0. Accounting & Settlement The Way Forward

1. Restatement of A&S objectives Background 2002-2005
Agenda
Restatement of A&S objectives
Background
Work streams commissioned by MRG
Repository
Strategy
Measurement
Questions
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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
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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 2005.
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
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4. Three A&S Workstreams
Repository
Strategy
Measurement
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5. Builds on ECF, “The Insurers’ Market 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)
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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
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7. Repository Timescales
Build time - this is being delivered in three releases
Release 1
Live E mail and Direct Load
Pilot DRI November 06 Live date slipped to December
Currently some 5800 PAN’s have been
Anticipate increase in activity for the 2007 renewals
Release 2
Planned MAT Feb 07
Includes application of supplied ACL’s, 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
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8. Three A&S Workstreams
Repository
Strategy
Measurement
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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 today’s 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
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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 today’s 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)
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11. Key Features
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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 Londonism’s
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
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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
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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…
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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 today’s 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
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16. Recently Published Documentation Technical
Section 1 Message Process Flows
Contains UML sequence diagrams to support the end state and transition states for Premiums Claims and Outward reinsurance
Section 2 Message 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 3 Message 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 4 Message 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
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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
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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.
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19. Lead implementers are a key feature of successful market reform
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.
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20. Three A&S Workstreams
Repository
Strategy
Measurement
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21. Covers both the timeliness and quality of broker submissions
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 Lloyd’s and IUA business
LPAN guidelines also included plus tax information
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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
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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 market-reforms.co.uk
Working with XIS to ensure brokers receive play back of references of checks failed
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24. MRPO via accandset@LMPoffice.com
Questions
Now
Or offline to:
MRPO via
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25. Example Graph – De-linking Take Up
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26. Example Graph – Technical Account Timeliness
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