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Market Reform Forum

Market Reform Forum. Andy Brookes Mike Smith Market Reform Programme Office. 25 August 2005. Objective: up to speed in twenty minutes……. Contract Certainty Public letter on CC CC guidance to be published end-September Progress on LMP slip, checking, Kinnect

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Market Reform Forum

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  1. Market Reform Forum Andy Brookes Mike Smith Market Reform Programme Office 25 August 2005

  2. Objective: up to speed in twenty minutes…… • Contract Certainty • Public letter on CC • CC guidance to be published end-September • Progress on LMP slip, checking, Kinnect • Back office electronic infrastructure • Accounting and Settlement • Electronic Claims Files – today’s special topic

  3. Contract certainty: Market Game Plan MRG endorsed the following, for implementation by end 2006: • Agree insuring clauses via a fully claused [1] LMP slip or LMP policy (which also meets LMP Standards) before inception • Define process measurements and quality standards • Understand standards and apply them • Raise standard through independent QA • Play back errors and publish league tables [1] by reference or all wordings spelt out

  4. Contract certainty: the programme • Key projects • Achieve CC during bind: agree wordings; get checking done • 30% of business end 2005; 85% end 2006 • LMP slips CC attributes • 95% June 2005; 97% December 2005; 99% March 2006 • Evidence of cover – within 30 days • Supporting projects • Policy checking by Xchanging • Model wording • Legacy (not strictly CC, but close cousin) • Kinnect/placement systems • Consistent with all this, but reduce compliance cost

  5. Contract certainty: MRG June letter • Definition: • “Contract certainty is achieved by the complete and final agreement of all terms (including signed down lines) between the insured and insurers before inception.” • And • “Full wording must be agreed before any underwriter commits to the contract”

  6. CC: end-September publication • “Clarification of practical implications of CC definition” for FSA • Measurement and targets • FSA agreed targets - 30%, 85% targets CC • LMP slip: 26 attributes for targets (95%; 99%); more attributes to come • Role of LMP slip audit and XIS checking: raising quality after the event to improve next time • Process diagrams with explanation • Guidance on issues • How will wordings be presented to U/Ws? • Either referenced or fully worded - brokers’ call • Up to underwriters to ‘express preferences’ • Across all business lines ie not targeted – brokers’ call • Signed lines; stamp conditions; underwriter subjectivities; challenges to CC

  7. LMP Slips – wider and deeper • CC score for open market: June 94%, just below 95% target • Rising, but slowly - 92% in March, 93% in April….. • 97% target for December • CC score for binder LMP Slips: 95% June • Down from 97% in May • Continue to check 25% of Lloyd’s slips in 2005. First IUA slips processed - companies getting first reports • LMP Slip 2005 • published in April • Extending to lineslips • LMP standard for lineslips published in June • 1 October mandate for Lloyd’s market

  8. LMP Slip Quality

  9. Contract certainty: checking • Policy checking Xchanging: Lloyd’s Prudential Practice Requirements • Binders • Two binder rejection reports for Q1 ‘05 issued to poorer performing firms (12 Lloyd’s; 12 brokers) • Q2 report in this month • Open market – similar approach to binders • Rejection reports for Q2 2004- Q1 2005 • Q2 report end this month • Better stats in Q4 2005 • QA tool for both binders and open market

  10. Quality Assurance Tool • Provides details of checks for market use that will ensure contracts reach the standard required by Lloyd’s • Aims to minimise or eliminate queries raised by XIS during the signing process • Aims to eliminate second submissions and achieve a “right first time approach” to contract certainty • QA tool now caters for both Binding Authority Contracts and Open Market Business • Do use and feedback

  11. QA Tool – Currently Available • Bahamas Binding Authority Contract Checks • Non-Marine Personal Accident Open Market Checks

  12. XIS policy rejections b – excludes Jan-04 The volume of binders is about 15% of the open market contracts

  13. XIS binder rejection data - QA checks

  14. BA QA Tool check General 1.002 Ensure that the LMP slip schedule details have been completed clearly and completely, eg there are no missing details, incomplete or unclear statements, vague expressions or ambiguities between terms and conditions.

  15. Legacy • MRG agreed cross-market priority rules • Rules on the LMP website • Road testing new Unsigned Policy List • in accord with new rules • New stats using priority rules • Reports on legacy numbers for big firms • Should there be market focussed effort in particular cob? • Is it worth it? Is it doable? Working Group suggest not

  16. Legacy policy data  Stage II signing  Stage I signing

  17. Legacy policy data by priority Stage II signing  Stage I signing

  18. Kinnect • Take up of 1 June release functionality for August incepting risks continues • North American Property going well • Slips now being created • Signing down and completions taking place • Terrorism starting in August • 17 customers live on platform and three in implementation • Next release due in two drops Q1 and Q2 06 • Improved risk class delivery, including generic (data light) template • Two way data transfer with underwriter response • International Property delayed to Q1 (from Q4) to fit with this • ITT for future supplier and review of platform development requirements

  19. Contract certainty: each firm • Don’t wait for end-Sept guidance • LMP slip CC attributes score • June result? Will you hit 97% in December? And 99% in March ’06? Process to improve? • CC on risks • How will your firm achieve 30% of risks by end year? • Full wording or references? • For brokers – focus on particular lines of business? • But quality matters, not just volume - build in QA checks • Sponsorship, project manager done. What’s the project look like? Training? Incentives? • Management information and measuring CC • How will you know you have done it?

  20. Accounting & Settlement • MRG and Project Board review. Result: • Measurement of process • Like other checks • Looking at a ‘light’ step 1 • Scanned LPAN and slips into repository • Reviewing how to achieve end vision • more efficient and flexible accounting and settlement processes achieved through the use of standard electronic messages in place of both paper and bespoke London messages

  21. Market Reform Training • LMP Training Group (LMPTG) established • Cross market group - CII and other providers • Ensure sufficient, relevant and accredited training Progress to date • Contract certainty training plan being developed • Senior management, compliance, technical levels • “These are the courses, you should have been on” e.g. Placing broker – how to complete an LMP slip • Claims and A&S plans to follow • Review / Accreditation of current training providers – LMP stamp

  22. Market Reform Forum Andy Brookes Mike Smith Market Reform Programme Office 25 August 2005

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