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LMP – Insurance DocumentationLMP – Insurance Documentation
Contract Certainty Initial ImplementationsContract Certainty Initial Implementations
THIS DOCUMENT APPLIES TO THE INITIAL IMPLEMENTATIONS OF THE THIS DOCUMENT APPLIES TO THE INITIAL IMPLEMENTATIONS OF THE CONTRACT CERTAINTY PROPOSALS ONLY, AT THIS STAGECONTRACT CERTAINTY PROPOSALS ONLY, AT THIS STAGE
January 2005January 2005
CCSG Membership
• Kevin Collins (MPC) Chair + MPC member• John Bentley (LMA)• Malcolm Forbes-Wilson (Aon) DOC Chair• Paul Gold (GE Frankona)• Steve Hulm (LMP) Secretary• Roy Laker (LMP)• Jo Langley (JLT)• Malcolm Massie (Amlin)• Dave Matcham (IUA)• Edward Moss (Catlin) MPC member• Rob Myers (XIS)• Mike Reidie (Marsh) DOC + LMSC member• Iain Saville (Lloyd’s) Head of BPR• Phillip Sexton (Hiscox)• Peter Spires (Lloyd’s)
CCSG Has …
• Developed the process in detail (4 options):1. Contract certainty end-vision. Slip leader confirms policy (may use
service provider). Broker/Slip Leader finalise policy.2. XIS technical check. Broker/Slip Leader finalise policy.3. XIS technical check (early) + signing4. XIS technical check (after placing) + signing
• Prepared an “Implementation Guide”
• Developed an Implementation Strategy & Plans
• Gained Lloyd’s feedback on proposals:• Tax & regulatory checking performed by XIS.• Value XIS checks to safeguard licenses• Will review checking performed• Options 3 & 4 can proceed with Lloyd’s markets
• Engaged with broker group (DOC) to implement + now engaging with companies & LMA
Key Features (for all options)
• Fully-claused placing document
• Use of model wordings and clauses, wherever possible
• Leader-only agreement, wherever possible
• Early agreement and checking of the wording
• Early finalisation of the policy
• Monitor performance – to demonstrate achievement
• Early delivery of an evidence of coverage for the client
DRAFT: Documentation – Process Overview.
Process objectives:
Achieve contract certainty Evidence to the client
Macro process steps:QuoteFirm order placementProvide closing informationTechnical & regulatory policy checkFinalise policy & evidence to client
Process inputs:• Risk information
• Client requirements
• Relevant wordings & clauses
Process outputs:• Contract agreed and documented
• Contract evidenced to the client
Process measures:• Wording certainty date versus inception date
• Firm order date versus inception date
• Contract certainty date versus inception date
• Date evidenced to the client versus inception date
Start:
Client Requests Quotation
End:
Contract evidenced to client
DRAFT: Documentation – Options 1 & 2.
Option 1• Broker prepares draft LMP policy & agrees with slip-leader
• Slip Leader confirms policy up-front
• Service provider may conduct Technical / Regulatory check where required by Slip Leader
• Broker/Slip Leader finalise policy after signing-down
• Contract certainty can be achieved and evidenced to client by inception date
Option 2• Broker prepares draft LMP policy & agrees with slip-leader
• Slip Leader confirms policy up-front
• XLMS conduct Technical/Regulatory check and confirm to Slip Leader & broker
• Broker/Slip Leader finalise policy after signing down
• Contract certainty can be achieved and evidenced to client by inception date
QuoteRequest quote Draft policyPresent & agree policyQuoteReview quote(s)Confirm policy
Firm Order PlacementFirm orderSeek & write linesPlacing completeIdentify changes
Provide closing informationSigning downPrepare closingsSubmit / issue closingsSubmit policyCheck closings
Technical (& for Lloyd’s Regulatory) policy check - if changes
Finalise PolicyConfirm technical & regulatory check performedAdd jacket / attestation clause and security scheduleSign policyPrepare copiesIssue evidence to client
Technical (& for Lloyd’s Regulatory) policy check
Options 1: Conducted by Slip Leader – or service provider.
Option 2: Conducted by XLMS.
Proceed to Finalise Policy if no change from original draft policy
DRAFT: Documentation – Options 1 & 2.
Options 1 & 2: Conducted by broker/slip leader
Options 1: Conducted by Slip Leader – or service provider.
Option 2: Conducted by XLMS.
DRAFT: Documentation – Options 3 & 4.
Option 3• Broker prepares draft LMP policy & agrees with slip-leader
• Slip leader invokes XLMS check up-front
• XLMS conduct Technical / Regulatory check and confirm to slip-leader & broker
• XLMS finalise Policy after signing-down
• Contract certainty can be achieved and evidenced to client by inception date
Option 4• Broker prepares draft LMP policy & agrees with slip-leader
• Broker invokes XLMS check after signing down
• XLMS conduct Technical / Regulatory check and confirm to slip-leader & broker
• XLMS finalise Policy after signing-down
• Contract certainty can be achieved and evidenced to client by inception date
QuoteRequest quote Draft policyPresent & agree policyQuoteReview quote(s)Confirm policy
Firm Order PlacementFirm orderSeek & write linesPlacing completeIdentify changes
Provide closing informationSigning downPrepare closingsSubmit / issue closingsSubmit policyCheck closings
Technical (& for Lloyd’s Regulatory) policy check
Finalise PolicyConfirm technical & regulatory check performedAdd jacket / attestation clause and security scheduleSign policyPrepare copiesIssue evidence to client
Technical (& for Lloyd’s Regulatory) policy check
Option 3: Review draft policy prior to, or at, Firm order placement
Option 3: Proceed to Finalise Policy if no change from original draft policy
DRAFT: Documentation – Options 3 & 4.
Option 4: Proceed to Firm order placement from quote
Option 4: Conduct Technical & Regulatory review after signing down
DRAFT: Process Charts - Key.
Key:
Process flow (data transfer):
Prime process flow
Alternative process flow
Decision point
System or Database
Process Step
Document
1.1 Request Quote
Policy
?
Wording Certainty (amber provisional)
Firm Order
Contract Certainty (amber provisional)
Date Evidenced to Client
W
F
C
D
DRAFT: Interim approach for Lloyd’s and Companies pending Lloyd’s review of XLMS activities - Option 3.
Client
PlacingBroker
Slip Leader(s)
Following Underwriters
1.1 Request Quote
InceptionTIME
1.2 Draft,
Present & Agree
Policy
1.4 Select Quote
2.1 Firm Order
2.3 Placing Complete
3.1 Sign Down
2.2 Request &
Write Line(s)
3.2 Prepare Closings
5.3 Receive Evidence
3.5 Check
Closings
5.2 Issue Evidence
Bureau/ServiceProvider
D
4.1 Technical (&
Regulatory) Check
Inception
C
C
5.1 Finalise
ClientPolicy
3.3 Submit
Closings
W
4.2 Technical (&
Regulatory) Check W
If changes applied
3.4 Submit Policy
FDO S&A Stage 2
?
W
?
?
? ??
F
2.4 Identify Changes
?
1.5 Confirm Policy
? ?
Policy
1.3 Quotes/Support Quotes
XLMS
XLMS
DRAFT: Interim approach for Lloyd’s and Companies pending Lloyd’s review of XLMS activities - Option 4.
1.1 Request Quote
InceptionTIME
1.2 Draft,
Present & Agree
Policy
2.1 Firm Order
2.3 Placing Complete
3.1 Sign Down
3.2 Prepare Closings
5.3 Receive Evidence
3.5 Check
Closings
5.2 Issue Evidence
D
Inception
C
C
5.1 Finalise Client Policy
3.3 Submit
Closings
W
4.2 Technical (&
Regulatory) Check W
If changes applied
3.4 Submit Policy
FDO S&A Stage 2
?
?
? ??
F
2.4 Identify Changes
?
1.5 Confirm Policy
Policy1.4
Select Quote
1.3 Quotes/Support Quotes
XLMS
2.2 Request &
Write Line(s)
Client
PlacingBroker
Slip Leader(s)
Following Underwriters
Bureau/ServiceProvider
DRAFT: Documentation – Summary.
Key Differences:
Both options 3 & 4 can meet our objectives:• Contract Certainty by inception• Evidence of Coverage by inception
After the Lloyd’s Review:• Options 1 & 2 could offer potential for streamlining the process
Option 3• Broker prepares fully-claused draft LMP policy & agrees with slip-leader
• Slip leader invokes XLMS check up-front
• XLMS conduct Technical / Regulatory check and confirm to slip-leader & broker
• XLMS finalise Policy after signing-down
• Contract certainty can be achieved and evidenced to client by inception date
Option 4• Broker prepares fully-claused draft LMP policy & agrees with slip-leader
• Broker invokes XLMS check after signing down
• XLMS conduct Technical / Regulatory check and confirm to slip-leader & broker
• XLMS finalise Policy after signing-down
• Contract certainty can be achieved and evidenced to client by inception date
Process Failures – what can go wrong ?
Significant risk factors:
1. Changes are applied during placing AND either:• It is not reflected in all documentation• It is wrongly applied• Insufficient agreement is gained
2. XLMS technical check not satisfactorily completed due to either: • Rejections/queries not being resolved• Unable to complete in a timely fashion due to e.g.• Submitted too late• File queried/rejected• Seasonal peaks• Lack of resource• File lost
CCSG Implementation Planning
•Initial Implementations Q1-Q2 2005. 200-300 risks across all classes.
•Process options 3 & 4 for Managing Agents. •1 & 2 possible for companies ?
•Classes identified: Aviation (Hull, War, Aviation General); PI; D&O; NA Property Fac R/I; Treaty; Binders; Marine
•Performance Monitoring in parallel (broker spreadsheet returns) to monitor key dates achieved.
•Brokers identifying possible risks to be processed within initial implementations: Aon, Benfield, Heath Lambert, JLT, Marsh, Miller, Willis
•Now engaging with markets (via IUA, LMA & non-IUA companies)
Implementation Timetable
• Publish implementation guide (options 3&4) Dec 2004 CCSG• Confirm participants Dec 2004 CCSG• Initial implementations Q1–Q2 2005 CCSG• Initial performance monitoring Q1–Q2 2005 LMSC• Lloyd’s review of checking Q1-Q2 2005 Lloyd’s/XIS• Amend Lloyd’s underwriting req’ts TBC Lloyd’s• Review LMP Policy Guidelines Q1 2005 LMP• Determine impact of Lloyd’s findings Q2 2005 CCSG/MRGE• Publish initial performance results Q1-Q2 2005 MRGE• Evaluate initial implementations Q1-Q2 2005 CCSG/MRGE/XIS• Define strategic technology solution(s) end Q2 2005 CCSG/MRGE• Review service change requests Q3 2005 TBC IUA/LMA/XIS• Publish implementation guide (other options) Q3 2005 TBC CCSG/MRGE• Plan & prepare further implementations Q3 2005 TBC CCSG/MRGE• Commence further implementations Q3-Q4 2005 TBC CCSG
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