1. 1 Market Reform Forum Update on business reform 11 November Andy Brookes Lloyds BPR

2. 2 Objective: up to speed in half hour…… (Briefly) principles and approach Accounting and Settlement Electronic Claims Files Contract Certainty and Documentation Benchmarking Kinnect LMP slips

3. 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; Lloyds 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; dont over satisfy

4. 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. 5 Accounting and Settlement LMA & IUA funding sign-up ongoing -Brokers contribution agreed Detailed business design progressing -September interim; has changed little -Premium processes complete; claims nearly finished; outward reinsurance well advanced -End November publication Plus interim detailed data deliverable Subsequent deliverables Swift sign-off from Market Associations – please First governance meetings held – MRIB, A&S Project board MRIB and Project Board working on implementation timetable

6. 6 Electronic Claims File New XIS Contract 90% Managing Agents by value signed XIS started repository enhancements work 1 st Oct Contract schedule for CLASS for Lloyds out soon to managing agents XIS started enhancements on CLASS for Lloyds 1 st Nov Governance Claims project board set up Market associations – LMA, LMBC, IUA - groups in place Working on the implementation timetable Which firms for which lines of business?

7. 7 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 Performance monitoring group has made initial proposals regarding measurement Lloyds and XIS codifying the checks; rationalise; publish performance data. Binders first

8. 8 Purpose of measurement Trustworthy data (vs. Ive 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 Measuring reform

9. 9 Kinnect November 1 release -Went well – enhanced placement process: harmonised business process; rough edges smoothed; market acceptable Hiscox signed-up; live in early December Working on endorsements -Finalising business requirements:Q2 delivery aim User adoption is key: Kinnect as core process -Step by step through H1 -Eg Create (LMP) slips on Kinnect Additional risk classes H2 2005: terrorism; international property

10. 10 Slips LMP Open market slips Sept Market Report and league tables published -October data out shortly Live slips checked once lead placed line - 86% current BSA Target 95% by the end of the year LMP Binding Authorities Model agreements published (inc. Marine) LMP slip templates published Slips led after 28 th Oct on risks incepting on and after 1 st Jan 05 must be LMP

11. 11 LMP Slip checking Binders Lineslips ACORD Electronic slip standard Slip - 2005 tasks

12. 12 Business Process Reform The LMP SlipJames Willison LMP Office

13. 13 Content Status Objectives Mandate / Exemptions / Enforcing Key areas to ensure compliance Binders LMP slip 2005

14. 14 LMP Slip standard mandated Audit team on board Market Reports published monthly League tables published Current BSA is 86% (target 95% by year end) Binding Authorities now available LMP Slip Status

15. 15 To aid clarity at contract formation by: Adopting a standard structure Clearly stating the contract terms Avoiding the use of TBA or As amended Greater use of standard wordings Non-standard wordings to be included in full Simplify post placing contract management by: Explicitly defining contract roles and responsibilities Identification of service providers Stating agreement parties for contract amendments Clearly defining claims handling responsibilities Objectives of the LMP Slip

16. 16 What has been mandated? Panel 1 No small print. Must contain the Unique Market Reference Panel 2 Amended to achieve clarity by separation of information into 4 sections: 1.Risk Details (Headings vary by class of business) 2.Subscription Agreement (Content fixed) 3.Information (As required) 4.Fiscal and Regulatory (Content fixed) Panel 3 remains unaltered (security detail)

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18. 18 Lineslips Motor & Term Life processed outside XIS Slips where the Insured or a non-Lloyds insurance intermediary requires use of a non-LMP slip Recognised Exemptions All slips incepting from 1 st January 2005 must be LMP Slips. The only recognised Exemptions at this time will be: All other slips will be processed as LMP Slips

19. 19 Enforcing the mandate Lloyds audit team tasked with improving quality 25% slips placed checked Regular market feedback and reports Monthly league tables published Regular meetings with Brokers and Underwriters Ongoing Quality checks continued to be conducted by the LMP Programme Office and Market Associations Sanctions – naming and shaming

20. 20 UMR Period Law and jurisdiction Payment terms Document production Claims Taxes payable by underwriter LMP Slips – key areas

21. 21 Use of the LMP Slip for B.A. Model agreements published LMP slip templates published for use with Model agreements Slips led after 28 th Oct on risks incepting on and after 1 st Jan 05 must be LMP The Schedule forms part of the Slip For LMA model B.A. the wordings are included by reference Schedule as placed is sent to the Coverholder to sign

22. 22 Binding Authority Wording PANEL 1PANEL 3PANEL 2 SCHEDULE NON-SCHEDULE AGREEMENTS SUBSCRIPTION AGREEMENT INFORMATION FISCAL & REGULATORY

23. 23 LMP Slip checking Binders Lineslips ACORD Electronic slip standard LMP Slip - 2005 tasks

24. 24 LMP Slips - Questions Email: James.willison@lmpoffice.comJames.willison@lmpoffice.com Phone: 020 7327 5231