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
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
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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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Endorsements – Past
+
“Honeycomb” Cover Note Addendum
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Endorsements – Present: The MRCE
Future starts now: End March deadline
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MRCE Structure
RISK AND ENDORSEMENT IDENTIFICATION DETAILS
CONTRACT CHANGES
INFORMATION (Where required)
AGREEMENT
CONTRACT ADMINISTRATION AND ADVISORY (Where required)
The order of these two sections is reversible
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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)
Honeycom
b
Honeycom
b
+Cove
r Note
Addendum
Cover N
ote
AddendumM
RCEM
RCE
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+
“Honeycomb” Cover Note Addendum
Endorsements – Past
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e-MRCE – the 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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e-MRCE – Submission and agreement of endorsements electronically
• What is it?
• How does it work?
• Broker perspective
• Insurer perspective
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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
• 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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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