1. Update on business reform
Market Reform Forum
Update on business reform
14 December 2004
Andy Brookes
Lloyd’s BPR

2. Objective: up to speed in half hour……
Accounting and Settlement – coming next
Electronic Claims Files
Contract Certainty and Documentation
LMP slips
Kinnect
Review of 2004; high level plans for 2005

3. Principles underpinning reform
Reduce ‘Londonisms’: international firms must buy-in – governance role
Change requires authority and a degree of neutrality: individual firms cannot do it alone; Lloyd’s and the Associations will lead
Commitment to co-operate essential, on design and implementation
Network effects: a convoy for implementation
Cost / benefit case is rarely convincing on its own. FSA – the ‘smouldering’ platform. Transparency – the (now) burning platform
Minimum requirements; don’t ‘over satisfy’

4. Overall approach to market reform
Drive standards for data and harmonisation of process
LMP slip; A&S; claims management; ACORD work; contract certainty initiatives
Build supporting electronic infrastructure, throughout the life cycle of a contract
A&S; electronic infrastructure for claims (CLASS, ECF); Kinnect
Result: transparency in processes and performance. Then market firms and trading partners can measure and manage
LMP slips, policy production, A&S take-up, claims processing

5. Electronic Claims File
XIS development work
XIS started repository enhancements work 1st Oct (£1.6mn development and implementation costs)
Contract schedule for CLASS for Lloyd’s going to managing agents for signature (total spend £600k)
XIS started enhancements on CLASS for Lloyd’s 1st Nov
Governance – not simple, but should work
Claims project board set up; working with LMA Systems Delivery Group
Market associations – LMA, LMBC, IUA - groups in place
Line of business practioner groups
Working on the implementation timetable
XIS phased delivery of repository functionality
Categorisation (Q1); search capabilities (Q2)
DRI in July 2005
Which firms for which lines of business?

6. Contract Certainty and Documentation
4 Process options identified by the CCSG
XIS involved earlier/quicker is the focus
Potential initial implementation areas identified by LMBC documentation overview committee (DOC) and CCSG – 300 risks starting Q1 2005, include ‘old’ way to assess impact. Planning underway.
Implementation guide on LMP web site
Performance monitoring group has made initial proposals regarding measurement for London Market Standards Committee
Policy checking by XIS: needs to be explicit and earlier
Lloyd’s and XIS codifying the checks; rationalise; publish performance data. Binders first – early data indicates high rejection rate

7. LMP Slips November BSA headline (sneak preview): 88%
Formatting hit 95% (contract certainty, process efficiency)
Up for firms that the team has seen
Likely to continue to check 25% of Lloyd’s slips in 2005
“Persistent underperformance”
LMP slip a year on – minor changes to update
Implementation guide
in discussion with LMBC prior to publication
Thematic work
Claims parties
Problem area “claims agreement party”: not Lloyd’s 1999
UMR on Panel 1
Period (include time zones)
Law and Jurisdiction: still a problem area
LMP slips for binders
Check list in production; publication shortly

8. Measuring reform Purpose of measurement
Trustworthy data (vs. “I’ve heard it takes…..”)
To drive process improvements
Provoke firms to improve performance – measurable targets where possible
Measure impact of reform agenda
Dimensions
Timing; Quality; Cost; Satisfaction – customer service survey
Sequence of delivery
LMP Slips – more of the same
Document production; XIS policy checking; start with binders
Use of A&S and Claims electronic infrastructure
Overseen by the London Market Standards Committee
Medium term: post project rationalisation
What data has the MA’s and Brokers got??
Market participant responsibility
- Commit resources with the necessary skill to produce requirement definition documents
- Must recognise and progress market wide initiatives – help us to own and communicate solutions
- Must integrate the project plans into their own plans
- Must change internal processes in order to maximise the benefits
- Provide and accept leadership: MRIB, Lloyd’s, Kinnect
Democracy comes later

9. Kinnect November 1 release
Went well – enhanced placement process: harmonised business process; rough edges smoothed; market acceptable
Next major release 6.1 April 2005 – complete slip preparation etc
Hiscox signed-up; live January (not December)
Working on endorsements
Principles agreed; design end-January
Q2 delivery was aim – now September (or slightly earlier)
User adoption is key: Kinnect as core process
Step by step adoption plan agreed through H1
Additional risk classes H2 (poss late H1) 2005: terrorism; international property
Tiner (FSA) speech on contract certainty – core objective for market place over next two years
Kinnect is a version comparison tool; wordings assembly; collaboration tool for XIS checking

10. What did we get done (and not done) in 2004?
Failed to do (so far)
LMP Slips and GUA
Compliance 88 % - heading for 95%?
Audit Team sampling 25% - working well
Binders for 01/01/2005 – just
Initial ACORD standard – but late
New liability schedule (marine) for use with GUA
LMP template for Lineslips
ACORD standard for all classes
Contract Certainty and Documentation
Contract Certainty report issued and market wide Steering Group formed
R/I and Marine reports done
‘User Guide’ on website
Lloyd’s and XIS codifying policy checking
Put in place concrete changes to improve contract certainty and policy production
Lessons learnt: data essential – measuring slips gives traction and has been used to change behaviour; getting governance right essential – sufficient to give legitimacy and market sponsorship and expertise, not so much that it collapses under its own weight; communication – details of what has been delivered, who is doing what, what is difficult – essential and has not been enough.
Accounting and Settlement
Detailed design progressed well after initial delay – published December
Funding nearly finalised – on critical path?
Implementation timetable – MRIB aiming for end year
Start build, first A&S deliverable
Claims
ACORD interoperability standards - vital
XIS agreement (for infrastructure improvements) - painfully slow
Small number of ECF pilots in progress
Common London standard (LMP claims vision)
Italics = not planned, but significant

11. Market reform objectives for 2005+
Compliance checking – push for 100% accuracy (Q4)
Implement LMP standard for Binding Authorities (Q1) and Lineslips (Q2)
Define more of the content of LMP slip (on-going); put this into ACORD data dictionary (Q2); sponsor incorporation of LMP slip within ACORD placement message (Q3/Q4)
Further standardisation of the placing process for endorsements
Fully claused slip used for several lines of business (initially 300 risks; Q1-Q2)
Policy production; codify XIS policy checking (binders, Q1; other, Q2); publish statistics on checking process(Q2); track and reduce error rates (H2)
Agree approach to Legacy wordings (Q2)
MRIB to set out timetable for phased implementation
(At minimum) new procedure for premium (Q4?)
Complete phased roll-out through 2006
Implement Electronic Claims File (repository) – (Q1 2006)
Implement CLASS at Lloyd’s – (final deliverable Q1 2006)
Drive implementation by lines of business; 10% electronic (Q4)
Explain plan for common claims procedure in London (Q4)
Agree formal training programme with CII (Q2)
Measure use of new infrastructure and (hence) business benefits (on-going)
Ramp up communication (on-going)
LMP Slips
Contract Certainty and Insurance Documentation
Accounting & Settlement
Risks and controls….. Much like this year. i) XIS say the costs are £9m, prolonged hiatus as the market tries to get those costs down. Lots of stakeholders involved and no one controlling the process. ii XIS failed to deliver to on the software. iii Despite all our efforts, the design signoff finishes up being prolonged rather than taking a week. iv. MRIB failed to deliver their firms.
Claims
Other

12. Update on business reform
Market Reform Forum
Update on business reform
14 December 2004
Andy Brookes
Lloyd’s BPR

13. What you need to do Different projects, different action required
Get information, get it to right place
Who’s doing what: clarify responsibilities
Who is signing to pay for A&S?
Who is digesting A&S design (IT and business)?
Next year’s plans, budgets, IT programme
Your suppliers
Who is responsible for the change programme?
What needs to change? (IT, processes)
= coherence; getting the benefits
Training