March 31, 2006

Dear Laura,

First of all, we would like to commend Fairles Benefit Services for extremely detailed information you include in your specifications regarding past Health claims that have exceeded the stop-loss level.  This information is very useful to our underwriters ad allows us to more accurately assess the risk.  Unfortunately, in this case, since the stop-loss claims in question are recurring, we are not prepared to take on this known risk without pricing for it.  Our calculations indicate that pricing for this known risk, however, will make us very uncompetitive with this current carrier's renewal rates.  Since we are unable to offer any overall premium savings, this means that we will not be submitting a quotation ,  Our honest assessment is that your client is getting a great deal from their current carrier because of the stop-loss claims and they would be advisable to stay with them.

Although your honesty in revealing past claims that have exceeded the stop loss limit has resulted in us declining to quote this group, I again want to commend you for doing this since you are doing your client a good service.  If you had not revealed the current large on-going heath claims, our policy is that we would increase the rates at the first renewal to account for any recurring pooled claims that existed at the inception of the policy that we were not informed of.  As a result, we would have had a very large Heath rate increase at the first renewal if you had not been honest  This is not in anyone's interest.  We do not price for recurring pooled claims that occur after the effective date of our policy, but we do have to price for those that existed prior to our effective date.

I trust that you will understand and appreciate our position in declining to quote on this group.  I really wish that other brokers were as honest as you are.

Sincerely,

Doug Knight
Manager, Business Development
Standard Life