Market Reform Group With Electronic Market Reform Contract Endorsements Market Briefing 14 th March...
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Market Reform Group With Electronic Market Reform Contract Endorsements Market Briefing 14 th March 2008 Slide 2 Market Reform Page 1 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 Slide 3 Market Reform Page 2 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 Slide 4 Market Reform Page 3 Endorsements Past + HoneycombCover Note Addendum Slide 5 Market Reform Page 4 Endorsements Present: The MRCE Future starts now: End March deadline Slide 6 Market Reform Page 5 MRCE Structure Slide 7 Market Reform Page 6 Endorsements Present: The MRCE Risk Identification and Endorsement Details section (Additional details may be included) Contract Change(s) Section using MRC format and headings Slide 8 Market Reform Page 7 Endorsements Present: The MRCE Settlement Due Date default Agreement Boxes (sig, date and name) Contract Administration and Advisory Section Agreement Section (Non-GUA Example) Slide 9 Market Reform Page 8 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 + Cover Note Addendum MRCE Slide 10 Market Reform Page 9 + HoneycombCover Note Addendum Endorsements Past Slide 11 Market Reform Page 10 e-MRCE the big prize Approx 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 Slide 12 Market Reform Page 11 e-MRCE Submission and agreement of endorsements electronically What is it? How does it work? Broker perspective Insurer perspective Slide 13 Market Reform Page 12 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 Slide 14 Market Reform Page 13 Simple steps using email BrokerSlip Leader Agreement Parties Notification Parties Request agreement + GUA category Response + GUA category Request agreement Response Notify Slide 15 Market Reform Page 14 Broker requests Slip Leader agreement GUA category request Settlement Due Date request MRCE attached to emaIl References: - Subject line - Insurer reference Response request Slide 16 Market Reform Page 15 Slip Leader agrees MRCE within the email reply Agreement response GUA category details Settlement Due Date details Slide 17 Market Reform Page 16 Slip Leader agrees MRCE within attachment to email Response within a scanned and attached copy of agreed MRCE Slide 18 Market Reform Page 17 Broker requests Agreement Party agreement Response request MRCE attached to email Slip leader evidence of agreement attached to email Agree Slide 19 Market Reform Page 18 Broker notifies Notification Parties MRCE attached to email Notify Slide 20 Market Reform Page 19 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 dont 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 Slide 21 Market Reform Page 20 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 Slide 22 Market Reform Page 21 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 Slide 23 Market Reform Page 22 Actions for brokers and insurers Use email Assign sponsor and primary contact Measure Make it happen Slide 24 Market Reform Page 23 Questions and discussion Slide 25 Market Reform Page 24 Market engagement Slide 26 Market Reform Page 25 Measurement Brokers Slide 27 Market Reform Page 26 Measurement Insurers Slide 28 Market Reform Page 27 Actions for your firm Use email Measure Initial estimation of total endorsements Monthly 28 th for previous month Measure total submitted (responded to) via any electronic means First return due: 28 th May 2008 Assign sponsor and primary contact Consider central email in box(es) Make it happen Slide 29 Market Reform Page 28 e-MRCE Client benefits Processing costs lowered in line with client expectations Faster turnaround of agreement process Contract change documentation received earlier Slide 30 Market Reform Page 29 Email samples Broker submits MRCE to Slip Leader for agreement and GUA determination Slip Leader responds agreeing MRCE and providing GUA indication agreement within the content of the email agreement is a signed and scanned MRCE attached to the email Broker submits MRCE to follower Agreement Parties for agreement Broker notifies Notification Parties of agreed contract change(s)