1. Market Reform Forum John Harvie, MRPO Martin Roberts, LMA 25 April 2007

2. Market Reform Update • John Harvie • Progress since last forum • Contract certainty • ECF and IMR • Other projects • Martin Roberts, Mike Reidie –Documentation and contract checking Page 2

3. Contract certainty - Headlines • Performance continues to exceed targets – Feb brokers’ achievement rate – 95% • Guidance consolidation nearing completion • Wide consultation just completed and has received high levels of support (including from the non subscription market). • Reviewed by AIRMIC and the CII, both are supportive. • Seeking guidance from the FSA on status of revised guidance and will publish it with reference to this status. • We are planning to continue to update the FSA for the remainder of this year. • Repeat of market survey will take place in August / September • Plan to disband CCSC and the other CC related governance groups around September. Page 3

4. Summary of the guidance re write • Plan to publish a revised contract certainty code of practice in May. • Consolidates 11 documents into 1 • Modifies the definition to remove the inconsistency and confusion arising from the use of inception date as part of the old definition, removing the need for separate late placements guidance; • Brings the definition, principles and guidance into a consistent structure; • Creates principles that are, as far as possible, timeless. Reference to targets, service levels or specific processes has been removed from the principles; • Provides clarity on how organisations may choose to demonstrate performance (which can encompass 100% checking as well as sample audits and process controls); • Makes the code generic (i.e. removes London specific terminology) and hence applicable to the whole UK general insurance industry • Deals with the actions required when the principles of contract certainty are not met. This provides a link between contract certainty and the legacy of un-issued contract documentation; • Defines the scope of contract certainty. Page 4

5. Plan for completion • Issue final draft guidance to Associations to obtain feedback from members. Early April; • Issue finalised guidance to FSA for comment and arrange to brief FSA representatives. End April; • MRG /CCPB sign off guidance for publication. End April; • Develop communications for associations. Early May • Develop market communication pack. Early May; • Publish. May; and • Brief implementation and communication exercise. Mid May to mid June. Page 5

6. Legacy • Lloyd’s progress continues • Volume of existing Legacy policies in the Lloyd’s Market in February 07 was 181,222, which was a decrease of 5% compared to January 2007. The index score is 79% compared to Lloyd’s baseline Legacy volume taken in July 2006. • Company market • IUA Circular 044/07 (26th March 2007) confirmed the significant Legacy activity amongst IUA members, Commencing with Priority 1 to tackle major potential exposures first • IUA is now giving further consideration to methods of measuring progress that can be more meaningful for both the market and the FSA than the Xchanging UPR. Page 6

7. Contract certainty and legacy - Messages to take away • Contract certainty sponsor or project manager, be prepared to do a gap analysis on your existing systems and controls against the new code of practice; and • Be prepared to help brokers and underwriters understand any implications of the new code that you believe are important. • Managing agent continue to work with Lloyd’s to reduce the legacy. Central point of contact Yvonne Bouman • Company market work with the IUA to reduce the legacy. Central point of contact John Hobbs • Be prepared to demonstrate to the FSA that your CC systems and controls are in place and working. Page 7

8. ECF and IMR – more use, more needed • Claims • All active Managing Agents, 44 Brokers and 1 Service Provider (XCS) signed up to ECF • 20% of in scope Lloyd’s claims being processed electronically in March – up from January (8%), February (12%) • Releases 6a and 6b – to allow Binders to be processed electronically - on target • 6a, in MAT at the moment, Go live 7th May • 6b, MAT planned for June-August • IUA planning to come on stream, go live 1st July - delayed • A&S • 70,000+ transactions have now been processed electronically • Release 2 – more DRI functionality – on target for live in August Page 8

9. ECF and A&S - Messages to take away • Good progress but more needed. • Blocks to take up being resolved: • ACL issue close to resolution. • Issues around funding of support near resolution • so shortly no excuse. Page 9

10. Market Reform UpdateOther Projects

11. Other projects • Future slip developments • A new release of the Market Reform Slip July • reflect the approach to be taken to contract documentation (more on this in a minute) • to tidy other aspects of the standard • Testing certification facility • ACORD standards are key to reform • TCF now available as a means of insuring that you ACORD messages are consistent • Contract quality: checking documentation • Martin Roberts – Contract documentation Page 11

12. Other projects Prepared by JMD Specialist Insurance Services from information provided by XIS • De linking Page 12 • Carrier are significantly more likely to get paid on time if transaction de linked

13. Other projects • Endorsements • Pilot close to starting, different brokers joining from now until 7th May • Pilot run through to end July • 18 Insurers currently signed up to participate • IUA and LMA briefed and actively involved • Market briefing back • Benefits: • Reduce the effort required to handle endorsements in the London Market; • Improves customer service, speeds up confirmation to policyholder/clients; • Reduces number of ‘box’ visits / frees up valuable ‘box’ time to see more business; • Allows Insurers who ‘follow’ to see endorsements earlier, particularly premium movements; • Increases common business process; • More reliable audit trail and recording of agreement/acknowledgement; • Assists with Contract Certainty; • Parallel (re)insurer agreement process will speed up endorsement agreement. Page 13