London Market Reforms - Acord

London Market Reforms- “where are we, where are we heading?”Software Providers Forum/IT ClubPat Talbot – IUAAdam Stafford – Lloyds Market Operations27th September 2007

AGENDA• Overview of London Market ReformObjectives• Benefits and Status of Insurers‟ MarketRepository (IMR)• ECF – Benefits and Status• Questions

Objectives• Rationalise and streamline processes to:– Remove reliance on paper– Capture data once and once only, re-usedata/reduce re keying– Reduce reconciliation/rejection errors– Introduce flexibility – let business requirementsdetermine the process, not have the processdriven by constraints– Speed up premium/claim agreement andpayment processes• Implement ACORD XML RLC standards– Remove „Londonisms‟– Enable back office rationalisation– Enable Global processes

Market Reform Strategy• The medium/long term vision– Implement ACORD RLC XML Messages for allprocesses where appropriate– Adopt standard global practices and processes– Insurers‟ choice of service provider (s) and processingapproach– There can be one or many service providers operatingin the London market• No more Londonisms– Brokers account at fundamental split level only (Lloydsonly)– Automatic broker funding/payment of deferredpremiums– Delinked approach as standard

Market Reform StrategyAll Design and Functional Specification, Implementation Guidedocuments posted to Market Reform websiteCurrent status:www.marketreform.co.ukNext Steps• Brokers and Carriers need to liaise with trading partners to adopt andimplement P2P process initiatives as appropriate.• Market Reform Strategy Group (MRSG) made up from members ofLMBC/IUA/LMA currently identifying early Implementers to create a„Matrix‟ to enable joint ventures to progress.• Participants and early implementers need to review documents toidentify key factors to enable strategic „end vision‟ and theimplementation steps required to achieve the „vision‟.

Insurers‟ Market Repository (IMR)• Electronic Premium Accounting (EPA) – electronicsubmission of slips, PANs, policy wordings andsupporting information by the broker to Xchanging• Electronic Claim Files in IMR• Two methods available for submission of EPA andClaim documents – Direct Load/DRI• All documents stored in IMR whichever submissionmethod used• IMR will include a „structured‟ (i.e. bureau) and an„unstructured‟ (i.e. non-bureau) area• UMRs - unique and maintained even if broker ofrecord changes mid term

Insurers’ Market RepositoryBenefits to Brokers:• Reduced paper and handling costs• Faster processing times – no „van time‟• Faster query resolution• Reduction in rejection rates• Enhanced audit trial & reconciliation• DRI functionality consistent with ECF• ECF reduces number of paper claim files inmarketplace• Utility function (non bureau), allows documentexchange between trading partners for P2Pprocessing.

Insurers‟ Market RepositoryBenefits to carriers:• No „van time‟ - speeds up premium processing• Faster query resolution speeds up premium processing• Signed lines available to all parties quicker• ECF enables concurrent claims agreement for all carriers• Access to all broker documentation in the IMR• Utility function (non bureau), allows document exchangebetween trading partners for P2P processing

Insurers Market RepositoryImplementation status - A&S• Currently 64 Brokers „live‟ Direct Load/DRI• Continued Broker Implementations planned for2 nd half year 2007, all LMBC members scheduledfor go live by end of 2007• 20,000 PANs submitted to 31 st December 2006• 185,000 PANs (26% of daily volume) submittedto 31st August 2007• Planned transactions by year end 80+% (volume)• Planned brokers live by year end 100%

Repository Implementation status:A&S• Phase 2 Completed - MAT June ‟07 – Live 26 thAugust „07– Reinstatement Premiums/simultaneoussettlements (single UMRs)– Enable Urgent transaction/re-submissionprocessing (PPWs etc)– Store all Metadata– New XIS „Gateway‟

Repository Implementationstatus: A&S• Phase 3 Planned MAT Sept ‟07 – Live midNovember 2007– User defined ACL‟s (Access Control Lists) – nowdeferred to 1 st Qtr 2008– „Short-term‟solution (work around)– Simultaneous settlements (multiple UMRs)– Edit work package– Ability to „store‟ LPANs and other docs as simplenon-ACORD data– Proportional Treaty Statements (ie multiple UMRs)– Additional DRI functionality for search anddownload

Insurers Market RepositoryElectronic Claims File (ECF) Update

Insurers Market Repository –ECF Con‟t• Improve service to all clients – (re)assureds,cover-holders, brokers etc• Enhance London market reputation –speedier claim service - reduce Claimlifecycle• Concurrent, 24/7 access to claim files –allows all parties to focus on „complex‟• Significant cost savings – paper, time, space

Insurers Market Repository –ECF Con‟t• Lloyds ECF „live‟ set 2006 – allows all „inscope‟ claims to be agreed „electronically‟• All Managing Agents signed and usingRepository (IMR)• Companies commenced „Pilot‟ June 2006 –7(8) IUA Carriers;– Global Aerospace, Liberty, Markel,Munich Re, Swiss Re, XL Re, Zurich– (AIG) – in house trial ahead of IUA Pilot

Insurers Market Repository – ECFCon‟t• Company Pilot extended for 6 months inDecember 2006 to:– Allow more volume• (only) 500 new loss advices (Companies) byDecember „06– Allow additional participants to „trial‟• AXA, Axis, Endurance, QBE, SCOR,Transatlantic Re

Insurers Market Repository – ECFCon‟t• Where are we now?– 3 Companies „live‟– 10 Companies in „Implementation process‟– 12 Companies having demonstrations/in „startup‟ mode– All Managing Agents Live– 30 Brokers using ECF– Weekly 47% of „in scope‟ claims processed viaECF within Lloyd‟s (as @ 7 th September).– 4 week rolling average 43%– 10,000+ new notifications processed 2007 –average 500+ per week

Insurers Market Repository –ECF Con‟tEvaluation by Companies completed (by original„piloteers‟)• System performance• Xchanging service & support• System functionality• Business efficiency impact• System Process and Procedures manual (completed)• Service Contract almost agreed• Charges/charging mechanism agreed andcommunicated to the market

Insurers Market Repository – ECFCon‟tCompany Evaluation results• Processing requirements met• Acceptable workarounds for functional shortfalls• Easy to use• Demonstrable efficiency gains for both „lead‟and „follow‟ positionsIssues for resolution• Functionality shortfalls (change requests MATOctober 2007 – live November 2007)• Contractual items to be agreed (inc. repositoryrules – inadvertant disclosure)

Insurers Market Repository – ECF Con‟t• System Functionality– Lloyd‟s assurance on document management– Change requests being delivered Oct 2007• Contract– Current „Pilot‟ contract for an interim period– Mutual market recognition on inadvertentdisclosure• Charges (Companies)– Licence Fees (£350 per licence)– „Start up‟ fee £7500 (£15000 for 2008)– Transaction (2008) charges to cover :• IUA contribution to IMR development• Prospective operational costs• Enhancement fund (h/ware andfunctionality)

Next Steps• System Functionality– „Cross market‟ user group to identify & prioritisefurther enhancements for Release 7 – expecteddelivery 2 nd Qtr 2008• Contract– Urgent resolution of contractual issues– Promote take up amongst IUA members andBrokers - essential for overall market take up– Ambitious 2007 target (Lloyds - 100% all newadvices by year end)

• Any questions?