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Accounting & Settlement The Way Forward. Accounting & Settlement Page 1 Restatement of A&S objectives Background 2002-2005 Work streams commissioned by.

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Presentation on theme: "Accounting & Settlement The Way Forward. Accounting & Settlement Page 1 Restatement of A&S objectives Background 2002-2005 Work streams commissioned by."— Presentation transcript:

1 Accounting & Settlement The Way Forward

2 Accounting & Settlement Page 1 Restatement of A&S objectives Background Work streams commissioned by MRG –Repository –Strategy –Measurement Questions Agenda

3 Accounting & Settlement Page 2 Restatement of A&S Objectives Rationalise and streamline business processes, specifically: –Speed up premium and claims payment –Remove reliance on paper –Reduce errors and reconciliation by capturing richer data once –Enable back office rationalisation –Introduce flexibility - process the way the business requires rather than the business being driven by constraints Implement international standards for the communication and processing of accounting & settlement data (the ACORD XML RLC standards) Provide a firm base for the future

4 Accounting & Settlement Page 3 Background Project commenced by defining new approach in 2002 Output from this was a requirement to implement international standards whilst maintaining current process flow incorporating XIS as central bureau High level design requirements published in July 2003 Detailed business design published in Dec 2004 and Technical Information to support design from March to June In June 2005 project stalled due to implementation complexity and rising estimate of cost of changing central infrastructure. MRG requested A&S board undertake three work streams i.e. Repository, Radical Review (strategy) and Measurement

5 Accounting & Settlement Page 4 Repository Strategy Measurement Three A&S Workstreams

6 Accounting & Settlement Page 5 Repository MRG and A&S PB commissioned Xchanging as supplier with Market as paying customer Builds on ECF, The Insurers Market Repository Broker loads slip, LPANs and supporting documentation to repository thereby removing paper (and vans) Carriers can gain access and view and download documents The repository supports ACORD DRI, Interactive (Direct Load) and E mail submission Repository will have two main uses on A&S:- –deliver documents to Xchanging Ins-Sure Services for checking (EPA) –deliver documents directly between brokers and carriers i.e. in support of non-bureau or P2P processes (utility)

7 Accounting & Settlement Page 6 Repository Benefits and Implications Faster turnaround times for documentation since van time is eliminated Faster delivery and speedier query resolution means signed lines available quicker Improved resolution of queries will reduce the volume of rejections DRI functionality consistent with ECF. Brokers have options on how to connect, DRI Push, DRI Pull or Direct load (or additionally for delivery to Xchanging for checking) Gives carriers access to a copy of the slip and other premium submission documentation in the repository Carriers can be notified as a slip is loaded on the repository thereby allowing signed lines to be communicated sooner, thus allowing improved exposure management Utility function of the repository, without XIS processing, allows users to distribute documents in a controlled manner to specified parties

8 Accounting & Settlement Page 7 Repository Timescales Build time - this is being delivered in three releases Release 1 –Live E mail and Direct Load –Pilot DRI November 06Live date slipped to December –Currently some 5800 PANs have been –Anticipate increase in activity for the 2007 renewals Release 2 –Planned MAT Feb 07 –Includes application of supplied ACLs, the store of all document metadata, ability to close simultaneous settlements Release 3 –Planned MAT May 07 –Includes the utility area plus the ability to close treaty statements

9 Accounting & Settlement Page 8 Repository Strategy Measurement Three A&S Workstreams

10 Accounting & Settlement Page 9 Strategy Review commissioned by the MRG to analyse strategic options for A&S in the London Market The A&S Board confirmed they were committed to the vision of adopting ACORD standards for messaging The Board short listed eight implementation options and carried out analysis and evaluation They concluded the Market should adopt a model based on a global point to point solution, allowing each carrier their choice of service provider. In essence this is todays non-bureau process The MRG requested that the model should be proposed to Market Associations for agreement. Market Association responses favourable – Move to next stage to complete the design documentation to demonstrate how this would work in detail. This is now complete

11 Accounting & Settlement Page 10 Strategy Key Features of Approach The broker will deal directly with the carrier(s) The carrier(s) will have the choice to retain in-house or outsource services where they view a business benefit. This will be transparent to brokers Supports early adopters by enabling migration with trading partners as soon as they are able Mirrors the Electronic Claims File implementation of broker to carrier trading partnerships Significant departures from todays environment are: –There can be one or many service providers operating in the market –Service providers will sit behind the carrier –Roles will move to the appropriate responsible parties (e.g. Risk carriers become responsible for accounting splits)

12 Accounting & Settlement Page 11 Key Features

13 Accounting & Settlement Page 12 Strategy Benefits of approach - Brokers Promotes process efficiencies –Potential to implement straight through processing –Re-use of broker keyed data reduces re-keying and reconciliation –Consistent data usage makes supporting clients more efficient –Validation at source reduces rejections and frictional costs –Faster payment cycles and reduced administration costs Reduces barriers to business e.g. removes Londonisms –International data interchange (ACORD) standards ensures business can be transacted consistently throughout the world –Movement of non fundamental accounting splits reduces administration costs –Deferred treated as individual instalments, released as funds received

14 Accounting & Settlement Page 13 Strategy Benefits of Approach - Carriers No large investment in central infrastructure envisaged Promotes process efficiencies –Allows straight through processing, with greater automation, –Re-use of data captured at source reduces re-keying and reconciliation –Consistent data definition makes interfaces more efficient –Faster payment cycles and reduced administration costs Reduces barriers to business –International data interchange standards (ACORD) will ensure business can be received from around the world –Carrier adoption of non fundamental accounting removes Londonism and cost for business producers Promotes competition –Competition amongst additional service providers should lead to competitive pricing structures and service levels –Current service provider can re-position offerings for new approach

15 Accounting & Settlement Page 14 Recently Published Design Documentation - A series of documents have recently been published onto the MRPO website. This represents the conclusion of the work stream to present a strategic end vision for A&S in the London market The Business documents are intended to help firms by spelling out the process flows and message types by which the end vision can be achieved The Technical documents are intended to support the above and include detailed information that is best supplied once to help any resulting implementations across the market to be completed in a consistent manner. In more detail these documents contain…

16 Accounting & Settlement Page 15 Recently Published Documentation – Business Documents Letter from Chair of A&S Board –A covering letter to the document sent from the chair of the A&S board on behalf of MRG Index Document –Allowing reader to ascertain quickly which information is included in which of the series of documents Overview Document –Shows at high level the entire end vision for A&S incorporating both premiums and claims outlining the difference between todays processes and those envisaged for the end state Detailed Premium Flows –Takes this information down to a lower level of information and explains how each transaction type would flow, which messages in what sequence etc. This also covers generic processes such as queries and rejections Detailed Claims Flows –As above but for claims. This also covers how claims would be agreed as it was felt to be a necessary requirement to include Claims agreement when changing the processes by which Claims are accounted and settled

17 Accounting & Settlement Page 16 Recently Published Documentation Technical Section 1Message Process Flows –Contains UML sequence diagrams to support the end state and transition states for Premiums Claims and Outward reinsurance Section 2Message Structure –Contains details of the structure of the messages. It identifies the hierarchy of the messages, how messages are referenced and cross refer to each other Section 3Message Data Specifications –Contains information surrounding the data principles used within the messages, an introduction to the detailed data specifications and the approaches that have been taken to validation Section 4Message Management –Contains information required to manage, issue and control messages as they are transported between trading partners Data Spreadsheet –Identifies the data usage requirements for each business message the completion and validation instructions These are not to be viewed as a technical design but as a central resource of information that can assist implementers in creating their technical designs in a way that should be interoperable with their trading partners

18 Accounting & Settlement Page 17 What this document set is/does A set of documents that have been created by market business and technical groups with publication agreed by the A&S Board and MRG Concentrates on the end vision – Full implementation of electronic processing using ACORD A document set that will allow organisations to –Assess the impact on current business processes and start to evolve new ones –Develop a clear strategy for business units and systems to improve A&S processes

19 Accounting & Settlement Page 18 What this document set is not/does not Formally accepted (explicitly signed off) design Prescriptive on implementation paths; there are a number of optional implementation steps which trading partners could take, rather than moving straight to the end vision approach A formal technical design; individual market participants will have to complete their own technical design which will vary depending on their own systems.

20 Accounting & Settlement Page 19 What next Lead implementers are a key feature of successful market reform It is for leading market firms to decide the pace at which the market should move in the direction of this end vision. This documentation includes only limited thinking on implementation issues and are included only to assist early implementers, but it is for them to work out how best to address these issues.

21 Accounting & Settlement Page 20 Repository Strategy Measurement Three A&S Workstreams

22 Accounting & Settlement Page 21 Measurement Introduction of benchmarking and monitoring of market performance in area of accounting, will begin with existing Stage One process –Covers both the timeliness and quality of broker submissions Accounting checks have been documented and published, via a QA Tool and within the design documentation –Checks cover LPAN, Treaty statement process for both Lloyds and IUA business –LPAN guidelines also included plus tax information

23 Accounting & Settlement Page 22 Measurement Benefits and Implications The validation and processing rules that the Market needs to work to will be available fully to both brokers and carriers Updated documentation will also assist those not familiar with London market, especially new brokers Brokers should build the documented validation checks into their systems to prevent errors at source Improving presentation quality and reducing rejections drives down costs for all Potential for faster premium processing due to less rejections Reduced reconciliation errors on receipt of signing messages due to improved data quality

24 Accounting & Settlement Page 23 Measurement Timescales Benchmarking & monitoring performance graphs are now available at a market level Accounting and procedural checks are now fully available Procedures for completion of LPAN for submission to the bureau are now available All of the above can be found on Working with XIS to ensure brokers receive play back of references of checks failed

25 Accounting & Settlement Page 24 Now Or offline to: MRPO via Questions

26 Accounting & Settlement Page 25 Example Graph – De-linking Take Up

27 Accounting & Settlement Page 26 Example Graph – Technical Account Timeliness

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