HOUSING SERVICES CORPORATION (HSC) AND TORONTO COMMUNITY HOUSING CORPORATION (TCHC) September 2, 2016

CONFIDENTIAL

MARSH

TCHC Current Program Overview – Limits and Deductible2015 – 2016 Insurance Program Overview

HSC Core Program

Non-Core Program

Deductible/Retention per coverage

Excess Property

$125M xs $25M except

Flood and Quake Aggregate: $125M

Property

Primary: $10M Excess: $15M xs $10M

Flood and Quake Program Aggregate $300MCore Limit: $25M

Equipment Breakdown

$50M per occurrence

General Liability$2M per occurrence

Incl $2M Abuse (NEW)

Umbrella Liability$3M excess $2M

Excess Liability $15M excess

$5M

Excess Liability

$30M excess $20M

Directors and Officers Liability

$5M per Claim$5M Annual

Aggregate (Dedicated own Limits)

$50,000 Deductible$100,000 Retention

$250,000 Deductible$250,000 Deductible

$20M

$100M

$50M

$150M

Crime(New Structure)$250,000 per

Claim

$10,000 Ded

Excess Crime(New Structure)

$5,000,000 excess $250,000

$5M

Privacy/Cyber Liability

$10,000,000

$250,000 Retention

$10M

$10,000 Ded

Misc E&OLiability

(NEW)$2M per occ

First Excess D&O Liability

(New Structure)$10M excess $5M

Excess Equipment Breakdown

$50M excess $50M

Second Excess D&O Liability

(New Structure)$5M excess

$15M

MARSH

TCHC Historical Property Claims 2011 – 2016 (As of June 30,2016)

TCHC Property Claims

• Total Claims: Self Insured and Insured (5 Years) $ 22,903,154

• Average Claim Amount (5 years) $757,364

• Average value of Self Insured Claims: $3,786,819

• Average # of Self Insured claims incl Reserves: 492 (2014: 719 Claims)

Wellesley Fire (2009) $36 Million + Insured Claim

TCHC Insured Property Claims Net of Deductible

Policy Year

Claims Count

Incurred

HSC Property Insurance Premiums (plus

contribution to Claims Fund)

2011/12 - - $ 2,811,001

2012/13 - - $ 2,973,966

2013/14 2 $ 2,769,058 $ 2,786,865

2014/15 2 $ 800,000 $ 3,117,866

2015/16 1 $ 400,000 $ 3,146,445

Total $ 3,969,058 $ 14,836,143

$-

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

$6,000,000

$7,000,000

$8,000,000

2011-12 2012-13 2013-14 2014-15 2015-16

HSC Premium including Contribution to Claims FundInsured ClaimsTCHC Self Insured incl Reserves

MARSH

TCHC Historical Liability Claims 2011 – 2016 (As of June 30, 2016)

TCH Liability Claims Including self insured claims:

• Total Claims (5 Years) $7,617,887

• Average Claims Count (5 years): 249/year

• Average Insured Claims: (5 Years) $ 35,136

• Average Self Insured Claims: (5 Years) $1,488,441

$-

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

2011-12 2012-13 2013-14 2014-15 2015-16

HSC Premium TCHC Self Insured Insured Claims

MARSH

Property Claims Fund

Benefits of Claims Fund – established in 2010

• Allows greater control

• Removes insurer overhead margin in premium

(30 to 35% of premiums are typically to cover

insurer cost structure)

• Greater claims management oversight within

fund

• “Surplus” funds returned to existing participants

based on:

• Pro rata premium contribution

• Participant loss experience in fund year

• Allocation model

• Loyalty discount (for renewing participants)

• In 2015, the claims fund surplus was $877,107

• In 2014 the Fund increased from $10.3M to

$12M

• TCHC’s fund contribution represents 19% of

total fund contribution

Current Structure

$15,000,000 Excess of Stream A and Stream B Occurrence Deductible and Aggregate

Per Occurrence/Per Provider/No Aggregate except $200,000,000 Shared Aggregate

for Flood and $200,000,000 Shared Aggregate for Earthquake

$10,000,000 Excess of Stream A and Stream B Occurrence Deductible and Aggregate

Per Occurrence/Per Provider/No Aggregate except $100,000,000 Shared Aggregate

For Flood and $100,000,000 Shared Aggregate for Earthquake

Combined Stream A and Stream B Aggregate Reimbursement Deductible

$12,000,000

Stream A$1,000,000 per Occurrence Deductible

all participating Housing Providers

Stream B$2,500,000 per Occurrence Deductible

all participating Housing Providers

Various Housing Providers Deductibles

MARSH

Property Claims Fund Status as of August 31, 2016

November 1st Property Claims Fund established at $12M based on 639 Providers

As of August 31, 2016: There is $1,683,638.35 remaining in the Claims Fund

November 1, 2015 - November 1, 2016 policy period

Date of Update

Number of

Claims Ground -Up (net of Provider Ded) Fund Draw Fund Status

August 31, 2016 97 $11,577,986.45 $9,894,348.10 $1,683,638.35

MARSH

Renewal Strategy

• Underwriting presentation with existing Lloyd’s Syndicates occurred late June 2016.

Presentations were also made to potential markets, Liberty and Markel.

• Underwriting presentation to existing domestic insurers, occurred late June and

early July 2016.

• Goal, to obtain “as is” terms, conditions and rates for all core coverages based on

existing structure with coverage improvements.

MARSH

HSC 2016 Property Insurance Renewal

Property Renewal “As per expiring terms with some improvements in coverage”

Primary $10 million limit Excess $15 million limit

Lloyd’s 75%

MS Pritchard Syndicate

Kiln Syndicate

Brit Syndicate

QBE Syndicate / Facility

Liberty Syndicate

Talbot Syndicate

Markel

Pembroke Syndicate

XL Catlin 12.5%

Aviva 12.5%

Northbridge 37.5% (Lead)

Aviva 15%

Catlin 12.5%

AWAC 10%

Berkshire Hathaway 15%

RSA 10%

MARSH

• Accounts Receivable sublimit increased to $5,000,000 from the current $1,000,000

• Newly Acquired Property, sublimit of $10,000,000 now applies to all types of construction –

the $5,000,000 sublimit for framed structures has been eliminated.

• Additional Living Expenses, the max per occurrence limit has been increased to $2,500,000

from the current $1,000,000 – the $10,000 limit per living unit remains unchanged.

• Terrorism Exclusion amended to provide limited coverage for fire following and coverage to be

based on actual cash value of the property

• Specified Perils Business Interruption/Crisis - Actual Loss Sustained and EXTRA EXPENSE

incurred if an order of civil or military authority limits, restricts or prohibits partial or total

access to an insured location, provided such order is a direct result of:

1) a violent crime, suicide, attempted suicide, or armed robbery; or

2) a death or bodily injury caused by a workplace accident

HSC 2016 Property Insurance RenewalCoverage Improvements

MARSH

HSC 2016 Casualty Insurance Renewal

XL Catlin (Incumbent)

Offered expiring terms, conditions and premium/rates including the following improvements:

• Limited Pollution Liability – Detection/Reporting period increased to 240 hrs from the current

120hrs

• Legal Lability for Hired Autos Limit increased to $100,000 from the current $75,000

• Tenants Legal Liability & Fighting Expenses deductible reduced to $5,000 from the current

$50,000

• Fumigation and Extermination Operations limit increased to $2,000,000 from the current

$1,000,000

• “Compensatory damages” – modified to just reference “damages” and definition modified to be

silent as respects punitive damages

* Insurer will not agree to provide additional “abuse” coverage and requires further review and

improvement of TCHC’s current “abuse” protocols in place.

MARSH

HSC 2016 Machinery Breakdown Insurance

BI&I have offered to renew at expiring terms, conditions and premium / rates including the

following improvements:

• Errors and Omissions, sublimit increased to $5,000,000 from the current $500,000

• Water Damage, sublimit increased to $1,000,000 from the current $500,000

• Ammonia Contamination, sublimit increased to $1,000,000 from the current $500,000

• Hazardous Substances, sublimit increased to $1,000,000 from the current $500,000

• Business Interruption – Loss of Rental income – increased period of indemnity of 24mos from

the current 12mos.

BI&I Have also introduced a new policy wording, improvements include:

• Microelectronics coverage- adds a brand new cause of loss for microelectronics failures when

physical damage is not detectable.

• Cloud Computing Service Interruption - pays for business interruption and extra expense

when the insured's cloud computing service provider experiences an outage due to an

equipment breakdown.

MARSH

HSC 2016 Machinery Breakdown Insurance

• Cloud Computing added to Data Restoration- data restoration coverage for data lost when

stored and managed by a cloud computing service provider that experiences an equipment

breakdown failure.

• Off-Premises Transportable Objects- coverage for off-premises transportable equipment

breakdown anywhere in North America includes direct damage, business income, extra

expense and data restoration.

• Public Relations coverage - pays for public relations assistance to help manage reputation

that may become damaged by an interruption of business- applies if there is a covered loss of

business income.

• Environmental and Efficiency coverage- pays up to 150% of the loss payable for upgrades to

more energy efficient or environmentally friendly equipment.

• Green coverage- up to $50,000 in addition to our energy-efficient upgrade coverage.

MARSH

TCHC’s Directors & Officers Liability

5-Year Claims Overview

29

11

6

0

5

10

15

20

25

30

35

Stream A Stream B TCHC

Claim Frequency by Stream

$216,062.12

$32,147.77

$211,408.04

$-

$50,000.00

$100,000.00

$150,000.00

$200,000.00

$250,000.00

Stream A Stream B TCHC

Paid $ Amount

MARSH

TCHC’s Directors & Officers Liability

Great American Insurance Group (GAIC) Incumbent

• GAIC offered to renew at expiring terms, conditions and premium / rates.• Coverage improvements requested were not approved by Great American

Insurance

MARSH

TCHC’s Directors & Officers Liability – Renewal

• Nov 1, 2015 to

• Nov 1, 2016

Expiring 2015 -2016

Policy Limit Insurer Premium

$ 5 M Great

American $ 55,000

$10 M xs $5 M HDI

Gerling $47,500

$5 M xs $15 M AIG $12,000

$20 M $114,500

$150,000

Renewal 2016 -2017

Policy Limit Insurer Premium

$ 5 M Great

American $ 55,000

$10 M xs $5 M HDI

Gerling $47,500

$5 M xs $15 M AIG $12,000

$20 M $114,500

$150,000

• Entity coverage for Joint Venture and Affiliated Companies of TCHC: Awaiting clarification and confirmation of Directors and Officers Liability Insurance and instructions from TCHC if Marsh needs to place insurance for these companies.

MARSH

TCHC’s Privacy / Cyber Liability - Renewal

Expiring 2015 -2016

Policy Limit Insurer Premium

$10 M AIG $84,927

Coverage Enhancements

• PCI Coverage• Bitcoin Ransom Endorsement • Cyber Extortion Enhancement• Notice of Claim (60 days)• Continuity Date Exclusion• Retention Amendatory

Renewal 2016 -2017

Policy Limit Insurer Premium

$10 M AIG $84,454

Insurer Recommendations

Employee Training: In order to maintain a consistent adherencewith privacy policies and avoid various security issues, such as social engineering, phishing attacks which have a higher impact on computer network users with inadequate training, a user awareness training program should be developed and implemented. Your account qualifies for the CyberEdge Risk Tool, we recommend thatTCHC implements this tool.

Data encryption recommendation: In order to safeguard sensitive data, it is required that you adopt a data encryption scheme for all sensitive data at rest and in transit. All removable media should be forced to use encryption when data is

transferred to such devices.

AIG have offered to renew at expiring terms and conditions including the following improvements:

MARSH

TCHC’s Crime - Renewal

AIG have offered to renew at expiring terms and conditions with a premium increase of $132 due to the increase in employee count

from 1,705 to 1,948 (14%)

Expiring 2015 -2016

Policy Limit Insurer Premium

$5 M Excess of $250K AIG $24,155

Renewal 2016 -2017

Policy Limit Insurer Premium

$5 M Excess of $250K AIG $24,287

MARSH

2015 - 2016 Focus

Examine TCHC’s potential exposures related to Users of TCHC property

• Tenant’s Associations

• Resident Led Activities

2016- 2017 Focus

• Continue review of schedule of locations and property values insured to ensure current values

are declared

• Tenant Insurance?

• Discuss other risk management goals/priorities for the coming period.

Other Considerations:

• Transferring Risks: Tenant’s Insurance

• Limiting Risks: Excess Workers Compensation Insurance

• Managing Risks: TCHC’s Owner Controlled Insurance Program (For ongoing and new

construction projects)

Key Lines of Coverage – 2016 Focus

MARSH

Renewal Annual Premium Breakdown Nov 1st 2016-2017Based on existing structure (Limits & Deductibles)

Coverage Limits

2014/2015 Expiring Annual

Premium

2015/2016 Estimated Renewal Annual

Premium

2015/16 Actual Final Renewal

Premium

Adjustment Endorsements

from Estimated to

Actual

2015/16 Expiring

Premium

2016/17 Renewal Quotes

Billed for Rnwl

Total Insurable Values $8,229,815,387 $8,339,713,976 $8,339,714,371.91 $8,344,214,371.91 $8,344,214,371.91

Property $25M limit $820,860 $830,011 $908,766.58 $78,755.58 $909,085.36 $909,085.36

Property Claims Fund $12M $12M shared over 646 participating Providers $2,297,006 $2,316,434 $2,237,678.03 -78,755.97 $2,238,462.99 $2,238,462.99

General Liability (incl Abuse) $2M $1,171,413 $1,001,810 $1,003,101.72 1,291.72 $1,003,956.14 $1,003,956.14

Crime Insurance $100,000 (Increased to $250,000 at renewal) $45,868 $45,868 $45,868.00 - $45,868.00 $45,868.00

Miscellaneous E&O* New coverage to TCHC added mid-term $8,659 $8,659 $8,658.75 -0.25 $8,658.75 $8,658.75

Umbrella Liability $3M excess of $2M $91,708 $91,708 $90,416.54 -1,291.46 $90,504.21 $90,504.21

Equipment Breakdown $50M $63,332 $64,178 $64,177.62 -0.38 $64,212.25 $64,212.25

Directors & Officers $10M dedicated limit no longer shared; Reduced to

$5 Million dedicated limit in 2015$69,750 *$55,000 $55,000.00 - $55,000.00 $55,000.00

Total Core Program $4,568,596 $4,413,668 $4,413,667.24 -0.76 $4,415,747.70 $4,415,747.70 *

Non Core Program

Excess Property $125M limit $159,736 $161,869 161,869 - 161,869 161,956

1st Excess Liability $20M excess of $5M $117,108 $105,560 114,448 $8,888 114,448 114,493

2nd Excess Liability $25M excess of $25M $45,000 $45,000 40,000 ($5,000) 40,000 40,000

Equipment Breakdown $50 M excess $50 M $2,500 $2,533 2,500 2,500 2,500

Excess Crime $5 M excess of $100k $25,572 $24,155 24,155 - 24,155 24,287

Privacy and Cyber Liability $10 M $84,432 $84,927 84,927 - 84,927 84,454

Excess Directors and Officers $10 M excess of $5 M $33,472 $47,500 47,000 - 47,000 47,000

Excess Directors and Officers $5 M excess of $15 M n/a $12,000 12,000 - 12,000 12,000

Total Non-Core Program467,820 483,544 486,899 3,888 439,899 486,690

*HSC will commit to the Total Core Premium stated above but the allocations may change depending on final confirmation of housing providers renewing with the program.**Options to increase overall liability insurance coverage by $25 Million or $50 Million to follow shortly.

MARSH

Thank You!Questions?

MARSH

Appendices

• Allocation Model – Property & Liability

MARSH

Deductible(Credit) moving from

$1k Ded't

$1,000 N/A

$2,500 (2.8%)

$5,000 (7.2%)

$10,000 (18.1%)

$25,000 (25.6%)

$50,000 (35.5%)

$100,000 (39.0%)

$250,000 (62.4%)

Construction SurchargeTown

GradeSurcharge

Frame/Brick Veneer 140% 01-04 0%

Masonry 110% 05-07 25%

Non-Combustible 0% 08-10 90%

Smoke Free (Credit)Tenants

Insurance(Credit)

y (5.0%) y (2.5%)

n 0.0% n 0.0%

TIV per Unit(Credit)/

Surcharge

Tenants

Insurance

Monitored

(Credit)

min 10.0% y (2.5%)

↕ ¦ n 0.0%Average 0%

↕ ¦

max (10.0%)

Loss per Adj.

TIV/Yr(Credit)/ Surcharge

min (20.0%)

↕ ¦

Average 0%

↕ ¦

max 20.0%

Allocation Model FactorsProperty Allocation

Adj. TIV Values

TrendedNet Losses

Final AdjustedTIVs

Each provider’s allocation is determined

using Total Insured Values.

TIV values are the sum of:

– Building values

– Value of Contents

– Additional Income (Annual)

The TIVs are adjusted according to a

number of rating factors (see right):

– Exposure Factors

– Deductible

– Construction Type

– Town Grade

– Smoke Free

– Tenant insurance

– Monitoring of Tenants Insurance

– TIV per unit

– Losses

– Losses per unit of TIV

– In order to ensure that no provider

experiences a large

increase/decrease in allocation from

year to year, a cap on allocation

increase/decrease is imposed where

necessary.

• Credit for moving to

higher deductibles,

determined using

historical weighted

claims frequencies and

net losses for guidance.

• Shown is the credit in

relation to a $1k

deductible.

• Surcharges for less favourable Town Grades on individual buildings

• Determined using historical rates

TIVValues

• Surcharges for less favourable Construction on individual buildings

• Determined using historical rates

• Credit for provider having smoke free properties

• Determined using historical loss rates per unit of TIV on non-smoke free and smoke free locations

• No significant difference in loss rates was noted, thus small credit

• Credit for tenants having Tennant’s Insurance

• TIVs may capture in part the number of units (i.e. higher TIV suggests more units).

• A correction is included to account for large numbers of units with low value

• Final adjusted TIV values is used to proportionally allocate premium/pool amounts.

• The split of pool and premium allocation depends on the stream• Stream B providers contribute proportionally more the pool than to the

premium when compared to Stream A.

• Members should not receive a double loading when they experience more claims if this was already accounted for in the exposure factors. Instead of straight claims, a claims performance (per unit of adj. building value per year) is determined using historical claims.

• Best performing providers receive up to a 20% credit, while worst receive up to a 20% surcharge.

Property Allocation Methodology

• Credit for tenants having Tennant’s Insurance monitored

Stream Pool Premium

A 63.6% 36.4%

B 74.5% 25.5%

*Approximated

MARSH

Allocation Model FactorsCasualty Allocation

Numberof Units

Tennant Support

ServicesSurcharge

n 0%

y 25%

Loss per

Unit/Yr

(Credit)/

Surcharge

0 (20%)

↕ ¦

Average 0%

↕ ¦

max 20%

Adjusted Numberof Units

TrendedNet Losses

Final AdjustedNumber of Units

CGL Allocation:

– New allocation methodology (See right) to account

for:

– Number of units.

– Provide credit for retention of small claims.

– Recognize increased exposure from TSS.

– Provide credit/surcharge based off of claims

history.

Crime Allocation:

– number of units

• E&O Property Managers:

– deductible

E&O Misc. (TSS)

– deductible and number of counsellors/Massage

Therapists, Nurses, Support Workers, Physio) etc.

Umbrella

– number of units and deductible.

CGL Allocation Methodology

• Providers who offer tenant support services where a third party is not responsible for such services will receive a 25% surcharge.

• Increased credit for moving to higher deductibles, determined using historical weighted claims frequencies and net losses for guidance.

• Shown is the credit in relation to a $1k deductible.

Exp

osu

re F

acto

rsC

laim

s P

erf

orm

ance

• Providers should not receive a double loading when they experience more claims if this was already accounted for in the exposure section. Instead of straight claims, a claims performance (per adj. number of units per year) is determined using historical claims.

• Best performing Providers receive up to a 20% credit, while worst receive up to a 20% surcharge.

• Final number of adjusted units is used to proportionally allocate premium/fund amounts.

Category(Credit) moving

from $1k Deductible

$1,000 N/A

$2,500 (10.8%)

$5,000 (17.6%)

$10,000 (22.1%)

$25,000 (31.0%)

$50,000 (40.9%)

This document and any recommendations, analysis, or advice provided by Marsh (collectively, the “Marsh Analysis”) are intended solely for the entity identified as the recipient herein (“you”).

This document contains proprietary, confidential information of Marsh and may not be shared with any third party, including other insurance producers, without Marsh’s prior written consent.

Any statements concerning actuarial, tax, accounting, or legal matters are based solely on our experience as insurance brokers and risk consultants and are not to be relied upon as actuarial,

accounting, tax, or legal advice, for which you should consult your own professional advisors. Any modeling, analytics, or projections are subject to inherent uncertainty, and the Marsh Analysis

could be materially affected if any underlying assumptions, conditions, information, or factors are inaccurate or incomplete or should change. The information contained herein is based on

sources we believe reliable, but we make no representation or warranty as to its accuracy. Except as may be set forth in an agreement between you and Marsh, Marsh shall have no obligation

to update the Marsh Analysis and shall have no liability to you or any other party with regard to the Marsh Analysis or to any services provided by a third party to you or Marsh. Marsh makes no

representation or warranty concerning the application of policy wordings or the financial condition or solvency of insurers or reinsurers. Marsh makes no assurances regarding the availability,

cost, or terms of insurance coverage.

Marsh is one of the Marsh & McLennan Companies, together with Guy Carpenter, Mercer, and Oliver Wyman.

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