and phone call, appropriate staff to report to the

alternate work site.

4. Call MyAgility to place them on ALERT. Call 877-364-9393 or dial our alternate hotline

numbers: 888-242-3740 or 866-894-3336.

5. Establish presence at the alternate work site.

• Contact Alternate Site Coordinators to inform of relocation

• Ensure all phone numbers can be redirected to specified alternate location

i. Ensure appropriate telephones are delivered/available at alternate site

• Ensure PCs and phones are properly functioning and have connectivity to LAN

and critical applications

• Availability of printers, copiers, and fax machines

• Ensure appropriate forms, office supplies and equipment is on site or have been

ordered

6. Establish administrative services using the business continuity Recovery Priority

Objectives.

• Ensure one employee from each section is available; discuss possibility of shift

work realizing all systems are not available at all times due to nightly back ups

• Maintain imaging activity

• Reestablish access to OASIS ImageRight and other critical systems identified in

the plan;

• Post premium payments

• Contact bank holding accounts; assure timely deposits

• Contact vendors to inform them of changes

7. Divert mail deliveries and payroll checks to alternate location

8. Ensure local law enforcement have ensured primary site security

• With law enforcement approval, assess losses and begin process of ordering

replacement supplies, equipment and material.

• Secure law enforcement assurance that site is secure to avoid inappropriate

access to records and other information.

9. Maintain daily meeting of the Emergency Response Management Team

10. Conduct weekly staff management meeting, if necessary and appropriate, utilizing

another alternate site.

11. Sustain regular contact/informational briefings with the Insurance Commissioner, if

necessary.

Scenario #3

1. All applicable steps initiated in the implementation of Scenarios #1 and #2 will be

performed.

2. Weekly staff meetings continued at alternate site.

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3. Mutual Management initiates an aggressive search for other facilities if, at the end of

three (3) months, it’s reasonable to assume a move back to the Home Office will not be

accomplished in the subsequent sixty (60) to (90) days.

4. Employee morale should be observed and addressed, as appropriate.

Scenario #4

1. All applicable steps initiated in the implementation of Scenarios #1, #2, and #3 will be

performed.

2. Begin replacing lost personnel and training new employees

3. Contact Agility Recovery Services to initiate full scale relocation plan.

4. Ensure the availability of OASIS and ImageRight.

5. Recovery of data backup, including the imaging system, crucial.

6. Major emphasis on employee morale.

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Appendix D: Summary of Plan Procedures Back to Executive Summary

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Appendix E: Testing Scenarios and Results Back to Executive Summary

Test Date: 2/11/2009

Scenario #1

Situation: An explosion occurred at 2:00 am on Wednesday morning at the Bayer plant in Institute.

The explosion sends a cloud of unknown gas toward downtown Charleston. Early news

reports indicate that a shelter in place has not been issued at this time, but everyone

should be cautious and stay indoors until further details are available.

Most people don’t hear about this until 5:00 am. By that time, it is announced the gas is

ethylene oxide which may cause headaches, nausea, and other minor health problems.

Higher exposures may cause a build-up of fluid in the lungs (pulmonary edema) which

can cause death. More details about the incident are available around 6:00 am. It is

determined that amount of gas exposed is five times acceptable exposure limits. Metro

911 has issued a shelter in place for all areas within a 15 mile radius of Institute.

The DEP and the National Weather Service has determined that the current conditions

will not alleviate the gas until conditions change later in the week. As a result, the shelter

in place will continue until further notice most likely until Friday or Saturday.

Scott hears about it first and calls Tamara at 5:30am. Tamara quickly calls David to let

him know.

Response:

1. The Emergency Response management team should be consulted, consistent with

our procedures.

2. Distribute mass email and text to all Mutual employees and pertinent vendors

informing them of the situation and to stay home. This can be done using the

Agility website. Staff should keep watching the news and follow instructions.

Follow-up phone calls to staff?

3. More than likely, policyholders in our area will be seeing a higher volume of

patients. They will need to know how to reach our staff. Communication should

be made to policyholders as soon as possible.

4. Phone message placed on phones describing how our staff can be reached and

auto-response on emails should be considered.

5. People are going to be calling their supervisor and co-workers. Having a

consistent message is important to ensure there is no confusion. Everyone

should be instructed to check their email and text messages for most up to date

information. Any changes related to the current situation will be distributed via

email and text. Employees should not rely on informal communication.

Questions:

1. Who makes the call to notify employees? When do they make it?

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2. What about the people on the road? Text message/phone calls as soon as

possible?

3. What about employees that drove into work and didn’t find out about the shelter-

in-place until they got here?

4. Can temporary VPN access be set up to allow employees to work from home?

5. Can staff access office phone options to allow forwarding to cell phones?

6. Would home internet costs be reimbursed?

Changes to Situation:

1. On Friday morning at 7:00am the shelter in place has been lifted for areas west of

Institute. However, due to the current weather conditions all areas east of

Institute are still under the shelter in place until further notice.

a. Should site visits, CARE seminars, and other meetings in that area

continue as scheduled? How are participants notified?

Test Date: 2/11/09

Results and Notes from Test:

February 11, 2009 - Procedures were tested on during a full staff meeting. During the

meeting all staff were given a copy of the draft plan and asked to provide input. Major

sections of the plan were reviewed. The above scenario was discussed. It was

determined that this situation would have led to closure of the office for the defined

period of time. Phone calls would be conducted by HR Manager and EVP & COO would

send out the initial notices via MyAgility website.

Changes to Plan:

February 11, 2009 – No significant changes were made to the plan as a result of the

exercise.

Test Date: 10/23/2009

Situation: Evacuation plan tested. Early Friday 10/23/09 the building fire alarm was

activated. The Mutual’s Floor Leaders actively and completely initiated the evacuation

plan. However, some employees took the staircase on the west side of the building

instead of the east (next to the women’s bathroom). This required that employees walk to

the east side where the meeting place is located. In the event an evacuation is required all

employees should take the east staircase to ensure exit on the correct side.


Plan Content Reviewed: Staff meeting was conducted to discuss the content of the

overall business continuity Plan. Procedures were reviewed consistent with procedure

listed in Appendix F. The staff was given two days to review the plan and submit

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revision by Friday 7/30/2010. In addition, a test message was disseminated using the

MyAgility website notification tool.

Changes to plan:

No significant changes required. Updated contact information and added vendor

contacts. The MyAgility website was also updated to reflect changes.


Plan Content Reviewed: Staff meeting was conducted to discuss the content of the

overall business continuity Plan. Procedures were reviewed consistent with procedure

listed in Appendix F. The staff was given two days to review the plan and submit

revision by Friday 7/29/2011. In addition, a test message was disseminated using the

MyAgility website notification tool.

Changes to plan:

No significant changes required. Updated contact information to add new Risk Manager.

The MyAgility website was also updated to reflect changes.



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Appendix F: Review Policy and Procedure Back to Executive Summary

POLICY:

It is the policy of the Mutual to review this plan every three (3) months and to promptly

distribute changes to its staff when significant modifications are made. Distribution of

significant changes should as soon as practically possible. Other changes will be

distributed as needed.

When a change to this document is made, the date of the change will be recorded in the

bottom right hand corner of each page.

At least annually, a full staff meeting will be held to discuss the details of the plan and to

conduct a test. The annual meeting should occur in February of each year.

PROCEDURE:

The Compliance Specialist and the EVP of Operations will review and keep the contents

of the plan up to date consistent with the policy.

The periodic reviews will be documented in Appendix F, or other form as determined by

the Compliance Specialist. Results of each annual test will be documented in Appendix

E.

Reviews should consist of, at a minimum, verifying contact information, changes to the

key roles and backups, significant changes in software/hardware, changes in alternative

worksites, and a review of Essential functions.

Tests should consist of, at a minimum, a run through of the procedures detailed in

Appendix C. A scenario may be used to demonstrate emergency procedures.

DOCUMENTED REVIEWS:

Schedule of reviews:

1. May

2. August

3. November

4. February

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Appendix G: Organizational Chart

Back to Section 1

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am best presentation final.pdf

Documents

west virginia physicians

years insurance experience

west virginia board

years mpl michael

years mpl gary

years mpl experience

years mpl experience

insurance management