Market Reform Group Market Reform “from the top”: Overview & Status Christopher Croft Market...

Market Reform Group

Market Reform “from the top”: Overview & StatusChristopher Croft

Market Reform Office22 November 2007

Mark

et

Refo

rm

Agenda

9.15 – 9.30 Registration & introductions9.30 – 10.00 “Market Reform from the top” - Christopher Croft,

programme so far, current priorities, future plans Market Reform Office10.00 – 10.30 Electronic processing Rob Campbell, MRO

the role of standards and how it all fits together10.30 – 11.00 Market Reform Contract Steve Hulm, MRO

contract standards to facilitate placing11.00 – 11.15 Break11.15 – 11.55 Insurers’ Market Repository – Chris Mears & Simon Collins,

electronic premium & claims settlement Repository Project Team, Lloyd’s11.55 – 12.20 Endorsements Stuart Dean, Willis

streamlining the process for contract changes12.20 – 12.45 E-Placing Rob Gillies, LMA

electronic support for risk placement12.45 – 1.00 Wrap up and discussion Christopher Croft

Mark

et

Refo

rm

Market reform overview

• Why reform? Origins and drivers of the programme

• What is the vision?

• What has happened so far?

• Lessons learned

• What is planned for 2007 and beyond?

Mark

et

Refo

rm

Why reform? Sharpen London’s competitive edge and client service

• Competitive pressure

– From other insurance centres (Marine 32% 1988, 15% 2006; Bermuda has grown at 7x the rate of London since 2000)

– From other financial services sectors (eg Cat bond markets, Gallagher Re etc)

– ‘Smouldering’ platform

• Customers dissatisfied with the speed of processing

– Lloyd’s customer survey - market poor on: speed of contract documentation; information about claims; speed of claims settlement

• Regulatory pressure

– Dec 2004: FSA CEO John Tiner challenges market to put an end to “deal now, detail later” culture

– Emphasis on achieving contract certainty or face rules to enforce it

Mark

et

Refo

rm

Why reform?

• All three drivers at least in part attributable to inefficient processes

• Highlight aspects that make London an expensive market in which to do business => create barriers to business coming here

• Customers value ability to place complex business but “one size fits all” approach reduces the business coming here

Mark

et

Refo

rm

Why Reform?

• First class client service

• Early receipt of high quality contracts

• Rapid claims processing and communication with clients

• Rapid movement of premium and claim monies

• ‘Right first time’ processing

• Increased efficiency with lower operational cost

• Lower operational risk

• Flexibility to support bespoke business

Mark

et

Refo

rm

Where are we going?

• MRG vision

All risk submissions sent electronically

All claims processed and agreed electronically

All accounting and settlement of risks performed electronically

– London to be the market of choice

Mark

et

Refo

rm

Slip creation guidelines providing certain and consistent placing documentation

MRC - complete

Clear, unambiguous contracts agreed at formation

Improving the speed of premium processing - delinked premiums

IMR in useDelinking 57% (Aug)

Contract Certainty - complete

Early delivery of single insurance document to client

Contract Certainty - complete

PLACING & SETTLEMENT

What have we achieved so far ?

Mark

et

Refo

rm

Broker Contact Certainty Achievement

Q4 2005 Q1 2006 Q2 2006 Q3 2006 Q4 2006 Q1 2007 Q2 2007 Q3 2007

65%

74%

95%

91%

94%

90%

85%

95%


Mark

et

Refo

rm

Broker Evidence of Contract Achievement

Q4 2005 Q1 2006 Q2 2006 Q3 2006 Q4 2006 Q1 2007 Q2 2007

65%

77%

91%

86%

92%

84%

80%


Mark

et

Refo

rm

Endorsements

Claims

IMR in useElectronic storing of documents allowing simultaneous access

Pilot stage complete Project being implemented

Improved speed of endorsement processing


Mark

et

Refo

rm

IMR Usage

Jan Feb Mar April May June July Aug Sep Oct

45%

30%

40%

ECF10%

16%

21%

14%

11%

6%

57%

36%

28%24%21%22%

19%19%

17%

A&S OP only

35%

37%


Mark

et

Refo

rm

Reform – lessons learned

Collaboration works

•Decentralisation works

Senior commitment vital

- Need all constituents – brokers, companies & Lloyd’s

- The era of large, expensive, centralised, single solutions is over

- Standards and frameworks a better approach

- Change must come from the top

- MRG needs the key decision makers in the room

Mark

et

Refo

rm

Reform – lessons learned

Keep it simple

Lead implementers

Measure

- Small is beautiful; one step at a time

- G6 et al

- Rigorously

Targets - Demanding

Communicate constantly at all levels

Mark

et

Refo

rm

2007 Projects

• Progress highlights

• Contract Certainty

• Legacy

• Market Reform Contract (MRC)

• Electronic Claim Files (ECF)

• Accounting & Settlement (A&S)

• Electronic Placing Support

Mark

et

Refo

rm

2007 Progress Highlights:

• Contract certainty – solidly above 90%: on track

– August broker numbers 96%; insurers’ data similar

– Market Reform Contract implemented; CC Code of Practice rewrite adopted

– Survey re-run. Proposal to FSA to stop central measurement.

• Legacy – mid-’06 = 100; reduce to 60 mid-’07; 40 by end-’07: ahead of target

– Lloyd’s reduced to 37% (September);

– Company market reduce to 41% (August)

• Electronic claims – 100% of new claims: just behind target, demanding

– Lloyd’s initial notifications: ©60% of in-scope

– © 20 IUA companies live or near live; but slower than planned

• Electronic A&S submissions – 80+%: behind the run rate, disappointing

– ©42% October (OPs); 29% incl. RPs and APs

– 93% of brokers live (by volume); rest by Jan 2008

• Delinking – 80+%: rising, but behind target

– ©55% in Q3; ©10% up on 2006

• Error rate on bureau submissions – at least halved: project postponed

– Inadequate data

Mark

et

Refo

rm

2007 Progress Highlights:

• Placement – LMA building on G6 work

– Resources published: Whose doing what; benefits model; ACORD standard

– Suppliers active; but volume still low

• Improve endorsements processing

– Pilot successful

– Transitioning to market roll-out; MRCE to be published; e-options set out

• LMA and Lloyd’s contract documentation improvements

– End of Stage 2 checking; MRC enables

– Lloyd’s PBQA tool upgraded

• Test Certification Facility

– Delivered by ACORD to help ensure messages are to standard

• Electronic policies

– Electronic ‘in’ to XIS becomes electronic ‘out’. Willis live. Others testing

• Insurers’ Market Repository

– Software Improvements delivered/on track (6a and 6b for claims; 2 and 3 for A&S)

Mark

et

Refo

rm

Market Reform 2008 Plans• ECF

– 100%

– Upgrade software to increase scope

– Hit legacy claims

– Plus service standards and measurement

• A&S

– 100% (OPs by 1/4)

– Include all RPs and APs

– Further software releases

– Note: expect to keep investing in IMR

• Legacy policies

– Finish – new target

Mark

et

Refo

rm

Market Reform 2008 Plans• Endorsements

– MRCE for all

– E-endorsements; measure and target

• Placing: electronic support

– Appetite

– Measurement

– Targets

• A&S

– ACORD business messages to bureau and non-bureau

– Premium Payment – implement any deal

– Delinking for all

Mark

et

Refo

rm

Market Reform 2008 Plans•Third rank – useful but not headline

–E-Policies for all (who want them)

–MRC for binders and lineslips

–Non-fundamental splits (MAs willing to pay?)

•Planning the next wave

–Claims: ACORDising CLASS; end of LIMCLMS?

–Documentation quality : PBQA +? Use for A&S?

•Underpinned by………

–Benchmarking and measurement

–Standards and support: how much

– ‘Grain of the market’

Mark

et

Refo

rm

What does the future hold?

• Further change is a given not an option

– To maintain London’s competitiveness with other insurance centres

– To maintain insurance industry’s competitiveness with increasingly sophisticated alternatives

• Embrace the new world which is and should be transparent and auditable

– Don’t re-employ bad practice into electronic format

• Build on the successes of the last 3 years and learn the lessons of things that have not gone as well

Mark

et

Refo

rm

Measure & target

Resource itUse

standards don’t tweak

Sponsor it

Reform – What should it mean to you?

Internal change programmes are the key to benefits realisation

Mark

et

Refo

rm

Challenges ahead

Current reform is only a stepping stone

Insurance is a global business, reform needs to be seen in that context

Need to preserve the advantages of the physical market place in an electronic world

Insidious creep of complacency

Market Reform Group Market Reform “from the top”: Overview & Status Christopher Croft Market...

Documents

Transcript of Market Reform Group Market Reform “from the top”: Overview & Status Christopher Croft Market...