2020 PAL/PLL/MISC Binding Authority Narrative

Thanks to the support of underwriters, Dominion's binding authority, renewing March 1st of each year, continues to enjoy profitable acceptance across the United States despite in roads made by Jameson, a major competitor, with the National Association of Patent Practitioners (NAPP) which offers Patent Practitioners Liability (PPL) policies to its members. In response to these competitive forces, we are in the process of launching an automated account recovery system by which each patent practitioner prospect in our database will receive renewal premium indications at optimal intervals designed to coincide with their current policy expirations. We will emphasize the two recently enhanced PPL product offerings: The Patent Agent Liability (PAL) policy and the Patent Lawyer Liability policy.

The combined PAL/PLL book, currently sits at $441,918 for 163 policies in force, down slightly from $450,247 with 168 policies the prior year as well as $578,339/179 and $667,813/216 in gross written premium/policy count for the two preceding years. As is apparent from the foregoing, the rate of loss to Jameson is slowing substantially. Moreover, the premium loss is exaggerated by a reduction in the average per policy premium, which has dropped from a high $3,230 two years ago to $2,680 last year, rebounding slightly to $2,711 this year. This reduction is due in large part to the premium discounts introduced to retain the book under the current heavy competitive pressures. Notwithstanding these setbacks, in light of the new marketing system we are implementing, we remain confident that we will be able to begin growing the book over the course of the next year.

The PPL/PAL/PLL book has experienced tremendous profitability over the past 20 years, sitting at an accumulated 8,79% Gross Loss Ratio. The highest this has ever been was under the B0621P33057016 contract in which the Gross Loss Ratio reached to 48.42% for that contract period. This uncharacteristic activity resulted from a single claim which involved $299,000 in what the insured called a meritless, pre-suit settlement with $10,454 in associated defense costs. With Dominion taking on the roll of issuing the monthly claim bordereau, we will be able to better monitor claim development and handling. Even so, the insured implicated in that claim has been non-renewed and moved to another program. In subsequent contract periods, only 2018 at 8.95% registered a Gross Loss Ratio above 0%. We anticipate that this program will resume its otherwise profitable trend moving forward.

As to policy wording, the only suggestions we have pertain to the PLL policy form in which contract patent lawyers need to be added to the scope of insureds. It appears that this is an inadvertent omission at the time we split the PPL policy into the PAL and PLL policies. We would also like to expand the scope of covered services to more broadly include coverage for any non-litigation legal services pertaining to intellectual property.

The remaining lines, AML, IBL, MPL and LPL, stand at a combined total gross written premium of $62,441, up $16,736 from last year's figure of $45,705. We believe that perhaps the addition of the Estate Lawyers Liability (ELL) product we have been discussing would spur growth in this area.

We genuinely appreciate underwriters continued support and look forward to improving the scope and profitability of all the lines supported under this binding authority moving forward.