claims transformation Programme

UPDATE

LMG 18th November 2010

Lloyd’s Performance Management Directorate

© Lloyd’s2

Agenda

Transformation vision

Core components

2010 Pilot

Pilot Performance

Transformation Programme 2011

Enhanced Governance

Claims Business Systems Options

Claims Talent Initiative

Consultation

© Lloyd’s3

Vision for Claims within Lloyd’s market

Lloyd’s reputation for fast and fair claims handling

Deliver professional excellence

Excellence in Underwriting Excellence in Claims

• Excellence in Operations• Capital advantages• Security and strong market ratings• Global brand

Lloyd’s Competitive Advantage

Core Transformation Components

• Enhance current segmentation – increase efficiency • Introduce choice

• Strengthen Corporation’s governance role

• Review Claims Business Systems Options

• Increase flexibility in notification and settlement

Designed to deliver:

• Better customer experience/more transparency

• More scope for differentiation

Commencing with 2010 Pilot

New ECF claims on new contracts incepting on or after 01-01-2010

For defined risk codes, excluding Binders and Singletons

Marine (excluding Cargo and Energy), Property Direct & Fac, Casualty Treaty

All subject to the 2010 Pilot Claims Scheme

Three tranches: Standard (£0-100k), Mid (£100k-5m) and Complex (>£5m)

Pilot Framework

Segmented claims response

Provision of choice

© Lloyd’s6

Success Criteria

Four key measures:

1. Speed

2. Quality

3. Market Perception

4. Cost

Speed considered the most important measure

Pilot deemed a success if claims handled 25% morequickly, provided that pilot performance in each ofthe other areas neutral or improved

© Lloyd’s7

Pilot Volumes as at Q3 2010 2,500 Pilot Claims & 4,500 fully completed transactions

Class of Business dynamics:

Marine (46%)

Property D&F (45%)

Casualty Treaty (9%)

Categories:

Standard 82%

Mid Tranche 15%

Complex 3%

Segmentation ratios in line with expectations

© Lloyd’s8

CTP Pilot Performance - Overall

5.00

7.15

10.23

14.24

16.47

18.0717.13

15.37 15.38

13.38

0

5

10

15

20

25

30

0

200

400

600

800

1000

1200

1400

January February March April May June July August September October

Cale

ndar

Day

s

Vol

ume

of C

ompl

ete

Tran

sacti

ons

CTP Transaction - Volumes & End-to-End Transaction Times by Month

Completed Transactions Avg Trans Duration Baseline (25 days) Success Criteria (18.8 days)

© Lloyd’s9

Pilot Score Card

Overall reduction in end-to-end transaction times – exceeds target

Reduction in average response times across all parties

Standard tranche - average end to end transaction time reduced

Triage accuracy rates are up

Quality of claim assessment up (mid/complex)

Pilot working group to discuss impact arising from new roles of leader, 2nd lead and XCS

Training for the market and revised Pilot guidelines will be developed to address issues identified

Pilot results are proving the concept of segmentation & choice

© Lloyd’s10

Transformation Programme – 2011

Full 2010 year results to be assessed by Lloyd’s early 2011

Consideration of any expansion will be made

Enhanced governance framework will be shaped

End vision implementation plan published early 2011

Volume claims service standards (published Q1 2011)

Framework for approval of delegated lead and 2nd service providers (Q2 2011)

Claims Talent initiative being launched

Pilot continues into 2011

© Lloyd’s11

Enhanced Governance

Framework

Revised and enhanced Minimum Standards

Lloyd’s claims service targets

Service provider approvals

Performance audits & wider reviews

Enhanced & targeted MI

With Lloyd’s continuing to:

Invest in more talent

Provide claims leadership

Raising the bar

© Lloyd’s12

Claims Business Systems Options Modern technology is critical to providing a

competitive claims service

Flexibility is vital

Importance of this project can not be underestimated

In 2009:

- the Lloyd’s Claims Team defined the market’s business requirements

- conducted a tender process based on those requirements

The Future Processes Project is now validating this work on behalf of the London Market

It is critical that the pace of this work does not diminish

© Lloyd’s13

*Talent Initiative – 50 professionals over 5 years

Graduate:

12 month programme

Provide fundamental understanding of

insurance principles with core focus on

claims

Utilisation of variety of development

methods, including hands-on experience

4 x 3-month Placements

Lloyd’s

Broking House

Managing Agency

Law Firm / Loss Adjuster

Market Practitioner:

12 month programme

Aimed at current adjusters with 2-5 years

claims handling experience

Participants alternate between formal

training at Lloyd’s, mini market placements

(~2 weeks) and project work

Modular approach:

Lloyd’s

The Market

Legal Aspects of Claims Handling

* subject to ratification by Market Steering Group

Examinations: LLMIT & CILA / DipCII Examinations: ACII

© Lloyd’s14

In closing…consultation with stakeholders

Ongoing market consultation remains vital

Managing agents

Brokers

LMACC

Future Processes Working Group

LMG

XCS

LMA sector groups

Service providers/experts

Lloyd’s market is committed to continuous improvement

© Lloyd’s15

Analysis of ECF data and discussions with Pilot working group to discuss issues arising from new roles of leader, 2nd lead and XCS

Training for the market, discussions with XCS and revised Pilot guidelines will be developed to address issues identified