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Market Reform Forum

Market Reform Forum. Update 24 February 2005. Andy Brookes. Objective: up to speed in half an hour……. Overall approach, end vision Contract Certainty LMP slips Documentation, early implementations Kinnect Electronic infrastructure Accounting and Settlement

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Market Reform Forum

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  1. Market Reform Forum Update 24 February 2005 Andy Brookes

  2. Objective: up to speed in half an hour…… • Overall approach, end vision • Contract Certainty • LMP slips • Documentation, early implementations • Kinnect • Electronic infrastructure • Accounting and Settlement • Electronic Claims Files – today’s special topic

  3. Vision for market processes • Exchange of data and progress of transaction is captured in a collaborative electronic system • Placing process built into electronic system • Placing data to international standards • Standard slip generated by electronic system. Ditto, the policy. slip/policy distinction blurs • Policy based on standard wordings; changes tracked and audited electronically. Or auditable bespoke wording created. • Checking in real time • Placing systems retain the data and audit trail • Claims: international standard messages for data and claims management. Repositories for simultaneous access • Accounting and settlement: ditto

  4. Approach To support each stage in the life cycle of a contract: • simplified, harmonised business process • standardised data • structured electronic messages • community infrastructure platforms - minimise interfacing costs and enforce discipline Why? Drive changes – including behaviour - within firms. Hence - reduce risk - reduce cost - make process transparent to market users so that they can measure and manage

  5. Contract certainty: overview • Governance • Market Reform Group (MRG) with new members • Market Reform Group executive (= Project Board) • BPR/LMP drive – plan to MRG by April • LMP slips – compliance and development • Policy checking by Xchanging - publish checks, drive compliance • Binders – model wordings • Slip “fully claused” • XIS checks and data – (old) rejection rates; top five reasons • Contract Certainty Implementation Group • Get wordings agreed during bind • Get checking done during bind • Kinnect • Consistent with all this – but reduces compliance cost • Other: Market Wordings Database; attributes of CC - measurement

  6. Contract certainty: LMP Slips • January BSA headline (another sneak preview): 93% • Continue to check 25% of Lloyd’s slips in 2005; IUA? • LMP slip a year on – publish once agreed, March? (not Feb) • Implementation guide – brokers signing-off; to be published • Thematic work • Claims guidance after 2005 Lloyd’s claims scheme • FSA headings • LMP slips for binders • Checked 75 in January; BSA 94% compliance • Still high XIS rejection rate • ACORD GPD published • Marine and reinsurance sub group formed

  7. Contract certainty: documentation • 300+ risks in Q2 • Xchanging check earlier • Policies produced earlier • Documentation available • Brokers lined up; underwriters being briefed • FI or D&O first? • Producing timetable of firms’ participation • Legacy : information collection; priorities (Q2)

  8. How Kinnect fits into reform • Reform is about • Harmonised process • Structured data (ACORD international standards) • Embedded in electronic messaging • Community infrastructure platforms • Kinnect provides the front office layer - and offers high quality data to subsequent processes – A&S, policy production, claims • LMP slip “enforces” a structured output of placing • Do it properly through Kinnect • Checking enforces Lloyd’s standards (contract certainty, regulatory, tax – but post placing) • Do it during placing through Kinnect

  9. Kinnect • Continuous use by Marsh and Willis over renewal season, passing risks to markets • “Slip” sponsored by Marsh and Willis to increase carrier use • Hiscox live and Liberty Syndicates in implementation (8 MAs) • 1 June 2005 – move to next stage of use – full submission process with brokers recording underwriter responses • Release in April (demo then; properly live in May) • Includes terrorism • Customers developing adoption plans (= usage for real) • Sep 2005 – endorsement functionality roll out • New risk classes • Terrorism available 1 June • International property available 1 November • Further roll out sequence decided Q2 (earlier)

  10. Accounting & Settlement • Detailed business design published in December • Live issues • Xchanging costs (£10.4mn) being reviewed • Technical and data information • Accounting splits • Migration (legacy and crossover): complete for premium • Testing – first convoy on behalf of market; subsequent convoys • MRIB and Project Board working on implementation timetable • Had aimed to publish in Q1, will be Q2 - greater certainty required on costs • Sequence and timetable for deliveries • Convoy one membership • Commercial framework

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