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Market Reform Forum
Update on business reform
11 November
Andy Brookes
Lloyd’s BPR
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Objective: up to speed in half hour……
(Briefly) principles and approach
Accounting and Settlement
Electronic Claims Files
Contract Certainty and Documentation
Benchmarking
Kinnect
LMP slips
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Principles underpinning reform
Reduce ‘Londonisms’: international firms must buy-in – governance role
Change requires authority and a degree of neutrality: individual firms cannot do it alone; Lloyd’s and the Associations will lead
Commitment to co-operate essential, on design and implementation
Network effects: a convoy for implementation Cost / benefit case is rarely convincing on its own.
FSA – the ‘smouldering’ platform. Transparency – the (now) burning platform
Minimum requirements; don’t ‘over satisfy’
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Overall approach to market reform
Drive standards for data and harmonisation of process LMP slip; A&S; claims management; ACORD
work; contract certainty initiatives Build supporting electronic infrastructure,
throughout the life cycle of a contract A&S; electronic infrastructure for claims
(CLASS, ECF); Kinnect
Result: transparency in processes and performance. Then market firms and trading partners can
measure and manage LMP slips, policy production, A&S take-up,
claims processing
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Accounting and Settlement
LMA & IUA funding sign-up ongoing
- Brokers contribution ‘agreed’
Detailed business design progressing
- September interim; has changed little
- Premium processes complete; claims nearly finished; outward reinsurance well advanced
- End November publication
Plus interim detailed data deliverable
Subsequent deliverables
Swift sign-off from Market Associations – please
First governance meetings held – MRIB, A&S Project board
MRIB and Project Board working on implementation timetable
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Electronic Claims File
New XIS Contract 90% Managing Agents by value signed
XIS started repository enhancements work 1st Oct
Contract schedule for CLASS for Lloyd’s out soon to managing agents
XIS started enhancements on CLASS for Lloyd’s 1st Nov
Governance
Claims project board set up
Market associations – LMA, LMBC, IUA - groups in place
Working on the implementation timetable
Which firms for which lines of business?
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Contract Certainty and Documentation
4 Process options identified by the CCSG
- XIS involved earlier/quicker is the focus
Potential initial implementation areas identified by LMBC documentation overview committee (DOC) and CCSG – 300 risks starting Q1 2005
Performance monitoring group has made initial proposals regarding measurement
Lloyd’s and XIS codifying the checks; rationalise; publish performance data. Binders first
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Purpose of measurement Trustworthy data (vs. “I’ve heard it takes…..”) To drive process improvements Provoke firms to improve performance – measurable targets
where possible Measure impact of reform agenda
Dimensions Timing; Quality; Cost; Satisfaction – customer service survey
Sequence of delivery LMP Slips – more of the same Document production; XIS policy checking; start with binders Use of A&S and Claims electronic infrastructure
Overseen by the London Market Standards Committee
Measuring reform
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Kinnect
November 1 release
- Went well – enhanced placement process: harmonised business process; rough edges smoothed; market acceptable
Hiscox signed-up; live in early December
Working on endorsements
- Finalising business requirements:Q2 delivery aim
User adoption is key: Kinnect as core process
- Step by step through H1
- Eg Create (LMP) slips on Kinnect
Additional risk classes H2 2005: terrorism; international property
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Slips
LMP Open market slips
Sept Market Report and league tables published
- October data out shortly
Live slips checked once lead placed line - 86% current BSA
Target 95% by the end of the year
LMP Binding Authorities
Model agreements published (inc. Marine)
LMP slip templates published
Slips led after 28th Oct on risks incepting on and after 1st Jan 05 must be LMP
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LMP Slip checking
Binders
Lineslips
ACORD
Electronic slip standard
Slip - 2005 tasks
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Business Process Reform
The LMP Slip James Willison LMP Office
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Content
Status
Objectives
Mandate / Exemptions / Enforcing
Key areas to ensure compliance
Binders
LMP slip 2005
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LMP Slip standard mandated
Audit team on board
Market Reports published monthly
League tables published
Current BSA is 86% (target 95% by year end)
Binding Authorities now available
LMP Slip Status
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To aid clarity at contract formation by: Adopting a standard structure Clearly stating the contract terms Avoiding the use of “TBA” or “As amended” Greater use of standard wordings Non-standard wordings to be included in full
Simplify post placing contract management by: Explicitly defining contract roles and responsibilities Identification of service providers Stating agreement parties for contract amendments Clearly defining claims handling responsibilities
Objectives of the LMP Slip
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What has been mandated?
Panel 1 No small print. Must contain the Unique Market Reference
Panel 2 Amended to achieve clarity by separation of information into 4 sections:
1. Risk Details (Headings vary by class of business)
2. Subscription Agreement (Content fixed)3. Information (As required)4. Fiscal and Regulatory (Content fixed)
Panel 3 remains unaltered (security detail)
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PANEL 1 PANEL 3 PANEL 2
( RISK DETAILS )
SUBSCRIPTION AGREEMENT
Contractual Information
INFORMATION
FISCAL & REGULATORY
No Change
To Format
No Broker Small Print
Must Contain
UMR
No Change
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Lineslips
Motor & Term Life processed outside XIS
Slips where the Insured or a non-Lloyd’s insurance intermediary requires use of a non-LMP slip
Recognised Exemptions
All slips incepting from 1st January 2005 must be LMP Slips. The only recognised Exemptions at this time will be:
All other slips will be processed as LMP Slips
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Enforcing the mandate
Lloyd’s audit team tasked with improving quality
25% slips placed checked
Regular market feedback and reports
Monthly league tables published
Regular meetings with Brokers and Underwriters
Ongoing Quality checks continued to be conducted by the LMP Programme Office and Market Associations
Sanctions – naming and shaming
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UMR
Period
Law and jurisdiction
Payment terms
Document production
Claims
Taxes payable by underwriter
LMP Slips – key areas
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Use of the LMP Slip for B.A.
Model agreements published
LMP slip templates published for use with Model agreements
Slips led after 28th Oct on risks incepting on and after 1st Jan 05 must be LMP
The Schedule forms part of the Slip
For LMA model B.A. the wordings are included by reference
Schedule as placed is sent to the Coverholder to sign
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Binding Authority Wording
PANEL 1 PANEL 3PANEL 2
SCHEDULE
NON-SCHEDULE AGREEMENTS
SUBSCRIPTION AGREEMENT
INFORMATION
FISCAL & REGULATORY
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LMP Slip checking
Binders
Lineslips
ACORD
Electronic slip standard
LMP Slip - 2005 tasks
