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Market Reform Forum

Update on business reform

14 December 2004

Andy Brookes

Lloyd’s BPR

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Objective: up to speed in half hour……

Accounting and Settlement – coming next

Electronic Claims Files

Contract Certainty and Documentation

LMP slips

Kinnect

Review of 2004; high level plans for 2005

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Overall approach to market reform

Drive standards for data and harmonisation of process

LMP slip; A&S; claims management; ACORD work; contract certainty initiatives

Build supporting electronic infrastructure, throughout the life cycle of a contract

A&S; electronic infrastructure for claims (CLASS, ECF); Kinnect

Result: transparency in processes and performance. Then market firms and trading partners can

measure and manage

LMP slips, policy production, A&S take-up, claims processing

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Electronic Claims File

XIS development work XIS started repository enhancements work 1st Oct (£1.6mn

development and implementation costs) Contract schedule for CLASS for Lloyd’s going to managing agents

for signature (total spend £600k) XIS started enhancements on CLASS for Lloyd’s 1st Nov

Governance – not simple, but should work Claims project board set up; working with LMA Systems Delivery

Group Market associations – LMA, LMBC, IUA - groups in place Line of business practioner groups

Working on the implementation timetable XIS phased delivery of repository functionality

- Categorisation (Q1); search capabilities (Q2)- DRI in July 2005

Which firms for which lines of business?

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Contract Certainty and Documentation

4 Process options identified by the CCSG

- XIS involved earlier/quicker is the focus

Potential initial implementation areas identified by LMBC documentation overview committee (DOC) and CCSG – 300 risks starting Q1 2005, include ‘old’ way to assess impact. Planning underway.

Implementation guide on LMP web site Performance monitoring group has made initial proposals regarding

measurement for London Market Standards Committee Policy checking by XIS: needs to be explicit and earlier

Lloyd’s and XIS codifying the checks; rationalise; publish performance data. Binders first – early data indicates high rejection rate

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LMP Slips November BSA headline (sneak preview): 88%

- Formatting hit 95% (contract certainty, process efficiency)

- Up for firms that the team has seen

Likely to continue to check 25% of Lloyd’s slips in 2005 “Persistent underperformance”

LMP slip a year on – minor changes to update Implementation guide

- in discussion with LMBC prior to publication

Thematic work

- Claims parties

– Problem area “claims agreement party”: not Lloyd’s 1999

- UMR on Panel 1

- Period (include time zones)

- Law and Jurisdiction: still a problem area

LMP slips for binders

- Check list in production; publication shortly

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Kinnect

November 1 release- Went well – enhanced placement process: harmonised business

process; rough edges smoothed; market acceptable Next major release 6.1 April 2005 – complete slip preparation etc Hiscox signed-up; live January (not December) Working on endorsements

- Principles agreed; design end-January- Q2 delivery was aim – now September (or slightly earlier)

User adoption is key: Kinnect as core process- Step by step adoption plan agreed through H1

Additional risk classes H2 (poss late H1) 2005: terrorism; international property

Tiner (FSA) speech on contract certainty – core objective for market place over next two years

- Kinnect is a version comparison tool; wordings assembly; collaboration tool for XIS checking

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What did we get done (and not done) in 2004?

LMP Slips and GUA

Done Failed to do (so far)

Compliance 88 % - heading for 95%?

Audit Team sampling 25% - working well

Binders for 01/01/2005 – just

Initial ACORD standard – but late

New liability schedule (marine) for use with GUA

LMP template for Lineslips

ACORD standard for all classes

Contract Certainty and Documentation

Contract Certainty report issued and market wide Steering Group formed

R/I and Marine reports done

‘User Guide’ on website

Lloyd’s and XIS codifying policy checking

Put in place concrete changes to improve contract certainty and policy production

Accounting and Settlement

Detailed design progressed well after initial delay – published December

Funding nearly finalised – on critical path?

Implementation timetable – MRIB aiming for end year

Start build, first A&S deliverable

Claims ACORD interoperability standards - vital

XIS agreement (for infrastructure improvements) - painfully slow

Small number of ECF pilots in progress

Common London standard (LMP claims vision)

Italics = not planned, but significant

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Market reform objectives for 2005+ Compliance checking – push for 100% accuracy (Q4)

Implement LMP standard for Binding Authorities (Q1) and Lineslips (Q2)

Define more of the content of LMP slip (on-going); put this into ACORD data dictionary (Q2); sponsor incorporation of LMP slip within ACORD placement message (Q3/Q4)

Further standardisation of the placing process for endorsements

Fully claused slip used for several lines of business (initially 300 risks; Q1-Q2) Policy production; codify XIS policy checking (binders, Q1; other, Q2); publish

statistics on checking process(Q2); track and reduce error rates (H2) Agree approach to Legacy wordings (Q2)

MRIB to set out timetable for phased implementation (At minimum) new procedure for premium (Q4?) Complete phased roll-out through 2006

Implement Electronic Claims File (repository) – (Q1 2006) Implement CLASS at Lloyd’s – (final deliverable Q1 2006) Drive implementation by lines of business; 10% electronic (Q4) Explain plan for common claims procedure in London (Q4)

Agree formal training programme with CII (Q2) Measure use of new infrastructure and (hence) business benefits (on-going) Ramp up communication (on-going)

LMP Slips

Contract Certainty and Insurance Documentation

Accounting & Settlement

Claims

Other

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Market Reform Forum

Update on business reform

14 December 2004

Andy Brookes

Lloyd’s BPR