Presentation on theme: "Market Reform from the top Andy Brookes, Market Reform Programme Office 29 March 2007."— Presentation transcript:
Market Reform from the top Andy Brookes, Market Reform Programme Office 29 March 2007
Market Reform Page 1 Agenda Market reform overview - Why? What? When? How? Electronic processing – dispelling the myths –Rob Campbell (MRPO) What reform means in our firm – ECF: the practitioner perspective –Trevor Madison Senior Vice President UK Operations, Marsh Ltd –Rich Woodhams – Property Claims Manager, Faraday Underwriting Ltd
Market Reform Page 2 Market reform overview Why reform? Origins and drivers of the programme Who does what and how? The key players What is the vision? And what does that mean… What has happened so far? What is planned for 2007 and beyond?
Market Reform Page 3 Why reform? Sharpen Londons competitive edge… London losing share of the global commercial insurance market –Marine 32% 1988, 15% 2006 –Bermuda has grown at 7x the rate of London since 2000 Customers dissatisfied with the speed of processing –Lloyds customer survey - market poor on: speed of contract documentation; information about claims; speed of claims settlement Regulatory pressure –Dec 2004: FSA CEO John Tiner challenges market to put an end to deal now, detail later culture –Emphasis on achieving contract certainty or face rules to enforce it
Market Reform Page 4 Why reform? All three drivers at least in part attributable to inefficient processes Highlight aspects that make London an expensive market in which to do business => create barriers to business coming here Customers value ability to place complex business but one size fits all approach reduces the business coming here
Market Reform Page 5 Why reform? Deliver more for less… Reverse the trend and make London the market of choice Collaboration between firms can deliver a larger, more competitive market Addressing inefficiencies will reduce costs and remove barriers to business coming to London Reform is aimed at delivering more profitable business to London => delivering to your bottom line
Market Reform Page 6 Who is involved? You –Nothing will change unless the market participants change; except, perhaps, that there will be no more market But some support to help you: –Market Reform Group (MRG) –Market Reform Programme Office (MRPO) Market Associations: –International Underwriters Association (IUA) –Lloyds –Lloyds Market Association (LMA) –London Insurance Market Brokers Committee (LMBC)
Market Reform Page 7 Who is involved?
Market Reform Page 8 Four chapters in the reform story… Where will it all lead? – the vision What has happened so far? – genuine progress Key priorities for 2007 – for all firms The next wave - watch this space
Market Reform Page 9 Market reform vision London to be the market of choice – which means further addressing the problem highlighted to deliver: –First class client service –Early receipt of high quality contracts –Rapid claims processing and communications with clients –Rapid movement of premium and claims monies –Right first time processing –Increased efficiency with lower operational cost –Lower operational risk –Flexibility to support bespoke business
Market Reform Page 10 Market reform vision – how? Deliver these benefits by maximising electronic processing in the market –All risk submissions sent electronically; wholly electronic trading for some simple risks with no manual intervention; face-to-face when required for large and complex risks –All claims processed and agreed electronically; face-to-face negotiation only when required for large and complex risks –All accounting and settlement of risks performed electronically
Market Reform Page 11 What has happened so far? LMP/MR slip –Standard way of introducing business to the market –LMP slip introduced 2003 –MR slip – enhanced version – mandated in 2006 –Ongoing process of amendments Contract certainty –Initiated by John Tiner challenge –Market led response to avoid FSA prescription –Achieved market target of 85% by December 2006 –Challenge for 2007 – enhance and embed
Market Reform Page 12 What has happened so far? Insurers Market repository –Developed during 2005 and 2006; went live 10 September –Supports Electronic Claims File (ECF) and electronic Accounting and Settlement (A&S) –Removes the need to shift paper from London to Chatham => devanning –All active managing agents and 36 brokers signed to use ECF –Over 55,000 electronic premium transactions carried out –2007 challenge – increase use
Market Reform Page 13 The immediate future – 2007 priorities Main priorities for 2007: –Contract Certainty – embed new processes as business as usual and maintain overall market rate consistently above 90% –Legacy – reduce the volumes of policies where no evidence of cover may have been sent by 60% based of the July 2006 figure –ECF – ramp up use so that all new, in-scope claims are processed electronically by year end –A&S – ramp up use so that 80+% of premium submissions are processed electronically by year end Need to progress other areas: –Increase delinking – separating the timing of the premium payment from the inception date of the risk to speed up the movement of monies – to achieve 80% of submissions by year end –Decrease the query/error rate on stage one submissions made by the broker to halve the number by year end
Market Reform Page 14 The immediate future – 2007 priorities Plus keep an eye on the future – the next wave: –Standardise submissions –Standardise endorsements –Standardise placing messages (G6 skinny message) –Further standardise A&S messages Keeping track of it all – measurement –Data to show progress on all projects – ramp up, CC figure, Legacy index etc –At market level and firm specific level Making implementation easier and nothing falls down the cracks –Standards All aimed at facilitating electronic processing – on which more detail now…