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Market Reform Forum

Market Reform Forum. Update on business reform 11 November. Andy Brookes Lloyd’s BPR. 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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Market Reform Forum

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  1. Market Reform Forum Update on business reform 11 November Andy Brookes Lloyd’s BPR

  2. 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

  3. 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’

  4. 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

  5. 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

  6. 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?

  7. 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

  8. Measuring reform • 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

  9. 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

  10. 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

  11. Slip - 2005 tasks • LMP Slip checking • Binders • Lineslips • ACORD • Electronic slip standard

  12. Business Process Reform The LMP Slip James Willison LMP Office

  13. Content • Status • Objectives • Mandate / Exemptions / Enforcing • Key areas to ensure compliance • Binders • LMP slip 2005

  14. LMP Slip Status • 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

  15. Objectives of the LMP Slip 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

  16. 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: • Risk Details (Headings vary by class of business) • Subscription Agreement (Content fixed) • Information (As required) • Fiscal and Regulatory (Content fixed) • Panel 3 remains unaltered (security detail)

  17. Recognised Exemptions All slips incepting from 1st January 2005 must be LMP Slips. The only recognised Exemptions at this time will be: • 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 All other slips will be processed as LMP Slips

  18. 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

  19. LMP Slips – key areas • UMR • Period • Law and jurisdiction • Payment terms • Document production • Claims • Taxes payable by underwriter

  20. 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

  21. Binding Authority Wording PANEL 1 PANEL 2 PANEL 3 SCHEDULE NON-SCHEDULE AGREEMENTS SUBSCRIPTION AGREEMENT INFORMATION FISCAL & REGULATORY

  22. LMP Slip - 2005 tasks • LMP Slip checking • Binders • Lineslips • ACORD • Electronic slip standard

  23. LMP Slips - Questions • Email: James.willison@lmpoffice.com • Phone: 020 7327 5231

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