Download - Market Reform Group With Electronic Market Reform Contract Endorsements Market Briefing 14 th March 2008.

Market Reform Group

With

Electronic Market Reform Contract Endorsements

Market Briefing

14th 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

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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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Risk Identification and Endorsement Details section(Additional details may be included)

Contract Change(s) Section using MRC format and headings

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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

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Honeycom

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+Cove

r Note

Addendum

Cover N

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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