Electronic Support for Endorsements Market Briefing 5 May 2010.
Electronic Market Reform Contract Endorsements Market Briefing
description
Transcript of Electronic Market Reform Contract Endorsements Market Briefing
Market Reform Group
With
Electronic Market Reform Contract Endorsements
Market Briefing
14th & 18th March 2008
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Agenda
• Introduction
• MRCE – The new document standard for endorsements
• e-MRCE – Submission and agreement of endorsements electronically
• e-MRCE – Broker perspective
• e-MRCE – Insurer perspective
• Questions and discussion
Andy Brookes, MRO
John Muir/Stuart Dean, Willis
Trevor Maddison, Marsh
Ian Fantozzi, Beazley
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MRCE & e-MRCE
John Muir, WillisMarket wide project sponsor
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MRCE – The new document standard for endorsements
• Previously no explicit standard and no guidance
• Benefits
– Supports Contract Certainty
– Enables contract change documentation to client promptly
– Reduces the effort required to handle contract endorsements
– Document format consistent with original contract (MRC)
– Mapped to ACORD standard – paves the way for structured electronic messaging
– Unambiguous Settlement Due Date
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Reforming endorsements: a big prize
• Approx ½ million endorsements p.a.
• High admin cost relative to low value that clients attach to non-complex endorsement
• Faster agreement process
• Save broker queuing and underwriter consultation time
• Frees brokers and underwriters for more productive use of time
• Agreed endorsement forms basis of contract change sent to client
– Improved contract certainty
– Saves broker rework
– Documentation to client quicker
• Bridgehead into electronic trading
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MRCE & e-MRCE Detail
Stuart Dean, WillisMarket Wide Project Manager
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Endorsements – Past
+
“Honeycomb” Cover Note Addendum
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Endorsements – Present: The MRCE
Future starts now: End March deadline
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Endorsements – Present: The MRCE
Risk Identification and Endorsement Details section(Additional details may be included)
Contract Change(s) Section using MRC format and headings
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Endorsements – Present: The MRCE
Settlement Due Date default
Agreement Boxes (sig, date and name)
Contract Administration and Advisory Section
Agreement Section(Non-GUA Example)
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MRCE Summary
• Logical extension to MRC – consistent format, basis of client documentation
• In line with Contract Certainty – speeds up contract change documentation to client
• Reduces the effort required to handle contract endorsements
• London Market standard from end of March 2008 (for new endorsements)
Honeycomb
+Cove
r Note
AddendumMRCE
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“Honeycomb” Cover Note Addendum
Endorsements – Past
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e-MRCE – Submission and agreement of endorsements electronically
• What is it?
• How does it work?
• Broker perspective – Trevor Maddison, Marsh
• Insurer perspective – Ian Fantozzi, Beazley
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What is e-MRCE?
• Email or other forms of electronic processing
• London based brokers are currently using email to agree endorsements for business outside the London Market … do this for London Market business as well!
• The email process:
– Broker assesses the suitability of endorsement for email
– Basic agreement process then as per existing practice
• Simple email template
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Simple steps using email
Broker Slip Leader
Agreement Parties
Notification Parties
Request agreement + GUA category
Response + GUA category
Request agreement
Response
Notify
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Broker requests Slip Leader agreement
GUA category request
Settlement Due Date request
MRCE attached to emaIl
References:- Subject line- Insurer reference
Response request
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Slip Leader agrees MRCE – within the email reply
Agreementresponse
GUA category details
Settlement Due Date
details
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Slip Leader agrees MRCE – within attachment to email
Response within a scanned and attached copy of agreed MRCE
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Broker requests Agreement Party agreement
Response request
MRCE attached to email
Slip leader evidence of agreement
attached to email
Agree
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Broker notifies Notification Parties
MRCE attached to email
Notify
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e-MRCE summary: focus is email
• “Keep it simple”
– Email is sufficient – new technology is not a pre-requisite
– Use structured data messaging when you have it
– Certainly non-complex, but don’t be afraid to go further
• “Just do it”
– Email widely used for non-London Market business already
– Brokers: extend use of email to your London Market business particularly for non-complex endorsements
– Insurers: respond using email
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Broker perspective
Trevor Maddison, Marsh
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Broker perspective
• Reduces time spent on submitting non-complex endorsements to insurers for their agreement
• Frees up valuable broker time to concentrate on our client needs
• Provides more control, clearer accountability and transparency
• Brokers are accustomed to using email for endorsements
• Reduces hand-off between “Account Handlers” and “Market Brokers”
• Simplifies task of preparing contract change documents for client
• Faster endorsement agreement using parallel insurer agreement
• Importantly, encourages confidence in electronic trading in the London Market
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Some Marsh facts
• We changed our internal document template for MRCE overnight
• Commenced use of new endorsement format in Dec 2007
• We will commence eMRCE from April 1st
• 60,000 endorsements traded per year, approx 5 per risk
• Marsh involved in the eMRCE endorsement pilot
– 2,000 endorsements traded successfully with major markets
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Insurer perspective
Ian Fantozzi, Beazley
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Insurer perspective
• Reduced face-to-face consultation time for non-complex endorsements
• Spend underwriting time with broker more productively
• Reduced scanning volumes through receipt of electronic documentation
• Easier transcription into insurer systems
• Earlier visibility of endorsements for follower agreement parties
• Use of email allows for quick adoption:
– A format that is well understood and readily used
– Minimal cost (including training cost)
• Allows insurers to apply “triage” to incoming endorsements
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Actions for brokers and insurers
• Use email
• Assign sponsor and primary contact
• Measure
• Make it happen
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Questions and discussion
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Panel discussion
• John Muir, Willis (Project Sponsor)
• Jane Warren, ACE Global Markets
• Trevor Maddison, Marsh
• Ian Fantozzi, Beazley