1

Electronic Claims

Electronic Claim File Briefing

Development and Implementation update

1st November 2005

Follow up to last update and demonstration on 1st March 2005

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Electronic Claims

Agenda Introduction and Welcome John O'Neill

Status review Ian Mallery

Market reform context Mike Smith

Binders work in progress Rich Woodhams

Brokers view Trevor Maddison

LMA SDG Martin Dyer

Next Steps Ian Mallery

Questions and close John O’Neill

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Electronic Claims

Status Review

Ian Mallery

ECPG & Marlborough

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Electronic Claims

LMA ECF Objective

To replicate today’s file electronically Not a Blue Sky Claims System development

Based on Existing Products Changes to CLASS out of scope (except look and feel) Work with underlying software capabilities

Provide a base product on day 1 To be evolved once experience gained

Post implementation of base product Strategic Review of On-going development

- e.g. Third Party Access

5

Electronic ClaimsStatus todayKey Enhancements in 5 Phases

Phase 1 See all documents in one view Completed February

Phase 2 Leader control of file/Improved searching Completed April

Phase 3 ACORD DRI Completed October

Phases 4/5 CLASS @ Lloyd’s data through GUI/Seamless link

Merged into single phase

Detailed specification completed

Re-planned, including key change requests completed

MAT expected to start Mid-May 2006

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Electronic Claims

· References· Paid / Outstanding

Amounts· Claim Status /

Agreement· Reports· Correspondence· Bordereau· Placing Documents

ECF Screens

CLASS

Repository

Broker Input

Agreement Parties Can Review All Claim Details, Perform Updates & Record Agreement in One Place

(Without a Broker?)

Data

Documents

Insurer Access &

Input

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Electronic Claims

Design Sign Off – June 2005 Sign off pack

ECF High Level Rules ECF 13 Jan 2005 Business Process Description ECF 17 Jan 2005 Full Requirements Definition ECF Business Process Models (A and B) ECF Phase 4/5 Full Business Design ECF Screen Flow ECF Screens – Search List & Summary ECF Screens – Enquiry ECF Screens – Actions DRI Diagram

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Electronic Claims

Business Operability Issues

Two way interoperability to ACORD DRI standards Solution in hand

Big Issue - driven by the CLASS responses Need to ensure Concurrent Access Ensure timely reserving

Solutions available Mapping of response to distinguish agreement from noting Notification message to agreement parties – to ensure SCM

- Also available to followers

Followers list added to CLASS Needs a change in broker practice for settlements with changes in incurred

- Provide incurred change separately from settlement request (currently under discussion with brokers)

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Electronic Claims

Features

Broker submits claim electronically Enables parallel presentation to insurers

Reduces data transcription errors

Allow brokers to concentrate on complex claims

Improved insurer access to information It’s the insurers’ file

concurrent access to all subscribing insurers

always available

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Electronic Claims

Market Reform Perspective

Mike Smith

Market Reform Programme Office

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Electronic Claims

London Market Objectives

To implement the electronic infrastructure

for the London market to negotiate, settle, and record claims quickly and efficiently

and to achieve a critical mass of live usage.

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Electronic Claims

Electronic Claim Files Enable parallel presentation to insurers

Reduce overall transaction time

Improve transparency of process

Underwriters can control their own work load

Allow brokers to concentrate on those claims where value is added

Claim file always available to insurers

Fundamental pre-cursor to the LMP objective of streamlined claims agreement

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Electronic Claims

Governance 1

Directed by MRG - Brokers, Companies, Lloyd’s through Claims Infrastructure Project Board

Programme Office Owns implementation timetable

issue definition and resolution

Market associations’ claims groups to resolve market wide claims practice issues.

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Electronic Claims

Governance 2

LMA

- Managing Agents manage contractual delivery to them from XIS

- Claims practitioners define processes and functions

IUA

- Formed a group to review function

- Discussing charging mechanisms

LMBC

- BEFIT – meets to review impact on brokers

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Electronic Claims

Overall Scope

Delivers an interactive Insurers’ Market Repository to carriers

Interactive service available to brokers- At a price

Adopts ACORD standards for the transfer of electronic documentsTo/From brokers’ repositories

- At no charge to brokers

To/From carriers’ repositories

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Electronic Claims

Legend KeyMilestone

Milestone

Jan2005

Feb2005

Mar2005

Apr2005

May2005

Jun2005

Jul2005

Aug2005

Sep2005

Oct2005

Nov2005

Dec2005

Jan2006

Feb2006

Mar2006

Apr2006

May2006

Jun2006

Jul2006

Aug2006

Sep2006

Oct2006

Nov2006

Dec2006

Oct2004

Nov2004

Dec2004

BrokersXISManaging

Agents

Start of implementationpartnership (underwritersmarket repository)

Complete

Ongoing

MarketStart of implementationpartnership (Brokerrepository)

Ready to participate,awaiting firmpartnership agreement

UnconfirmedProcessedclaims Slippage

Timeline for Electronic Claims implementation - 26th October 2005 (Update for 1st November MRG Board)X

ISX

CS

op

erat

iona

l re

adin

ess

Target Milestones

10% new Lloyd’sclaims transactedelectronically

Imp

lem

enta

tion

und

erw

ay

Lloyd’s managing agents processingnew claims electronically*

MarshGuyCarpenter

AmilinHiscox

Brokers

Carriers

Marine - Hull & Liability/Cargo

Energy

Aviation Direct/Reinsurance

Non-Marine Property

Non-Marine Liability All Other/PI

Binding Authorities

Reinsurance Non-proportional XL)

Political Risk

Build and fully tested

Business design

Build and fullytested

??MAT??

Marsh, Aon, Benfield, JLT present 100%of Lloyd’s new claims and theirsubsequent processing electronically

Aon } Own repositories†

Benfield }

Global Aerospace, Allianz, Munich Re, GE Francona

Implementationpartnershipscommenced

MAT MAT

*Commitment from:Brit, Amlin, Limit,Wellington, Faraday,St. Paul Travelers,SVB, Marlborough,Hiscox.

Aspen ReAlea Group

Phases 1 & 2: RepositoryenhancementsPhase 3: Document RepositoryInteroperability (DRI)Phase 4: Enhancements toCLASS for Lloyd’sPhase 5: Integrated CLASS andRepository

Aegis

Wellington

MAT

Cooper Gay

St PaulTravelers

Slippage- dueto focus onPhase 2 MAT

Faraday Amlin

Millers

Beazley

Benfield

MAP,Chaucer

SP

&P London Claims Market System

Process & Procedures

Lloyd’s publishedversion

IUA published version - datedependent on IUAinvolvement

Lloyd’s versionfor comments

Review, revise Review, revise, definition of variations definition of variations

Limit

Slippage

Slow, but gradual take up ofelectronic claims on existingtechnology. Project Board will beramping up presentations etc, toencourage firms take up inpreparation for new infrastructure.

Kiln

Willis

Potential delivery of added functionality “5.5”

MAT

* Training being defined in conjunction with the CII

IUA progress1. Agreed revised scope2. Agreed CR business designClose to formal sign off

Build & fully tested Phase 4.5

IUA

/X

IS

Slippage due to replanningand renegotiation

Brit

Interchange Agreement Draft document to be agreed

Heritage

Targets likely to movetowards end Q3 2006 aftercompletion of replanningexercise. Continuingstrong commitment fromcarriers and brokers.

Will not be achieved but Boardview number of relationships asmore important than pure volumes

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Electronic Claims

Systems Processes and Procedures Manual

Documenting how the market process works NOT how to manage a claim

but where the systems fit and how to use them

Starting with Lloyd’s working draft prepared by LMA ECPG

under review with ECPG and BEFIT

being extended to include IUA

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Electronic Claims

Lloyd’s Electronic Claims Process Flow (New)L

loyd

’s L

ea

de

rX

CS

Llo

yd’s

Fo

llow

ers

XIS

Sys

tem

Bro

ker

Insurers’Market

Repository

Broker

Repository

Advised ofsettlement

authorisationBSM

Receive &processadvice &money

Advised ofsettlement

authorisationUSM

Advised ofsettlement

authorisationUSM

Receive &processadvice &money

Receive &processadvice &money

AT ANY TIMEReview loss information,

slip, wordings,endorsements and

leader’s additions etcheld on Insurers Market

Repository

AT ANY TIMEReview loss information,

slip, wordings,endorsements and

leader’s additions etcheld on Insurers Market

Repository

Insurers’Market

Repository(IMR)

Insurers’Market

Repository

Advised ofSCM

Advised ofSCM

Retrieve relevantdocuments

Store info

Create CLASSentry

Receive and verifyCLASS entry

Receiveadvice of

loss

AccessCLASS entry

Assess lossadvice

Consult withnecessary

parties

- Additional partiesrequired?- Appoint experts?

Overrides/Exceptions

- If original premium notpaid may choose tooverride need to wait foradditional premium- If reinstatementpremium due then maychoose to setsimultaneousreinstatement premiumindicator- Leader may declare aconflict of interest

Record response,instructions and

comments on CLASS.May add documents to

ECF

Leaders ActionAwaiting Index

Update CLASS entry andissue leader responses

to broker. Updateagreement parties.

AccessCLASS entry

Assess loss advice(on IMR) and

Leader response

- Additional partiesrequired?- Appoint experts?- Leaders- Other Followers

Consult withnecessary

parties

Overrides/Exceptions

- If original premium notpaid may choose tooverride need to waitfor additional premium- If reinstatementpremium due then maychoose to setsimultaneousreinstatement premiumindicator- Leader may declare aconflict of interest

Record response,instructions and

comments on CLASS.May add documents to

ECF

Issue SCMs

Exceptions

- If original premium not paid, then wait forpremium unless requirement to wait has beenoverridden- If reinstatement indicator set, wait forreinstatement premium- Manage withdrawal from central settlement forreinsurance credit control

CLASS postspayment to central

settlement

Processsettlement

Settlementadvices and

moneymovement

- Update CLASS entry- Issue XCS responses onbehalf of followers to broker- Update agreement parties

Broker analysesresponse

Possible responses:- Accept- Pend - broker to amend/correct- Query - broker to amend/correct- Request broker visit(informal response)

- Change Leader ifLeader declaresconflict of interest

Followers Workin Progress list

Possible responses:- Accept- Pend - broker to amend/correct- Query - broker to amend/correct- Request broker visit(informal response)

Broker analysesresponse

Issueresponseto broker(LIMCLM)

1. Advise Market 2. Leader Claim Transaction Negotiation 3. Following Market Claim Transaction Negotiation 4. Advise Market of Completed Claims Transaction

Issueresponseto broker(LIMCLM)

If payment

AT ANY TIMEReview loss information, slip,wordings, endorsements andleader’s additions etc held onInsurers Market Repository

and/or CLASS. Raisecomments to XCS and/or

Leader if necessary. Declareconflict of interest

If no brokerrepository but

contract with XIS,then load directly

If PULLBroker

If PUSHBroker

Senddocuments

using ACORDDRI

LIMCLM

Retrievedocuments

usingACORD

DRI

NotifyDRI

ACORDmessage

- Additionalsequences withinsame transaction

Third parties - howdo they createtransactions?

SecurityRequirements

ManagementInformationreporting

Audit facilities

SystemAdministration,

logons, user IDs

- Wrong leader

LIMCLM

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Electronic Claims

Implementation

Broker-driven with Lloyd’s and IUA carriers and XCS by classes of business and risks programme office monitoring progress

New claims and their subsequent transactions

Using today’s CLASS and repository in parallel with the enhancements

early experience of electronic work

assess impact on procedures and processes

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Electronic Claims

Take Up Volumes – 26th October 2005

Jan

Ma

r

Ma

y

July

Se

pt

0

5

10

15

20

25

30

35

Volumes

New Advices

Millers

Benfield

Cooper Gay

Guy Carp

Marsh

429 AdvicesOf which 291 New Advices

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Electronic Claims

Take Up Participants Brokers

Benfield

Cooper Gay

Guy Carpenter

Marsh

Millers

Willis (in progress)

Aon (waiting for DRI)

Carriers

Aegis Amlin

Chaucer Faraday

Hiscox Kiln

Limit MAP

St Paul Travelers

Aspen Re

Markel

Class of Business

Marine Hull

Aviation Direct

Reinsurance

PI

Non Marine Property

Binding Authorities

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Electronic Claims

Carriers Wanting to Participate

Ace

Advent

Atrium

Brit

Liberty

AIG

Allianz

Beazley

Global Aerospace

Wellington

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Electronic Claims

Public Commitment to participate

Brokers

committed to deliver new claims to Lloyd’s electronically

Aon

Benfield

JLT

Marsh

Managing Agents

committed to deal electronically with new claims

Amlin Brit

Faraday Hiscox

Limit Marlborough

St Paul Travelers

SVB Wellington

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Electronic Claims

Binding Authorities

Richard Woodhams

Faraday

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Electronic Claims

Numerous advantages for handling binder claims via ECF

However some significant technical issues not applicable to open market claims

Solutions can be considered “work-arounds” pro tem, pending a tactical longer term solution

Aim of this series of slides is to introduce you to those issues

Binders & ECF

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Electronic Claims

Binders & ECF

Binder characteristics:

Significant level of Lloyd’s premium income is due to binders

Bordereau of losses, reported monthly

- Volume (if only the bordereau themselves)

- Opportunities to manage workflow

Individual losses (above coverholder/ TPA’s handling authority) all of which may need to be cross referenced with the bordereau

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Electronic Claims

Desktop access, plus linking claims

Block UCRIndiv.

UCR

Indiv.

UCR

Indiv.

UCR

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Electronic Claims

Binders & ECF

Additional benefit (in some instances) to enable data entry to be pushed to nearer the source of origin

- TPA

- Coverholder

- Interaction with experts own repository

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Electronic ClaimsBinders & ECF

Insured

C/Holder

TPA

Broker

Leader

XCS

Leader

XCSRepository

CLASS

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Electronic Claims

Binders & ECF

Additional benefit (in some instances) to enable data entry to be pushed to nearer the source of origin

- TPA

- Coverholder

- Interaction with experts own repository

Enables timely CAF (plus Minimum Standards generally) on the sizeable volume of claims generated under binders

Enables tracking of the claim agreement process

Plus, reduces a significant volume of paper

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Electronic Claims

Issues

Set the scene

Early implementers:

Millers, Hiscox & XCS

Marsh, St Paul Travelers & XCS

Binder Group (as a sub set of the ECPG)

Initially to identify the potential binder process(es)

Latterly, to understand and document the issues arising

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Electronic Claims

Key Issue 1 – “Duplication”

Potential for duplication of reserves both on block UCR and within individual UCR’s

Increased volumes of transactions, on above authority (but below £/$100k) claims

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Electronic Claims

The repository+CLASS model

UMR

UCR 1

A valid CLASS entry “creates” one UCR page (and a UMR page, if first advice) on the repository, for the lodging of claims and coverage info, respectively

Key Issue 2. “Data Levels”

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Electronic Claims

The repository+CLASS model

UCR 2

UMR

UCR 1

UCR 3UCR

2

TR1 TR2 TR3 TR4

Policy

Claim

Transaction

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Electronic ClaimsThe binder on ECF model

UCR 2

UMR

UCR 1

UCR 3

Binder Slip held at UMR level

CertificateCertificate

Certificate

Policy coverage info, for each declaration will need to be stored also at claim (UCR) level

Key Issue 2. “Data Levels”

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Electronic Claims

eg. CLASS holds only one “cover period”, yet for binders we have:

- A binder period and

- A certificate period

Plus certain “financial limit” fields

Finally, certain “name” fields

Key Issue 2. “Data Levels”

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Electronic Claims

Key Issue 3. “Block Splits”

Regulatory Block Splits XCS use a “multi block” facility within their system

automatically links constituent parts of a block collection over the various regulatory State splits

- 1) Repository works at the UMR/ UCR level for each claim arising under a policy

- 2) XCS system works at a UCR/ Claims Office Reference (and then, later, at TR) level

Which in turn, creates a need for further work-arounds, pro tem.

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Electronic Claims

Next Steps

Discover and understand the issues

Merit of early implementations

Consider both: “Short term”

workarounds to enable early implementation and increase volumes

Work to develop and introduce longer term strategic solutions

Contact Claire Bulman Lloyds Business Process

Reform Lloyd’s Ext 6513

Claire.Bulman@lloyds.com

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Electronic Claims

Working Party

Murray Edwards & Steve Spicer Miller,

Charles Lee Cooper Gay Ian Mack, Graham Avery &

John Clouston, Claytons Martin Chapman, Guest

Krieger David Bartington, Marsh, Paul Spicer, Benfields Paul Bastien, XCS

Paul Farrelly, Amlin Richard Foulger, Aegis Laura Bramble & James

Side, Hiscox Heather O‘Sullivan, Ace James Roberts & Dave

Southgate, Beazley Lucy Cooper & Neil

Riddington, Atrium Rich Woodhams, Faraday Ray Tytler, St Paul Travelers

Claire.Bulman@lloyds.com Lloyd’s Ext: 6513

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Electronic Claims

A Broker’s View

Trevor Maddison

BEFIT & Marsh

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Electronic Claims

A Broker’s View

Target:

9 months until e-claims becomes reality

Brokers committed to e-claims trading from 3rd Qtr ’06

4 brokers publicly declared their commitment

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Electronic Claims

Highlights

Valuable lessons learnt from early implementers

22 ECF partnerships created – 6 brokers/16 underwriters

429 accumulative volumes transacted electronically to date

BEFIT and ECPG working closely with MRPO to ensure success of project

Broker questionnaire to be released to 169 brokers to understand broker readiness

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Electronic Claims

Concerns Process issues arising from early implementations

The ability of brokers and underwriters to adapt to change

Will there be sufficient number of brokers and underwriters trained and ready to go live

Big bang vs controlled introduction (new claims)

Handling legacy claims

IUA and Lloyd’s should work in partnership to realise electronic completeness for London market

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Electronic Claims

Milestones

The infrastructure is being proved

Electronic claims is working!

Let’s stop walking paper around this market

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Electronic Claims

Impact on Budget

Martin Dyer

LMA SDG & St Paul Travelers

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Electronic Claims

Impact on Budget

SDG responsible for delivery of CLASS / ECF on behalf of Project fund providers (LMA Members)

Tracks XIS performance against plans / budgets

Manages changes to scope through Change Request Process

Ensures Managing Agents are appropriately involved / informed

Participates in Market Claims Infrastructure Project Board

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Electronic Claims

Impact on Budget Funding provided via surcharges applied to SCM / USM

messages Revenue and Development costs (pre Phase 4/5 signoff) have

been tracking to plan Annual operational costs significantly under plan (est. £0.8m) Q3 review with XIS of Phase 4/5 scope and Change Requests Agreement now reached with XIS

Phase 5 scope finalised Additional Change Requests included (some excluded!) Budget fixed for this scope (surcharges to continue as planned

with no changes) Delivery to MAT in May 2006

Minimum scope change and focus on delivery now is critical

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Electronic Claims

Next Steps

Ian Mallery

ECPG & Marlborough

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Electronic Claims

Next Steps

Phase 5 delivery to MAT mid-May 2006

Delivers first version

of an integrated electronic claims service for Lloyd’s

replicating existing file electronically

with improvements where possible

companies and syndicates can see the same claim

Things change and we won’t have thought of everything

There will be more issues and enhancements

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Electronic Claims

Access

Can you access the internet from your desktop?

Are you familiar with looking at messages, data and information?

On your Personal drives or My Documents?

On Shared or Network Drives?

On websites?

The Insurers’ Market Repository is just another folder of documents

but market wide

24/7 access from anywhere

- Home, overseas, or even in the office

controlled by CLASS security access

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Electronic Claims

What should you do now? Assess and plan for the impact on you

How many adjusters have you got?

How many will need access to this system?

Can you connect to these new services?

Who will be responsible for implementing in your agency?

How will you ensure they are trained in CLASS and the repository?

How many need general computer training?

What is your approach to reviewing claims information if you are a follower?

How will the leader’s role change with responsibility for controlling the file?

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Electronic Claims

Technology Requirements PC specification

Windows 2000 SP1 and higher, Windows XP Microsoft Java Virtual Machine Version 5.0.3802 or higher Pentium 2 750 MHz and higher, 256 MB RAM, 25 MB of free space TCP/IP Networking Protocol Internet Explorer Version 5.5 SP2 or higher Java VM: Microsoft JVM 5.0.3802 or higher Sun JVM Plug-in 1.3.1_07, 1.3.1_08 or 1.4.2

Internet connection companies decide on the appropriate connectivity depending on their own

requirements Variables include number of users, number of clients, size of files, time taken for review

of files

Software packages supportedAcrobat Reader (.pdf) AVI Movie File (.avi) Bitmap Image (.bmp) GIF Image (.gif) HTML (.htm) JPEG image (.jpg) MP3 Audio file MS Excel (.xls) MS Project (.mpp) MS Paint MS Power Point (.ppt) MS Word (.doc) MS Visio (.vsd) Rich Text Format (.rtx) Text file (.txt) TIFF (.tif) URL (.url) WAV file (.wav) XML (.xml)

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Electronic Claims

Other Electronic Initiatives

ECPG Terms of Reference expanded to be the reference group for the impact of other

projects on claims practitioners Claims Minimum Standards CAF/Claims Tracker Lloyd’s Claims Scheme rewrite Solution for Binders SCM changes

- Leader reserves

Accounting & Settlement

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Electronic Claims

Contacts

For information Mike Smith & MRPO Lloyd’s Ian Mallery & ECPG Marlborough Tim Willcock LMA John Ticehurst XIS Trevor Maddison & BEFIT Marsh Martin Dyer & SDG St Paul Travelers

To participate in implementations E-mail claims@lmp-office.com

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Electronic Claims

Questions and Close