Presentation is loading. Please wait.

Presentation is loading. Please wait.

The Market Reform Contract Endorsement

Similar presentations

Presentation on theme: "The Market Reform Contract Endorsement"— Presentation transcript:

1 The Market Reform Contract Endorsement
and where are we going to take it and us?

2 Let’s start with a brief history lesson

3 Market Reform Contract Endorsement (MRCE)
Why Guidance? No prior definitive guide to Endorsements Formal launch of new style documentation Aids training and implementation Benefits Assists in meeting code of practice, “Contract changes need to be certain and documented properly” Reduces the time and effort handling Contract Changes

4 Key Elements Eliminates use of the “honeycomb” endorsement condensing the long established two document (and sometimes three) process into one Allows for the MRCE to be used as an Insurer Authorised Document or as a Broker Insurance Document (BID) Follows MRC approach and section layout Provides an unambiguous Settlement Due Date default position The MRCE may be used immediately; formally adopted as the Market Standard after 31 March 2008

5 ‘Old’ Honeycomb style

6 Cover Note Addendum

7 MRCE Standard Structure
MRCE Structure Page header RISK and ENDORSEMENT IDENTIFICATION DETAILS CONTRACT CHANGE(S) Primary sections INFORMATION (where required) Secondary sections – order of sections is reversible CONTRACT ADMINISTRATION AND ADVISORY (mandatory, where applicable) AGREEMENT

8 New style layout Risk Identification and Endorsement Details section
- Additional details may be included Contract Change(s) Section using MRC format and headings

9 New style layout Contract Administration and Advisory Section (mandatory where applicable) Settlement Due Date default position (always include on APs) Agreement Section – GUA Example Agreement Boxes – ensure date of agreement is captured

10 Evidencing Contract Changes
The MRCE may be used irrespective of the form of the original contract documentation MRCE approach to evidencing Contract Changes A copy of the MRCE A copy of the MRCE with the Contract Administration and Advisory and Agreements sections in the contract documentation being omitted Brokers may also evidence agreements of change(s) to contract(s) by means of a Broker Insurance Document A formal policy endorsement document which is produced and authorised in accordance with the Insurer Contract Documentation heading of the MRC

11 e-MRCE

12 e-MRCE Project Approach
Primary target audience - the vast number of easy (non-complex) endorsements As many as possible as quickly as possible Attaching an MRCE to an or message for agreement and return to the broker Formal adoption criteria to join initiative Measurement being used as an interim stage (minimum entry requirement)

13 Benefits Accumulation
These may be interlinked Application/ Platform Data Integration Benefits Accumulation agreement delivery Technology phase MRCE Face to Face Implementation phase Benefit increments not to scale

14 Benefits Clients Regulator
Align the relative low value that clients place on brokers and insurers handling easy (non-complex) Contract Endorsements with the actual expense to the Market This means embedding a more cost effective and efficient process for all Clients should benefit from quicker turnaround of agreement process and therefore receive Contract documentation earlier – supports achieving Contract Certainty Regulator Code of practice states “Contract Changes need to be certain and documented promptly”

15 Benefits Insurers Allows insurers to apply “triage” to incoming endorsements Free up box time for more important , significant, productive and valuable business Free up “line” underwriters time by matching materiality and value with appropriate level of insurer personnel and personnel location “Following” markets see full audit trail and could be much more easily notified when not an Agreement Party Much easier to get “agreed” endorsements into insurer’s systems Use the consistency of presentation and data to integrate into insurer’s systems

16 Benefits Brokers Reduce time spent on delivering endorsements to insurers Provides more control and clearer accountability Reduces hand-off between “Account Handlers” and “Market Brokers” Simplifies onward confirmation of agreement to the Contract Change(s) to the client Allows for parallel insurer agreement process which will speed up endorsement agreement Affords the technology opportunity from the use of consistent presentation/data to integrate into broker’s systems Encourages confidence in electronic trading in the London Market and its growth and development

17 Adoption Assign a Project Champion
Actively promote the change in culture and behaviour Determine which technology (if in doubt start with ) Start in an easy place Single agreement endorsements Contracts with ‘regular’ endorsements Know the process e.g., dealing with “Urgent’s” and slow responses Workflow considerations Changing roles and responsibilities in the organisation Simple measurement – collated by MRO

18 Remote Agreements – Technology overview
– use with authentication software Document Repositories such as Lloyd’s Wordings Repository and ECF Repository are also available for automatic download of documents. Electronic Forms. This is the simplest option, involving the use of electronic forms for capturing or presenting information and using ACORD messages to transport the information between trading parties. Direct Messaging refers to the ability to received and send (ACORD standard) messages through your own gateway and integrate the documents and data directly onto your own core systems. Messaging Hub. This is a web-based application offering users the ability to route electronic messages between trading partners. It is used primarily to outsource the connectivity configuration where there are multiple destinations for sending/ receiving messages and keeping/maintaining live connections . Note: some technology vendors sell messaging hubs that have electronic forms integrated with them. Trading Platform. This is a web-based application offering users secure access to a trading environment which provides placement workflow and data management functionality via the internet. Risks may be bound on-line within the trading platform.

19 What are the risks and issues?
Key Risks and issues Resolution/mitigation Have to change the Culture and Behaviour Varying views from Brokers/Insurers on method of deploying electronic endorsements can act as barrier to take-up No common infrastructure or (placing) systems platform that facilitates endorsement agreements Endorsement numbers are not currently officially monitored. For proper and accurate measurement of the penetration and success of the initiative, Market-wide endorsement statistics will be required and centrally monitored Requires commitment from each organisation to adopt and adhere to new practices and procedures being mitigated by Implementation Pack guidance and the work of the Electronic Placing Steering Group Standards and common processes from usage scenarios. ACORD working on standards. Service Providers are already building Endorsement solutions Simple measurement approach for now; count what is sent “remotely” and what is agreed “remotely”. Brokers and Insurers submit high-level data

20 Next Steps December 2007, January and February 2008
Finalise “starter” pack Definitive guidance Overview of remote agreement processes Adoption and implementation considerations Measurement Market guidance and presentations early 2008 Insurer Briefings Broker Briefings Build-up market endorsement framework via cross-market representation for: Usage scenarios – Practitioners Messaging standards – Associations/ACORD Build systems around market framework – Technology providers

Download ppt "The Market Reform Contract Endorsement"

Similar presentations

Ads by Google