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Market Reform Forum

MRG Objectives 2008Accounting and Settlement Progress and Plans

Andy Brookes, MRO

Mark Barwick, LMBC

31st January 2008

Market Reform Office

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8Structure of presentation

• Reminders

–Successes in 2007

–The MRG: role and principles

• London Market Reform Vision revisited

• 2008 MRG workplan and actions for firms

• Five things to do with your shiny laminate

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8Building on the successes of 2007 (and 2006)

• 2007 was second year (at least) of tangible progress

– 2006: Contract certainty; MR Slip; IMR live for claims and A&S

• In 2007, significant reform in key areas

– Contract certainty embedded; legacy ahead of 40% target

– Market Reform Contract adopted; PBQA changes

– ECF: 88% of new in-scope Lloyd’s claims in December ’07

– ECF: 24 London market companies actively using ECF

– A&S: 70% of Original Premium via IMR

– Progress on e-placing, endorsements, electronic policies, de-linking A&S

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8The Market Reform Group (MRG)

MRG is the senior market-wide body responsible for overseeing and driving process reform in the London Market

MRG will typically focus on and drive 2-3 key initiatives…..

….while planning the next steps

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8The Market Reform Group (MRG) will….

• Set vision, strategy and timetable for reform

• Resolve difficult cross market issues

• Communicate: influence and disseminate

• Set up governance for initiatives

• MRG firms lead by example and encourage laggards

• Ensure that initiatives are consistent

• Measure progress

• Drive use of standards with ACORD

• Ensure resources in place – people and funding

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8The Market Reform Group (MRG): principles

In overseeing and driving reform, MRG will:In overseeing and driving reform, MRG will:

• Work with the grain of the market

• Grasp the difficult issues

• Not be proprietorial

• Represent the London Market on reform

• Focus on cross-market co-ordination, not centralised delivery

• Take incremental steps: momentum is paramount and better than perfection

• Actively communicate with the market

• Reduce ‘Londonisms’

• Champion the formation and adoption of process standards

• Use the lead implementer model

• Use measurement to drive performance improvement

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8London Market Reform Vision

To be the market of choice

This means:

• Maximising electronic processing across the market

− All risk submissions sent electronically; wholly electronic trading for some simple risks with no manual intervention; face-to-face when required for large and complex risks

− All claims processed and agreed electronically; face-to-face negotiation only when required for complex claims

− All accounting and settlement of risks performed electronically

• Using

− ACORD international standards for data messages and documents

− Common processes

− Agreed service levels

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8London Market Reform Vision

Resulting in the following benefits:

• First class client service

• Early receipt of high quality contracts

• Rapid claims processing and communication with clients

• Rapid movement of premium and claim monies

• ‘Right first time’ processing

• Increased efficiency with lower operational cost

• Lower operational risk

• Flexibility to support bespoke business

To be the market of choice

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8Steps towards the vision

All risk submissions sent electronically; wholly electronic trading for some simple risks with no manual intervention; face-to-face when required for large and complex issues

• Increase proportion of risks for which structured data is exchanged

• Adopt MRCE & increase use of e-endorsements

• Further reduce legacy risks

• Adopt Electronic Policies

Vision 2007 – 2009To be the market of choice

PLACING

2008 actions for market firms

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8Steps towards the vision

All claims processed and agreed electronically; face-to-face negotiation only when required for complex claims

• Develop and extend ECF

• Adopt ECF for legacy claims

• Implement service targets for ECF claims

CLAIMS

2008 actions for market firmsVision 2007 – 2009To be the market of choice

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8Steps towards the vision

All accounting and settlement of risks performed electronically

• Develop & extend IMR use for all payments

• Extend use of De-linking

• Increase use of ACORD messaging for A&S submissions

Vision 2007 – 2009To be the market of choice

2008 actions for market firms

ACCOUNTING & SETTLEMENT

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8Steps towards the vision

Placing document standard for London (MRC) Q1 Confirm whether update required

Implement MRC for Binding Authorities and Lineslips Q2 Adopt as market standard

Further reduce Legacy policies Q1-Q4 Reduce mid 2006 numbers to below 20% (Q4)

Adopt Electronic policies Q4 80% of bureau policies

Market Reform Contract Endorsement (MRCE) Q2 Adopt as market standard

Endorsements via e-messaging Q4 To be defined by Steering Groups (Q1)

Promote take-up of electronic support for placing Q4 To be defined by Steering Group (Q1)

ECF Enhancements to increase scope and improve usage

Q2, Q4 Enhancements delivered

Full ECF usage for new in-scope (as at end 2007) claims

Q1Q3

For Lloyd’sFor IUA companies

ECF for legacy claims Q2-Q4 Complete pilot, review targets (Q1)

Implement Service targets for ECF claims Q1 Approach to service targets defined

Placing

Claims

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8Steps towards the vision

Implement A&S enhancements (Release 4) Q2 Enhancements delivered

Use repository for Original Premiums Q1 100% of original premiums

Use repository for Additional & Return Premiums Q4 100% of submissions

Adopt de-linking Q3 100% use for in-scope transactions

Implement Premium Payment Working Party recommendations

Q3, Q4 Successful implementation

A&S ACORD Messaging for bureau & non-bureau Q4 To be set by Steering Group (Q1)

Measurement/Benchmarking Framework Q1-Q4 Continue measurement. Review need for Benchmarking (Q3)

Collaboration with ACORD on standards development Q1-Q4 As per ACORD 2008 objectives

Accounting & Settlement

Supporting

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8The Market Reform Laminate

• This information is presented in the Market Reform Laminate

• This is available at www.marketreform.co.uk

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8Five things to do with your laminate

• Integrate them within your change programme

– Explicit decisions on priorities, especially where not in first wave

• Relate the targets to your firm

– Use within your scorecard

– Beat the market wide targets; or be clear why you can’t

• Get the objectives and progress in front of your Board

– Without that, where’s the sponsorship?

• Put them in individual objectives

• Link to bonuses

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8Contacts for further information

• Further information can be found on the Market Reform Office (MRO) website:

www.marketreform.co.uk

• Contact your Association…..