1. LONDON MARKET REFORM
DELINKING

2. AGENDA Background Contract Certainty What is Delinking?
Market Closing Performance
The Myths
Current usage
Summary

3. BACKGROUND
Part of the International Process Compliance (IPC) Reforms (1998)
Align the London market with international processes
Improve flow of information to underwriters
Incorporated into the LMP Programme
Faster premium payment
Enables earlier documentation to client
Contract Certainty
Early delivery of Signed lines
Premium Payment Working Party

4. Current MRG Initiative
Project started at 1st January 2007 aimed at doubling usage of delinking
Identified what barriers exist to using Delinking and how these can be fixed
MRG have agreed to provide each Broker with a monthly report showing what has been Delinked.
MRG have set targets for usage:
Q2: 50%
Q3: 60%
Q4: 80% - Mandatory as at 01/01/2008
Market Rollout Plan provided to MRG for consideration

5. LONDON MARKET CLOSING THE PROBLEM
London Market closings are submitted on an LPAN
Submission of the LPAN to XIS provides:
advice of Closing details
notification of signed lines
authority for XIS to pay underwriters
Broker submits the LPAN once client pays
NOT when the information is available

6. Pre DELINKING 68+ -15 60 Over 80% of risks submitted ‘on time’
Only 20% of premium is received by SDD
Latest date for PAN submission to XIS
London Broker:
- signs down
- produces evidence
of cover
- produces debit note
Risk inception date
Funds transfer
68+
TOT date
-15 60
Client pays
Non-XIS (re)insurers advised of:
- Closing note
- signed lines
XIS check and resolve queries
XIS advise (re)insurers of signed lines and payment
Producing broker receives:
- evidence of cover
(including signed lines)
- debit note
Client receives:
- evidence of
cover
(Re)insurer writes risk

7. WHAT IS DELINKING?
Post Placement separation of the Closing submission (technical account) to XIS (& underwriters) from the instruction to settle
A two stage process
Advice of closing details and signed lines (LPAN)
Timing to meet the Contract Certainty/FSA targets
Trigger settlement once the client pays
At the same time as the old LPAN submission

8. DELINKED CLOSING -15 Broker signs down the risk Funds transfer
Trigger date + 3 days
London Broker:
- produces evidence
of cover
- produces debit note
Risk inception date
-15
Client pays
Non-XIS (re)insurers advised of:
- Closing note
- signed lines
Broker triggers payment
XIS advises Underwriters of payment
Client receives:
- evidence of
cover
- debit note
Producing broker receives:
(Re)insurer writes risk
XIS check and resolve queries
XIS advise (re)insurers of signed lines
LPAN submitted to XIS
Pending file

9. BROKER RELEASE OF FUNDS
On Line Trigger
Common facility for Lloyd’s/IUA business
Available via the XIS screens
Release items held on the pending file
Electronic RESETT message
Automatic trigger from Broker system
Standard international ACORD message
Money released into Settlement that evening

10. PAYMENT PERFORMANCE 27% 53% 20% 27%
Figures include cash and first installments only
Based on total in-scope premium signed for 2005 up to August. Data supplied by Xchanging

11. QUERIES/REJECTION RATES
Closing Queries
Items where the Closing submission is queried by XIS
22%
Closing Rejections
Items rejected back to the Broker for correction and resubmission 4%

12. SCOPE OF DELINKING Direct Facultative XOL Includes Excludes
Original premiums
Additional premiums
Return premiums
Excludes
Proportional Treaties
Reinstatement premiums
Premium reserves
May not be suitable for
Short Terms of Trade periods
Planned/Flexible Settlement schemes
Direct
Facultative
XOL

13. Broker Signing Messages
- BSM
EVERYTHING SETTLED THAT DAY. Includes payment of previously Delinked items and cash (Non-Delinked) signings.
- IPC BSM
An EDI or CSV message in the same format as BSM showing EVERYTHING DELINKED THAT DAY applies to all transactions
- DL5089 “CSV File”
For A&S Repository submissions only shows EVERYTHING SIGNED THAT DAY – Delinked and Non-Delinked

14. DELINKING MYTHS Delinked risks are paid later than non Delinked
Analysis of Delinked submissions disproves this commonly stated issue
Underwriters cannot tell if a delinked risk has been paid
Separate messages are sent to Underwriters by XIS to advise when a delinked risk has been submitted and of the subsequent payment
Brokers just want to delink risks to keep them off the late payers list
The XIS Signing Performance Report for delinked items is based on the payment trigger date - not the LPAN submission

15. DELINKING MYTHS – Cont’d
Just another Market Reform requiring costly systems changes
Brokers submit the existing LPAN with a ‘Delinked’ stamp on it
Payments can be released using the XIS on-line trigger facility
Underwriters will need to change their systems if they want to take advantage of the earlier Delinked message.
Most Underwriter Software packages already support delinked messages

16. Convertible Currency Processing
For convertible currency transactions a notional rate of exchange must be provided at the Delinking stage.
When the premium is released for settlement, the rate of exchange may be updated with the actual rate which will apply
Rate of exchange may be updated via RESETT or Delinking Trigger
If settlement rate of exchange varies more / less than 10% of original rate of exchange then release is prevented. Contact XIS to release on your behalf

17. Miscellaneous Settlement Due Date (SDD) Premium Payment Warranty (PPW)
Delinked risks may be released for settlement, before, on or after the SDD. If they are released after the SDD, you will be late signed.
Premium Payment Warranty (PPW)
Delinked risks may be released for settlement up to and including the PPW Date.
Underwriter Proof
Once date has been passed underwriter proof is required, they will accept the premium
Evidence of underwriter proof should be sent to Xchanging who will release on your behalf

18. BENEFITS - Brokers
A standard process for dealing with XIS and non-XIS insurers
Queries resolved earlier
Control of payment is retained
Enables Contract Certainty requirement for Signed Lines to be achieved
Consistent with A&S processes

19. BENEFITS - Underwriters
Earlier advice of signed lines:
Provide confirmation of exposure
Assist credit control
Eliminate effort in chasing broker for details
Xchanging messages
Closing queries and corrections should not delay settlement
Consistent with A&S processes

20. BENEFITS - XIS
The checking of Closings and resolution of queries is no longer time critical to premium payment
Reduces processing peaks and enables better workflow management
Should a processing backlog occur it should not impact premium payment
Earlier policy preparation is possible

21. Getting Started Who will release funds?
Will you use the RESETT or Delinking Trigger?
Get Delinking trigger ID’s set up or your RESETT software configured
Get “IPC Delinked” stamp made
Consider whether you will require the IPCBSM
Consider processing some test transactions

23. SUMMARY The Delinking process is beneficial to your organisation
It supports the Contract Certainty and FSA requirements
Closing queries and rejections are no longer on the critical path for premium payment
This results in improved premium payment performance
Premium performance and Delinking usage will be monitored over the next six months
Eliminates “Londonisms”

24. Q
& A

25. LONDON MARKET REFORM
DELINKING