TOM London Market Target Operating Model (TOM) Vendor Consultation Briefing Pack November 2015 TOM Version 2.4.

TOM London Market Target Operating Model (TOM) Vendor Consultation Briefing Pack November 2015 TOM Version 2.4

Contents Your opportunity to contribute TOM Overview How can you help? End to End TOM Initiative details Consultation Approach Legal Notices & Disclaimers Appendix I – Other Initiatives Appendix II – TOM Design Principles Appendix III – TOM Conceptual Data Model Appendix IV – Glossary Page 3 8 16 19 30 72 80 83 91 93 97 2 1 2 3 4 5 6 7 8 9 10 11

Introduction and Context 3 TOM

Our challenge – Your opportunity In 2014 the London Market Group (LMG) published ‘London Matters’*, an analysis of the London Insurance Market and concluded that London's position as the undisputed global centre for commercial insurance was under threat. 4 1.Customers have a preference for buying insurance in their local market 2.London does not have a strong position in emerging markets, and its share of business in these markets is declining 3.London is losing share in reinsurance as purchasing is increasingly centralised and emerging market growth gains in importance 4.London’s expense ratios were 9 percentage points higher than its peers in 2013, driven by higher acquisition and transaction costs 5.The comparatively high regulatory burden could further increase this price disadvantage for London 6.The prolonged soft market cycle, propagated by the superabundance of capital and securitisation Main Challenges Design a TOM that responds to the challenges and embraces innovation Consult with vendors to help us innovate and make this step change Our Response * You can find the ‘London Matters’ report on LMG website http://www.londonmarketgroup.co.uk/index.php/market-reform/latest-news/713-london-matters-the-competitive-position-of-the-london-insurance-market-2 Understand your perspective on the proposed TOM and initiatives Incorporate innovations into the TOM Ensure the TOM has been robustly challenged from outside Vendor consultation

This is your opportunity to contribute to the London Market Modernisation agenda We recognise that there are a huge number of stakeholders in the market that we have not yet engaged with. WE NOW WANT YOU to help shape our future and challenge TOM to be as innovative and ambitious as possible. Have your say and get involved by contributing your feedback, challenges and ideas regarding either: The Overall TOM Specific focus Initiatives AND/OR Delegated Authority Delegated Authority Claims Local Shared Service Centre Local Shared Service Centre Settlement We have had 1-on-1 meetings with 31 market participants covering 79% of GWP; engaged with 131 stakeholders across 75 organisations through 37 meetings; and held community workshops with 194 participants TOM engagement to date Complaints Management Complaints Management Data Integration Data Integration 5

6 What role can you play? Propose your ideas and help us understand what else might be achieved helping us push the boundaries Challenge the model and make us think again Build our understanding of how and where you can support us in our endeavours Influence the way the requirements are structured and activities are prioritised How can you help?

This is not a selection process, we will be evaluating ideas and challenges – not vendors 7 TOM will review and consider how we can use or address each piece of feedback. If we need more detail or ideas, the team will reach out to you to set up some 1-on-1 time to discuss. Augment Our TOM Programme Incubate Innovation Review where the TOM can be improved and evolved Increase the specificity of our solutions and requirements Challenge whether the scope of initiatives is achievable or overcautious Challenge prioritisation of initiatives to balance risk with benefits realisation Generate, develop and socialise new ideas that could drive further market modernisation Identify potential market disruptors and explore expected impact of successful implementation Design prototypes and seek stakeholder and/or customer feedback Help us to be the best we can be and position yourselves as a potential partner to this market defining programme.

Target Operating Model (TOM) Overview 8 TOM

9 ‘London Matters’ highlighted the threat to London's position as the undisputed global centre for commercial (re)insurance The London Market is the largest global centre for commercial and specialty risk and is in a great position of strength Ongoing investment in making the Market more accessible and efficient Financial strength ratings reaffirmed, outlook revised to positive Continued focus on our collective vision and goals Increasing retention of risk in high growth developing markets Higher acquisition costs make London a more expensive market to deal with than its competitors An inflexible business servicing model that is inefficient and slow to change, reducing London’s competitiveness These challenges are recognised by the Market and there is acceptance of the need to change However, the world is changing which is challenging London’s position

The Market has spent the last six months developing a model to deliver one touch data capture and enhanced central services, and the initiatives required to deliver it Design Principle One touch data capture Enhanced central services Current Operating Model Inefficient and paper based Inflexible and complicated Fragmented Target Operating Model Highly effective and accessible Improved data re-use Economies of scale for common activities 10

The future operating model will be based on the principle of one touch data capture and enhanced central services 11 Policyholder Local Broker, Coverholder/ Service Company/TPA Approved Broker Carrier Broker Services Claims Services Carrier Services Customer Services Local Service Centre Risk, premiums and claims data and payments Data feed Face-to-face negotiation (as required) Regulators & Tax Authorities Lloyd’s By Agreement: Direct Policy, Claims Advice, Premium Payment, Endorsements etc. Real-time integration and ACORD messages and regulatory data feed Real-time integration and ACORD messages Data feed Data feed (XML) Most locally settled business reported to Lloyd’s Data feed (XML) Tax & regulatory data By Agreement: Data feed * Lloyd’s Regulators & Tax Authorities Real-time integration and data feed Real-time integration and data feed Service Centre Customer Interactions Carrier Interactions London Market Domestic Market * Encourage Data standards adoption, do not enforce a new “Londonism”

The new model will deliver benefits across the market place Carriers  Access to integrated shared services in London and internationally which will reduce duplication, unnecessary costs and barriers to entry for new territories  Ability to send and receive data using global standards  Central MI and analytics providing carriers with rich data to enhance decision making capabilities and minimising reporting burden  Reduced turnaround times and complexity for Coverholder approvals making the market more attractive  Access to integrated shared services in London and internationally which will reduce duplication, unnecessary costs and barriers to entry for new territories  Ability to send and receive data using global standards  Central MI and analytics providing carriers with rich data to enhance decision making capabilities and minimising reporting burden  Reduced turnaround times and complexity for Coverholder approvals making the market more attractive Brokers  Reduction of existing frictional costs of doing business  Removal of all negative London Market specific processes  Ability to place business electronically from anywhere where there is an approved broker  Ability to choose the preferred method of placement for each risk to optimise value-add to the client  Reduction in risk of errors and omissions caused by current fractured processes coupled with the use of paper and e-mail  Reduction of existing frictional costs of doing business  Removal of all negative London Market specific processes  Ability to place business electronically from anywhere where there is an approved broker  Ability to choose the preferred method of placement for each risk to optimise value-add to the client  Reduction in risk of errors and omissions caused by current fractured processes coupled with the use of paper and e-mail Coverholders  Clear, consistent data requirements and processes across the entire market  One market audit and compliance process rather than one per carrier  Allows the balance between premiums and claims to be paid, i.e. net settlement  Reduced turnaround times and complexity for Coverholder approvals  Basic risks checks made as soon as possible, with focus on service quality and speed  Clear, consistent data requirements and processes across the entire market  One market audit and compliance process rather than one per carrier  Allows the balance between premiums and claims to be paid, i.e. net settlement  Reduced turnaround times and complexity for Coverholder approvals  Basic risks checks made as soon as possible, with focus on service quality and speed Policyholders  Increased confidence in consistency of standards and service  Faster and simplified claim process, ensuring a quicker decision and payment  Direct access to Central Services to provide far more clarity around the status of the claims and access to placement documentation (with broker approval)  Contract certainty at the point of bind with any queries raised far earlier in the process  Increased confidence in consistency of standards and service  Faster and simplified claim process, ensuring a quicker decision and payment  Direct access to Central Services to provide far more clarity around the status of the claims and access to placement documentation (with broker approval)  Contract certainty at the point of bind with any queries raised far earlier in the process 12

We want your ideas and comments across the TOM initiatives TOM Key messages Fifteen TOM initiatives  Fifteen TOM initiatives were initially identified to deliver the enhanced central services and realise the benefits of straight through processing 1 :  In-flight initiatives (CSRP PbS, PPL) are currently in delivery and not open for vendor consultation  Other in-flight initiatives (IMR, MAT, ECF) are also in delivery and near completion  Prioritised new initiatives (Data Integration, Settlement, DA, Claims, Complaints, Local Shared Services) are the most advanced and on our plan to take forward in 2016 – we have provided detailed information on these  Other new initiatives (Customer Portal, Reporting & Analytics) are less advanced and we will take ideas on these forward once we have the 2016 initiatives well under way  Governance & Delivery covers the TOM programme but is not a specific initiative required to deliver the TOM CSRP 2 PbS IMR 4 Re-Platform Settlement Delegated Authority PPL 3 Claims – Core Services & systems Complaints management New MAT 5 environment Data Integration Electronic Claims File enhancement Governance & Delivery Local Shared Services TOM initiatives Reporting & Analytics Additional CSRP Customer Portal 12 6 4 7 8 3 910 13 5 12 1415 11 Detailed information provided Key: 13 Other 1 Not every initiative impacts all stakeholders 2 CSRP = Central Services Refresh Programme 3 PPL = Placing Platform Limited 4 IMR = Insurers’ Market Repository 5 MAT = Market Acceptance Testing

Build Customer, Competitor Analysis Global Strategy Interim resources run governance functions Shaping & Analysis 14 The programme schedule for 2016 supplements the in-flight initiatives with six further projects Design and Build Data Services Complaints Delegated Authority Local Shared Service Centre Placing Platform Limited Data Integration Electronic Claims File – Binders and Writeback Central Services Refresh Programme (Post-bindSubmission) Insurer Market Repository Re-Platform Claims Initiative Post – Bind Submission (R1) Implementation Governance Release 1: EBOT/ECOT (Market)Release 1.1 : EBOT/ECOT(Carrier) Release 3: Online Sub. Portal Release 2: Restructure Central Service Post – Bind Submission (R2) InitiationPost – Bind Submission (R2) Design Post – Bind Submission (R1) Rollout Post – Bind Submission (R2) Implementation Product Development Cycles: Design and Build Release 1 IMR Build Business Services Deployed Implementation ECF Binder Revise PID / Draft RFP* Supplier Evaluation* Data Governance Go-Live Data Integration Framework Go Live MDM Go Live Complaints System Go Live Draft RFP Supplier Evaluation Coverholder Audit & Compliance Go-Live Contract, Design and Build for Audit and Compliance Contract, Design and Build for Coverholder Approval and Data CCA Socialisation CCA Study Complete Prepare vendor Consultation and RFI/RFP material Resource On-boarding Prepare vendor Consultation and RFI/RFP material Q1 16 Q2 16 Q3 16 Q4 16 ECF Build Permanent resources Go Live Next Stage Planning Release 2Release 3 Settlement Initiatives with detailed information Other initiatives Key: Go Live/Releases * May not go to RFI/RFP contingent on further analysis Implementation Next Stage Planning INDICATIVE

TOM 5 year Roadmap 20192018201720162015 Delegated Authority Data Integration Claims – Core Services, Systems Reporting & Analytics Placing Platform Limited Electronic Claims File – Binders and Writeback Insurer Market Repository Replacement Settlement Complaints Management Central Services Refresh Programme (Post-bind Submission ) New User Testing Environment Additional Central Services Governance and Delivery Local Shared Service Centre Initiative Region Rollout In flightPrioritisedWave 2 Customer Portals Key: Evaluate Requirements 15

How can you help? 16 TOM

17 How can you contribute? Vendor Engagement We are inviting the vendor community to propose innovative ideas and challenge our preconceptions relating to our modernisation agenda Propose innovative ideas and challenge our preconceptions We are open to disruptive and innovative ideas that challenge our current planned approach. Our aspiration is to implement future-proofed solutions to improve our services and address our existing challenges. To do this we need to be aware of your existing capabilities as well as those in the pipeline and understand how they can be applied to our situation. Depending on ideas, we will invite you to working sessions to understand and elaborate your ideas. Consultation is focused on the six initiatives; however, we will still value your feedback on other areas of the TOM. Review the Vendor Briefing Pack and attend future events The Vendor Briefing Pack contains all of the necessary information and direction on the submission process. In keeping with an open process, we will advise you of any future Q&A sessions and discussions. 1 2 Demonstrate your capability We are looking to partner with vendors that can assist in developing and implementing innovative technology changes to our services as well as those that can support our systems and services on an ongoing basis. You have the opportunity to influence the shape of our programme and put yourselves on the radar for future formal procurement activity 3

The period of open Consultation will last until the end of the year and will drive input, ideas and engagement from all areas of the Market NovemberDecember 06/11 Market Launches 18/12 Ideas for further development On-going Market Consultation 18/12 Market feedback close Evaluation and working sessions 05/11 Vendor Launches Vendor Town Hall Q&A Sessions On-going Vendor Consultation 7/12 Vendor ideas submission 2016 Evolve and Deliver TOM Drive innovation Continue Market and Vendor Engagement Crowdsourcing activities on www.isupportTOM.London Launch of Consultation Generation of ideas, exchange of opinions Collation of ideas and feedback We will continue Market engagement and further target operating model development next year 20/1104/1207/12 If you cannot access any of the information, email TOM and a soft copy will be provided 10/11 18 24/1127/1120/11 Market Town Hall Q&A Sessions 09/12

End to End TOM TOM 19

Policy Holder Regional Broker Surplus Lines Broker Current Operating Model London Market – Key interactions 20 Current Issues Reduced quality of service to Policyholder due to over-complicated, inefficient and old fashioned processes No easy access to Carriers for non-London Brokers Unlike other Markets, London Brokers carry more of administrative burden and are the Bureau's primary interface in query resolution London-specific, complex, back office processes (Londonisms) Re-keying of information from placement, accounting and claims by each Managing Agent and then by The Bureau Justification for RAG status 1) and 2) Large frictional costs due to number of intermediaries 3) Paper usage, photocopying and scanning, duplication 4) Negative Londonisms, e.g. LPANS, Bureau queries 5) Manual mismatch clearing, data duplication 6) Lack of structured data, no written data or ‘Net of RI’ 7) Lack of structured data. Three days to settle monies, due to central settlement system 8) Lack of structured data, duplication across carriers 9) Lack of audit trail, signed data only Bureau Submission Bureau Messages Risk query, claims, Policy etc. E.g. Quote request Declaration Claims Advice Premium Payment Tax and Regulatory Reporting Agreement Process Regulatory Information for Carriers Bureau Messages Regulatory Information for Lloyd’s Syndicate Returns (Lloyd’s only) Central Settlement London Market Carrier(s) Approved Broker 4 5 6 8 7 9 2 3 6 9 Bureau Services 1 Lloyd’s Optional Channels Business placed outside LM Key:Inefficient process 1 Sub-optimal processEfficient processProcess sequence Local Broker Regulators and Tax AuthoritiesLondon Market Carrier(s)

*In some territories these can be onshore Current Operating Model Coverholder & Service Company – Key interactions 21 Justification for RAG status 1) Multiple data formats 2) Negative Londonisms, e.g. Declaration, onerous data requirements 3) Paper usage, photocopying and scanning, duplication 4) Negative Londonisms, e.g. LPANS, Bureau queries 5) Manual mismatch clearing, data duplication 5a) ACORD XML 6) Lack of structured data, no written data or ‘Net of RI’ 7) Lack of structured data. three days to settle monies 8) Lack of structured data, duplication across carriers 9) and 10) Lack of audit trail and granularity, signed data only Various reports Risk query, claims, Policy etc. Reporting Data Risk, premium, claim information; premium and claims payments Referrals and responses Quote, Policy, Claims Advice, Declaration, Premium Payment etc. Policy, Claims Advice, Premium Payment etc. Domestic Market London Market International Offices 1 1 1 2 22 10 Tax and Regulatory Reporting Agreement Process Bureau Messages Bureau Submission Regulatory Information (Lloyd’s only) Syndicate Returns (Lloyd’s only) Central Settlement London Market Carrier(s) Approved Broker 4 5 6 8 7 9 3 Lloyd’s Business placed outside LM Bureau Services LDR 5a * In some territories these can be onshore. Key:Inefficient process 1 Sub-optimal processEfficient processProcess sequence Client (can be in or out of territory) Local / Placing / Producing Broker* Regulators and Tax Authorities Coverholder / Service Company (TPA for some claims)

Regional Broker Policy Holder Future Operating Model London Market – Key Interactions Local Broker Interaction Any direct interaction would either be where local broker is a subsidiary of the Approved Broker, or where local broker has been approved in its own right Regulatory Information for Carriers E.g. Quote request Declaration Claims Advice Premium Payment * Risk query, claims, Policy etc.* Non Service Hub Activities 6 Approved Broker 2 5 4 7 6 7 2 1 Lloyd’s Data feed Data feeds Direct access to Carrier via Hub Data feed (ACORD XML) Real-time integration and ACORD messages Face-to face negotiation (as required) Broker Authorised: Direct Policy, Claims Advice, Premium Payment, Endorsements etc. Justification for RAG status 1) and 2) Easier access to central services 3) Placing avoiding paper with single contract version and no re-keying of data; enhance trading floors 4) and 5) Easier access to central services (ACORD) to avoid duplicative processes and rekeying data 6) Data provided to Carriers in ACORD XML for consistency, audit trail and automated reporting 7) Written as well as signed data provided to regulators, full audit trail and consistency 3 London Market Carrier(s) Optional Channels Customer Interactions Carrier Interactions Carrier Services Bureau Services e-Placing Services Document Repository Claims Services Broker Services Customer Services Data services Message Hub (TMEL) Service Hub * Encourage Data Standards adoption, don’t enforce a new Londonism Key:Inefficient process 1 Sub-optimal processEfficient processProcess sequence 22 NB: Brokers primarily interact with broker and market services, NOT carrier or Hub services Surplus Lines Broker Local Broker London Market Carrier(s) Regulators and Tax Authorities Structure Data Capture

Future Operating Model Coverholders & Service Company – Key Interactions 23 Local Broker Interaction Any direct interaction would either be where local broker is a subsidiary of the Approved Broker, or where local broker has been approved in its own right Risk, premiums and claims data and payments Tax and regulatory data Lloyd’s Real-time integration and ACORD messages and regulatory data feed Real-time integration and ACORD messages By Agreement: Data feed* By Agreement: Direct Policy, Claims Advice, Premium Payment, Endorsements etc. Data feed London Market Carrier(s) Approved Broker 2 5 4 7 6 Data feed (XML) Face-to face negotiation (as required) Most locally settled business reported to Lloyd’s 2 Data feed (XML) Domestic Market London Market 6 Policyholder could be in or outside of territory Dependent on Client needs and Licence held Local Service Hub Carrier Services Claims Services Broker Services Customer Services Justification for RAG status 1) Multiple data formats 2) Easier access to central services without encountering Londonisms 3) Placing avoiding paper with single contract version and no re-keying data; enhance trading floors 4) and 5) Easier access to central services (ACORD) to avoid duplicative processes and rekeying data 6) and 8) Data provided to Lloyd’s in ACORD XML for consistency, full audit trail and automated reporting 7) Written as well as signed data provided to regulators, full audit trail and consistency 3 2 6 8 Data feed* Real-time integration and data feed 2 This diagram does not show cash flows Service Hub Customer Interactions Carrier Interactions Carrier Services Bureau Services e-Placing Services Document Repository Claims Services Broker Services Customer Services Data services Message Hub (TMEL) Key:Inefficient process 1 Sub-optimal processEfficient processProcess sequence * Encourage Data Standards adoption, don’t enforce a new Londonism 1 Regulators and Tax Authorities Policy Holder Local Broker Coverholder / Service Company / TPA Regulators and Tax Authorities Structure Data Capture

Procurement Binder Placing & Registration Post- Bind Reporting Settlement Value Chain The specialty insurance market has additional complexities in comparison to other industries Finance HR IT Coverholder Approval & Compliance BindReporting Quote (pre-Placing) Placing the Risk (Placing) Post-BindAccounting Claims Notification Claims Agreement Open Market Value chain depicting core processes across the London Market Open Market Value chain depicting core processes across the London Market Claims Claims process cuts across the value chain Claims events can occur any time after the risk has been placed Claims accounting is settled in the settlement process Claims Claims process cuts across the value chain Claims events can occur any time after the risk has been placed Claims accounting is settled in the settlement process Delegated Authority Binder placing does not go through a quote process DA requires coverholder compliance checks before commencing through the value chain Delegated Authority Binder placing does not go through a quote process DA requires coverholder compliance checks before commencing through the value chain Support Functions Represents traditional functions in an organisation Supports both ‘Run’ and ‘Change’ elements of the business Support Functions Represents traditional functions in an organisation Supports both ‘Run’ and ‘Change’ elements of the business Note: * Out of Authority Claims and Risk are processed in London (not by coverholder) Claims Management Claims Accounting Settlement 24 AccountingQuote

Value Chain - Functional Decomposition 25 Pre-PlacingPlacingPost-BindAccountingSettlementClaimsReporting Policyholder Broker meetings Carrier meetings Requirements definition Broker Instructions Quote reviews Agree final T&Cs Review policy docReceive debit notes Diary premium payment Pay premiums Receive claims Provide FNOL Provide claim updates Broker Client meetings Carrier meetings MGA meetings TPA meetings Binder registration Document client requirements Produce quote requests Review quotes with client Create contract Place risk Signed line advices Create client policy Create debit notes Create accounting entries Submit accounting entries Receive premiums Pay claims Reconcile against accounts Submit premium advice Pay premiums Process FNOL and claim updates Claim advocacy Underwriter(s) Client meetings Broker meetings C/holder approval C/Holder audits Review quote requests Model & price risks Create quotes Bind risk Capture policy data Exposure Management Outward RI management Create client policy Receive accounting advices Reconcile accounts Receive settlement advices Receive premiums Reconcile against accounting entries Pay claims Process FNOL and claim updates Adjust claim Manage claim Set reserves Agree settlement Submit bespoke data Non-core tax and regulatory reporting Bespoke MI and BI MGA Broker meetings Carrier meetings Coverholder approval Coverholder audits Review quote proposals Price risks Create quotes Bind risks Capture data Create client policy Create debit notes Submit Risk Data Create accounting data Credit control Submit paid premium data Receive premiums Reconcile against accounts Pay premiums and claims Process FNOL and claim updates Adjust claim Manage claim Agree settlement Non-core tax and regulatory reporting TPA Carrier meetings Broker meetings MGA meetings TPA registration Process FNOL and claim updates Adjust claim Manage claim Set reserves Agree Settlement Central Services Coverholder approval TPA registration Binder registration Coverholder audits Placing support Tax & Reg checks Augment data Publish data Contract processing Signed line processing Risk data processing Augment data Publish data Syndicated accounting Accounting advices Credit control Process settlement requests Currency conversion Net settle between participants Settlement advices Process claim movement advices Update claim records Augment data Claim advices Syndicated accounting Tax and regulatory reporting Complaints reporting Credit control MI Cat claims metrics Market analytics Exposure monitoring Performance metrics Key:No change anticipatedPrioritised initiatives The value chain functional decomposition describes the anticipated changes that the TOM will deliver 5 year TOM vision

Value Chain - Benefits Relating to Accounting & Settlement 26 Consistent view of claims More accurate reserving Reduced communication overheads Reduced duplication in claims record maintenance EBOT advice to Carrier EBOT from broker Settlement Request from authorised payee Money movement EBOT processing Central claims management and processing ECOT from broker ECOT creates central claims record No policy data capture Automatic attachment to central policy record Automated validation No MRC-related queries Faster processing Reduced Bureau costs Global standard accounting process No usage of LPANs or SN&Ds No accounting splits Automated accounts reconciliation and attachment to policy record Enables better credit control Eliminates manual clearing of mismatched Bureau messages Enables faster settlement Reduced bank charges Settlement in original currency Supports direct settlement for authorised payees Single net movement over all three Bureaux Payment into agreed settlement currency Supports direct debit or ‘pay as paid’ processes Single agreement orchestration TPEs managed centrally Faster processing Better data for claims adjusters Eliminates Bureau costs EBOT submission Processed EBOT Settlement Trigger ECOT submission Central claims record ACORD Settlement Advice Automated cash matching No unallocated cash Full audit trail of settlement history Global standard claims process No usage of LCCFs or OSNDs No accounting splits CSRP (PbS) CSRP (PbS) Data Integration Settlement Claims Data Integration Main Benefits Right first time improvement resulting in faster, higher quality data, automated reconciliation, operational risk reduction, more compliant, auditable processes, supports automated tax and regulatory reporting, reduced carrier administrative burden, reduced operational costs, no unallocated cash. Note: Benefits are related to the aspirations of the TOM.

Value Chain - Benefits Relating to Claims 27 Create claim file & publish info FNOLAdjust claim Set initial reserves Initial Evaluation Update client Agree initial claims settlement Central accounting Central settlement Update claims file Supports FNOL from any authorised party Faster and simpler process Supports different media channels, e.g. telephone, e-mail, portal etc. Enables direct loading of info into central system FNOL triage as a shared service Automatic routing enabled Faster processing times Rules-based service options Automated processes Early structured data capture Automated record creation Single version of the truth Shared record available to all stakeholders, both in London and globally Faster instruction of centrally accredited experts Standard claims processing as an elective shared service Straight Through Processing enabled Performance metrics enhanced Elective central sanctions checking service Consistent reserves based on single version of the truth More accurate reserves based on better quality data Reserving data / MI accessible to authorised users Supports ECOT global standard process Straight-through processing Faster processing turnaround Reduced processing costs ACORD accounting advices Direct settlement to non-London stakeholders if required Settlement in any currency ACORD settlement advices to avoid manual cash matching Single settlement across bureaux Evaluated Claim File Adjusted Claim Agreed Claim Settlement Updated Claim File Updated Client Processed Accounting Entry Claims Data Integration Claims CSRP (PbS) Settlement Single agreement process across all 3 bureaux Faster agreement Agreement orchestration via central workflow Includes agreement via TPA Claim updates to one central record Removes duplication across stakeholders Faster updates available to all stakeholders Faster updates to client More accurate information, based on single claims record Ability for client to enquire on claim progress directly Single source of data maintains continuity of updates Reported Claim Data Integration Main Benefits Improving the Customer experience by enabling faster, higher quality claims service, with increased transparency, simpler process for all stakeholders, reduced administrative burden, more accurate reserves. Note: Benefits are related to the aspirations of the TOM.

Value Chain - Benefits Relating to Delegated Authority 28 Coverholder Audits Coverholder Approval Binder Contract Creation & Placing Binder Registration & Processing Compliance Checks Coverholder Collects Premium Payments Coverholder Binds Risk Coverholder (or TPA) Pays Claims Coverholder Settles Net Balance of Premiums & Claims Central Publishing & Carrier Upload Single approval process Supported by workflow Case management Faster, easier process Supports requests to take advantage of urgent business opportunities KYC checks Anti-Money Laundering Sanctions screening Due diligence checks Co-ordination of audit dates Auditor selection Risk-based audit scoping Data capture Audit recommendations management ePlacing support via Ebix Exchange Early signed line advice Automated policy data Single process for Binder registration and signing via Bureau Removal of duplicated data capture and checking Faster end to end process Coverholder aware of carrier claims data requirements Coverholder able to send claims data directly to Central Services as an ACORD message Coverholder able to settle net balance directly with Central Services if desirable Broker able to simultaneously settle premiums and claims ACORD settlement advices Compliant Coverholder Audited Coverholder Fully Placed Binder Risk Data Complete Carrier Records Paid Premium Data Paid Claims Data DA Data Integration PPL DA CSRP (PbS) Settlement Coverholder aware of carrier risk data requirements Coverholder able to send risk data directly to Central Services as an ACORD message Central data publishing No need to batch risks into a bordereau Full, ACORD standard granular data Accurate exposure MI Individual risk KPIs Coverholder aware of carrier premium data requirements Coverholder able to send premium data directly to Central Services as an ACORD message Main Benefits Faster, higher quality transaction-level data, automated validation, operational risk reduction, more compliant, auditable processes, better Coverholder service, reduced Coverholder and broker administrative burden, reduced operational costs. Approved Coverholder Note: Benefits are related to the aspirations of the TOM.

Initiative details TOM 29

CSRP (Post- bind Submission) PbS changes back office administration for Broker and Carriers using EBOT/ECOT messages and delivers greater automation including the Structured Data Capture utility service for the whole market. PPL Electronic placing platform which allows brokers and Insurers to quote, negotiate and bind business, replacing traditional channels such as paper and e-mail Delegated Authority Development of binder registration, coverholder approvals and central coverholder audit services, plus automated post-bind risk, premium and claims processing Complaints Management An initiative to implement central services to manage customer complaints in response to new regulatory changes and the Lloyd’s Conduct Risk report requirements Customer Portals A web-based service allowing brokers and Insurers to communicate with all authorised parties Initiative overviews Initiatives with detailed information provided Other initiatives Data Integration creates a common language for Market Participants to share information more easily, to a higher quality standard and promote central services adoption in the Market Data Integration New MAT Environ- ment An initiative to create a reliable and available Market Acceptance Testing environment for testing changes to market systems operated by a third party supplier ECF Electronic Claims File involves submission, handling and settlement of claims via an integrated service, enabling sharing of files by subscribing underwriters Additional Central Services Refresh Programme addresses further Londonisms not covered by PbS, simplifies legacy systems to allow other modernisation initiatives to progress. Additional CSRP Local shared services The Local Hubs/Local Shared Service Centres initiative aims to create SSCs where a “menu” of integrated services can be offered A premium and claim settlement service that will inform interactions, netting transactions as much as possible Settlement Claims Core Services Delivers the fundamental claims services required to ensure that the London Market offers maximum value to the claimant for all claims Reporting & Analytics The provision of reporting (MI, regulatory and tax), analytics and additional services IMR Re- Platform Project to move the Insurers’ Market Repository from an unsupported technology to a new and improved supported technology Note: Additionally, Governance & Delivery initiative ensures efficient management of TOM programme 30

Contents 31 Contents Data Integration DI1- Data Integration Settlement Delegated Authority Claims Core Services Complaints Management Local Shared Service Centre Page 32 34 37 43 55 63 67

What is the Data Integration initiative? Creates a common language for Market Participants to share information more easily, to achieve a higher quality standard and promote central service adoption in the Market. This initiative will provide the overall framework, governance, standards and guidance to enable different systems and processes to talk to each other. In-scope components Data Integration Framework – Defines principles and methods for data exchange Message Standards – Enhancement of messaging standards to define the format of each message exchanged Governance and Processes – Capability to provide control over data creation, exchange and storage Master Data Management (MDM) – Provide a central view of the mastered data across the Market Allows faster setup and execution of data exchange Improves consistency of data management across systems Reduces re-keying of information through better data governance Improves confidence in data used within the Market Provides better data on which to perform analysis 32 Benefits Key Challenges Data Integration – Initiative summary  Lack of common data standards resulting in inability to effectively share information between Market participants  Lack of consistent reference data resulting in a reduced ability to clearly analyse performance, exposure or risk  Lack of standardisation of data requirements and formats reducing the quality of data in the Market as a whole  Unclear governance resulting in difficult, inefficient or slow data correction

Global market presence & data access Focused products and customer service Reduce manual/paper based processes Reduce cost of regulatory reporting Enable growth Centralise key services Better market and risk insight Lower costs Reduce cost of data processing TOM aims Implications for data Data assurance Common definitions of data across the Market Improve data usage Improve reporting and analytic capabilities Exchange data Standardised data exchange format Efficient data exchange method Market owners chosen to verify data Trusted data Trusted sources agreed for critical market data Efficient and trusted regulatory reporting TOM consists of multiple systems and services, and the efficient transport of data between all stakeholders is essential for its success If this work is not undertaken: our ability to deliver the ‘keyed once’ capability will be lost due to not having the right transfer processes agreed data exchanges within the Market will remain inefficient new participants will be discouraged to join due to overly complex data integration challenges and slow processes we will not fulfil our shared service and reporting ambitions we risk perpetuating multiplicity of data standards, being poorly and inconsistently adopted across the Market This initiative will ensure the cohesion of TOM systems, through providing a seamless transition of a policy through its lifecycle, appropriate access to data in support of client services and faster settlements at a lower cost TOM aims require improvements in data Data Integration 33 Functional Component DI1 “Data Integration”

The Data Integration initiative ensures data flows in a way which is standardised, verified, controlled and efficient across the London Market, supporting all TOM functions, services and the delivery of associated benefits. Data Integration Framework Defined Principles for data movement and storage across systems. Guidelines for use of a system or service to send and receive messages e.g. TMEL Messaging Standards Enhanced compulsory message standards (ACORD) defining the format of messages exchanged by Market participants Master Data Management A capability to agree, create, maintain and publish a master view of key reference data across the market e.g. Country code, Broker ID or currency code Brokers Managing AgentsNon Lloyd’s Carriers Service Hub 1 Lloyd’s TMEL To be agreed Regulators Data Governance Shared control over data through common definitions and standards. Have demonstrable control over data to assure regulators Data Validation MDM Arrows are not reflective of actual business processes Coverholders Data Integration 34 Service Hub 2 Functional Component DI1 “Data Integration”

The current Data Integration PID defines the potential full scope of delivery required to support TOM initiatives and establish core functionality across the market To enable us to design the Data Integration solution in more detail we will define and agree requirements across TOM initiatives and in-flight programmes. This activity will support TOM RFPs being issued We will assess existing capability in the market in order to focus solution design efforts Data Integration Framework Messaging Standards Master Data Management Data Governance What is the total scope we could deliver? What do we need? What do we already have? Does it satisfy all requirements? What solution options do we need to assess? The Data Integration PID document defines full initiative scope and tasks required to deliver it. At this stage the requirements from other initiatives are not known so scale and complexity of our tasks may change as we clarify what is needed. What data is to be sent and received? What format of messages are being considered? What enhancements are planned for 2016? What volume of data is exchanged? How frequently? What reconciliation is performed? What reference data is used? Which data should be centrally provided? Which data needs local updates? What data is the most important for this initiative? Where are data quality issues currently? What data validation is planned? What data is needed to facilitate the TOM objectives of Reporting and Shared Services? What data is in ACORD? What extensions are required? What versions are already in use? What can TMEL do? What are its limitations? What other messaging hubs are used? What MDM capability exists in the market? What data is mastered? What limitations exist? What governance processes exist? What data definitions have been established? What data quality capability exists? What types of messages are required? Ways to enhance TMEL? Benchmark features with alternate providers. Data, software and service providers. Governance models of control, level of data model/definition, data quality monitoring, data lineage. Define Scope Define RequirementsDefine Solution Options Complete Q4 Activity Data Integration 35 Functional Component DI1 “Data Integration”

Contents 36 Contents Data Integration Settlement SE1- Settlement Delegated Authority Claims Core Services Complaints Management Local Shared Service Centre Page 32 37 39 43 55 63 67

Settlement – Initiative summary What is the Settlement initiative? The settlement initiative aims to improve London Market settlements, potentially replacing numerous existing settlement systems and processes. Some of these existing solutions are running on legacy mainframe technology which incurs higher development costs and restricts the ability to adapt processes to changing Market needs. In-scope components Single Settlement Process – Delivered through alignment and consolidation of existing processes or replacement with an entirely new process Customer Portal – For authorised participants to view and/or transact their settlements Settlement Technology Platform – Refreshed or updated Provides a standardised process and managing, that will drive operational efficiencies and make reconciliation simpler Reduces bank charges for market participants currently using alternative settlement services and processes A larger customer base to share development and operational costs Benefits 37 Key Challenges Lloyd’s Constraint on currency conversions Three-day settlement period perceived as too long Company Bureau Market Material constraint on number of banks that can be used Constraint on currency conversions Settlement period perceived as too long, with some players choosing to settle weekly/monthly Non Bureau Company Market Multiple bespoke settlements methods deployed, normally weekly Limited netting of transactions resulting in higher bank charges ALL Settlements are not netted across the Market increasing the number of bank charges Processes are not consistent across the three areas of the Market, resulting in operational inefficiencies for companies and brokers that operate across all three areas

Settlement 38 There are a number of settlement systems and processes, some running on legacy technology, which is not cost efficient to develop, restricting the processes ability to adapt to changing market needs. The Company Bureau market uses the LPC Irrevocable Payment System (LIPPS) which is run by an external service provider and hosted on the supplier’s mainframe. The process has a limited number of banks that can be used in London and when processing the movements the debits have to be collected before the credits can be paid out. There is also no option of Currency Conversion Service offered The Company Non-Bureau market settles directly from company to company Many companies have bespoke arrangements to ensure quick settlement Non-Bureau e-Accounting typically drives weekly settlement Work is being done to create ACORD standard messages for settlement, and a potential netting service is being piloted Whilst there have been many pieces of work developing settlements throughout the market, this is the first time settlements has been approached as a cross-market piece of work The settlements initiative was developed under the TOM programme with the aim of solving the following problem: growing needs of the London Market cannot be met due to restrictions in current systems. The key objectives of the settlements solution are to: Improve Customer experience Improve operational efficiencies Reduce the cost of doing business through cost efficient use of technology The next stage of this project will involve undertaking analysis to establish the feasibility of the following aspirations: Functional Component SE1 (Part 1) “Settlement” Objectives and Aspirations 1Make settlement speedier than the current three-day Bureau process 2Maximise the number of viable currencies accepted to reduce FX risks to Insurers and administrative costs to Brokers 3Maximise netting of insurance related transactions, potentially across different markets, etc. 4Instruct and accept payments at a settlement stage only from authorised parties (i.e. independent of the upstream process, trigger files coming from outside Bureau) There are several other aspirations that have been identified. Some of these are dependent on other areas of the TOM initiatives, but any settlement solution must aim to support the following: Objectives and Aspirations for LM Settlements 1Maximise reconciliation and use of cash flows (i.e. reducing any mismatching and unallocated cash) 2Maximise integration to reduce manual re-keying 3Support the currencies and processes needed for Local Shared Service Centres (Lloyd’s only objective) 4Create a developable service based on flexible, scalable, cost effective technology 5Standardise messaging in and out of settlement (ACORD XML) The Business Challenge The Business Aspirations

Settlement To realise these aspirations, the initiative will be evaluating the potential to improve processes and automation/system support for those processes in the following areas: Net settlement of insurance-related transactions across the entire London market (multilateral – i.e. multiple parties and markets involved) Faster settlement Increase in settlement currencies Accepting business at the settlement stage which has not gone through the upstream Bureau process Provision of access to data for customers to provide improved transparency of the settlement status and MI Settlement Process Reduced bank charges for brokers (STFO and LIPPS already reduce charges for insurers) A larger user base (if Non-Bureau business can be incorporated) to share development and operational costs Uniform changes only funded once, cost shared amongst existing users Brokers would see both Lloyd’s and Company Market settling in one hit per risk/claim Front End Standardised process and messaging will drive operational efficiencies and make reconciliation simpler, reducing unallocated cash and increasing speed of payment to clients The ability to operate settlement based on an instruction to pay and agreement to receive independent of the accounting and reporting processes. Opening up the settlement process to increased business volumes and risk, to be managed by a clear control structure Potential to support Lloyd’s Local Shared Service Centres (LLSSC) and global company market insurers, as well as other future initiatives Settlement Technology Platform (enhance/update) Control over development costs and timescales Flexibility to add new functionality (i.e. interaction with the portal and front end) Repeatable, predictable development Customer Portal Visibility of future cash flows for planning purposes Certainty of claims payment timescales Functional Component SE1 (Part 2) “Settlement” Aspiration Realisation Benefits Sought 39

Settlement Settlement Process – The settlement processes are currently performed separately for Lloyd’s, Company Non-Bureau and Company Bureau. These processes are to be combined, better aligned or replaced with a new process. Combining these processes may allow for greater netting efficiencies, and overall lower banks charges. Viability – The feasibility of either aligning, combining or designing a new settlement process is to be assessed with consideration of the following: The likelihood and timelines of a Single Claims Agreement Process (this is being addressed as part of the Claims Initiative) The settlement frequency of various participants (Lloyd’s currently settle on the next available settlement date, whereas some companies choose to settle on a weekly or monthly basis) The capital implication of the solution type (for example a clearing house style model would require a large pool of money to be held) Interactions with the technology platform (the technology is the enabler to changes in the settlement process) Front-End – A direct access point to the settlement process for authorised participants that allows for: Easy addition of local shared service centres to the settlement service (a Lloyd’s specific requirement) Non-Bureau business entering the process at the settlement stage, for settlement only Increase in the number of settlement currencies Translation of allowable data formats into standard agreed formats, allowing the easy addition of local hubs Viability – The feasibility of introducing a front-end to the settlement process is to be assessed with consideration of: Interactions with other areas such as: Tax, Regulation and Reporting Data Visibility – i.e. all Market participants being comfortable with the service provider of the front end having access to granular TA information Integration with participants existing systems (i.e. how much benefit standardised messaging brings to market participants) Customer Portal – A Portal which allows brokers and insurers to check the status of their payments, the postings against them and the breakdown of any amounts. Viability – The feasibility and desirability of a new customer portal is to be assessed with consideration to the following: Interactions with the technology platform (data for the portal would be extracted from the technology platform) Value add, over and above offerings from other initiatives (such as the claims portal from the claims initiative) Solution Evaluation Approach Functional Component SE1 (Part 3) “Settlement” 40

Settlement Settlement Technology Platform (Change/Update) – The technology used by the settlement service(s) needs to support potential increased transaction volumes, additional functionality (e.g. portal, front end) and be cost effective to maintain and develop. STFO and LIPS are currently hosted on a third party mainframe. Viability – The feasibility and desirability of any update or replacement to the technology platform needs to be assessed with consideration to the following: The cost effectiveness of any large scale changes, with reference to the expected future state of TOM The risks and implications of changing the provider and/or technology to the overall TOM project The risks and implication of changing the provider and/or technology to the market Wider strategic decisions being made by the market, related to technology provision The aim of each deliverable is to meet the objectives; if new or alternative deliverables better meet these objectives, then their viability will be assessed in a similar way Solution Evaluation Approach (continued) Functional Component SE1 (Part 4) “Settlement” 41

Contents 42 Contents Data Integration Settlement Delegated Authority DA1 – Coverholder Approval DA2 – Coverholder Audit DA3 – Compliance Controls & Services DA4 – Binding Authority Contract Process DA5 – Transactional Processing Claims Core Services Complaints Management Local Shared Service Centre Page 32 37 43 46 48 50 51 53 55 63 67

Delegated Authority – Initiative summary What is the Delegated Authority initiative? The Delegated Authority initiative will address existing legacy systems that are limited by poor integration of data between systems and limited functionality. Processes will also be centralised and streamlined to eliminate inefficiencies associated with Delegated Authority business services. In-scope components Coverholder Approval – Enable a ‘right first-time’ collection of supporting coverholder approval information Coverholder Audits, Coverholder Controls and Compliance Services – Centralisation of coordination and performance Binding Authority Registration – System to automatically generate, validate and store contracts (including multi-year) Coverholder Data Publishing and Processing Provide a more efficient coverholder approval process Reduce duplication of audits and interruptions to coverholders Reduce time spent by brokers and insurers on manual data capture and cleansing Eliminate need for manual Bordereaux – replaced with automated data sharing at a far more granular level Benefits Key Challenges 43 Significant duplication of effort to approve new coverholders Significant duplication of effort to monitor compliance and audit coverholders Data cannot be effectively mined and reused Poor Coverholder experience due to inconsistent interpretations of compliance requirements Varying quality of coverholder binder contracts. Often incorrect tax & regulatory information due to non-systematic use of available checking tools

Delegated Authority – Initiative summary 44 The current processes for managing coverholder approvals are decentralised meaning that multiple participants in the market will duplicate effort to approve and monitor coverholders on an individual level, often requiring the target coverholder to supply the same information multiple times. The process for auditing coverholders is disjointed with managing agents executing their own audits, frequently covering similar scope to parallel audits. Centrally stored data is difficult to reference during an audit and is often resupplied on several occasions. Existing contract data could be reusable on renewal and also for new contracts. However the current repository for contracts is inflexible and the data cannot be easily extracted to support automated contract generation. The existing systems do not support common data integration standards and as such are a constraint on broader integration and straight through processing/process automation. The Delegated Authority initiative aims to: Create a better “experience” for and increase the retention of coverholders, brokers, carriers and TPAs within the London market by working collectively to address long standing issues such as multiple audits and annual binder contracts Reduce the costs and time taken to introduce new business to London through improvements to the coverholder approvals and binding authority agreement processes Create a more flexible, efficient model for processing risks, premiums and claims for binding authority business by enabling straight through processing and accessibility to information. Objectives and Aspirations 1 Facilitate greater use of straight through processing (STP) in the market. Encourage coverholders, underwriters and software providers to review their accounts and move to STP where suitable. STP reduces much of the regulatory and reporting requirements for coverholders and also eliminates the possibility of human error through the reduction of 'keystrokes‘. 2 Improve and speed up the process of approving new coverholders. 3 Improve and streamline the process for negotiating, creating, endorsing, renewing and registering binding authority contracts. 4 Improve the quality, flow and re-usability on all information on risks, premiums and claims written under binding authority contracts and ensure such information is accessible to all stakeholders in a standardised format. 5 Remove the burden of unnecessary multiple annual audits for coverholders with multiple lead carriers as well as eliminate duplication of effort in the audit process. 6 Improve the binder contract renewal process by making the compliance checks an ongoing process rather than an annual one. 7 Remove inefficiencies in the compliance process by ensuring that coverholders are asked for compliance data once and once only by the London Market. 8Improve the competitive position of London by enabling multi-year binding authority contracts, thus providing greater certainty to coverholders and their clients. The Business Challenge Our Ambition

Delegated Authority Delegated Authority DA1 (Part 1) “Coverholder Approval” Coverholder Approval is the process through which new coverholders are vetted and validated before being permitted to participate in the market. Within the current process multiple stakeholders may execute the approval process in parallel, each applying central or local processes to do so. This results in the target coverholder organisation being engaged to provide the same information multiple times and a material duplication of effort across the market In addition, the existing IT legacy systems do not readily support the extraction of data and the reuse of that data in their interactions with other systems/system queries This initiative will undertake the following high level activities to realise the desired improvements: Review end-to-end process of coverholder registration and approval to identify areas of improvement covering: Process steps, metrics (SLAs/KPIs), stakeholders and approval checkpoints Coverholder registration & requirements capturing Central data storage Automation of coverholder data capture Review of existing ATLAS* platform to determine process steps, workflows and system interfaces/architecture, as well as whether functionality meets existing user requirements RACI (responsible, accountable, consulted and informed) matrices to identify who is responsible at each stage of the coverholder approval process Review of existing processes in the company market and understanding whether these can be centralised with those of Lloyd’s Subsequently implement an IT Solution to help support coverholder registration and approval process (i.e. replacement of or enhancement to ATLAS) * ATLAS is a Lloyd’s online market tool that supports the management of Coverholders for new Coverholder applications, including branch applications, changes to Coverholder permissions that are applied centrally by Lloyd’s, and provision of annual compliance data to Managing Agents and Lloyd’s brokers. Background & Context Planned Activities 45

Delegated Authority Delegated Authority DA1 (Part 2) “Coverholder Approval” Standardisation of the approval process across the whole market (both Lloyd’s and company market) Eliminate duplication of effort currently experienced whereby the same checks and information requests are being done by different parties within the process (e.g. on-boarding checks and compliance being carried out by local coverholder reps at the start of the process) Improved automated approval process (supported by a centralised on-line application system) Possibility of segmenting coverholders based on parameters such as cover, region etc. in order to easily identify complexity of approval and quicken process Benefits Sought 46

Delegated Authority Functional Component DA2 (Part 1) “Coverholder Audit” Audit is one of the key assurance mechanisms used by managing agents to: Make sure that all aspects of a binding authority are operating effectively Assess the coverholder’s adherence to the terms and conditions of the binding authority Raise areas where coverholders may be able to improve aspects of their business, either to reduce risk or improve efficiency Assess suitability of the coverholder’s business systems, governance and controls over the risks Current constraints and issues include: Each managing agent audits each coverholder separately Whilst there is a standard audit scope, this is not always used, therefore audits are inconsistent ATLAS holds a large amount of information, but this is not always referenced; instead coverholders are often asked the same questions at the audit as well as the same recommendations being duplicated and dealt with at different times Each of the above means that coverholders feel like they are repeatedly being audited Managing agents are not currently taking advantage of economies of scale and shared knowledge and experience which may come from co-ordinated audits This initiative will undertake the following high level activities to realise the desired improvements: Review Coverholder Audit process and identify areas of improvement covering: Review and revision of Audit Scope (e.g. removal of due diligence requirements from scope as well as questions based on information already held on London Market systems) Define the process and management of the pre and post audit service Evaluate whether the same services are appropriate and can be provided to both Lloyd’s and the rest of the London market Define and implement roles and responsibilities of the key stakeholders at each stage of the audit process; including those of Lloyd’s Define and implement pricing model for licencing and how the audit and compliance service/system access will be charged Define pricing model for auditor fees Design and implement resourcing solution to support the audit and compliance processes, including review of Lloyd’s ability to provide the service in terms of resourcing and appropriateness of provision to the whole London market Background & Context Planned Activities 47

Delegated Authority Functional Component DA2 (Part 2) “Coverholder Audit” This initiative will undertake the following high level activities to realise the desired improvements: Implement an IT solution to support the audit and compliance process, which includes the following functionality: Auto-generate a single set of relevant audits/questions for each coverholder regardless of how many leads they have Automatic assignment of skilled auditors to complete the audit based on defined business logic/rules Automatic and appropriate scheduling of audit for given timeframe prior to the due date Manage post audit activities e.g. providing recommendations etc. Full workflow and query management functionality across the audit lifecycle Interaction with other data systems to reduce data collection by reuse of existing data Full reporting suite Refined audit scope to ensure that only relevant questions are asked Removal of due diligence and compliance elements from audit process so that audits become focused on the testing of findings Centralise and automate coordination and performance of delegated authority audits Risk-based and proportionate audit, to eliminate inefficiencies and duplication of effort (avoiding a one size fits all scope) Central management and appointment of better skilled auditors to improve quality of audits Integrated system solution to support audit coordination and completion Integrated system solution to support production of audit MI Improve analysis of audits and in turn improve process and standard of recommendations post audit collection Integration with composite Market audit requirements (via IUA) Reduce administrative burden on MGAs Planned Activities (continued) Benefits Sought 48

Delegated Authority Functional Component DA3 “Compliance Controls & Services” Annual Compliance checks are done in order to access and ensure that coverholders continue to meet Lloyd’s suitability requirements. The following are key challenges associated with the existing process and system environment that the initiative seeks to address: Coverholders being chased by multiple managing agents for the same compliance information The compliance information is often requested by managing agents at time of contract renewal. This can delay the renewal process, creating challenges over contract certainty This initiative will undertake the following high level activities to realise the desired improvements: Review Coverholder compliance process and identify areas of improvement covering: Definition of the process and management of the compliance service Definition and formalisation of roles and responsibilities of the key stakeholders at each stage of compliance process Definition and formalisation of the pricing model for licencing and how the service/system access will be charged Implement an IT solution to support the audit and compliance process, including the following functionality: Automatic scheduling of compliance checks to make it more of an ongoing process as opposed to the current situation whereby completion of the compliance checks are only driven by renewal due dates Centralise/Automate coordination and performance of ongoing Coverholder compliance Deliver improved system for the completion of annual compliance tasks (i.e. enhancement/replacement of ATLAS system) – Moving to ongoing compliance Background & Context Planned Activities Benefits Sought 49

Delegated Authority Functional Component DA4 (Part 1) “Binding Authority Contract Process” Binding authority agreements are contracts which set out the scope of delegated authority and so allow coverholders to enter into contracts of insurance and to issue insurance documents on behalf of Lloyd's managing agents. Binding authorities are registered online on the Binding Authority Registration (BAR) website. The key issue with the current process is that system contract data cannot easily be identified and extracted to support: Automatic contract creation Verification checks This initiative will undertake the following high level activities to realise the desired improvements: Review of existing BARS system to determine if it can be enhanced or replaced in order to meet the requirements set out in the IT Solution section below Implement an IT Solution providing the following functionality: Document management system/Central repository for binding authority contracts Electronic creation of contracts using data entered/ stored in the system Auto checking against local rules, requirements, taxes etc.; for example using the rules currently held in Crystal and the QA Risk Locator Tools Auto checking against coverholder permissions and licenses IT solution/system must interface directly with central data source IT solution/system must have role-based access and security permissions defining what solutions can be accessed IT Solution must permit Multi-Year Contracts CRYSTAL provides Lloyd's market participants with quick and easy access to international regulatory and taxation requirements QA RISK LOCATOR provides guidance on how to identify the legal location of an insured risk Background & Context Planned Activities 50

Delegated Authority Improve/speed up binder renewal process Electronic creation of contracts which can be updated in real time by multiple parties Central repository for storing and sharing of binding authority contracts and endorsements Auto checking against Crystal and the QA Risk Locator Tools Auto checking against coverholder permissions and licenses Easy accessibility of granular risk level data within binder e.g. for tax and regulatory purposes Easy accessibility of data for use and improvements in other area of the process e.g. using contract data to validate whether a coverholder can cover a particular risk Refine registration process including support for multi-year contracts Functional Component DA4 (Part 2) “Binding Authority Contract Process” Benefits Sought 51

Delegated Authority The current system landscape does not support common data integration standards and is a constraint on the delivery of consistent ubiquitous access to the data underpinning the functional components addressed by this initiative and future integration with other initiatives to facilitate straight through processing. Functional Component DA5 (Part 1) “Transactional Processing” This initiative will, as a contributor to a broader data integration initiative, undertake the following high level activities to realise the desired improvements: Define a solution to enable access to all delegated authority risk, premiums and claims data to all required stakeholders Link/provision of data to any appropriate systems and services for example for settlement of premiums and claims, and claims agreement processes Agree requirements and standards (e.g. ACORD) for submission and extraction of data (including risk, premium, claims, complaints) as defined in the data integration work stream into the central service hub Define query management capabilities for data conversion and storage Develop support for multi formats for transferring data to stakeholders e.g. broker, carriers etc. Including the mapping and transformation between different data media and message standards (e.g. between XLS and XML) Execute transformation of data to required formats Develop improved reporting capabilities by providing real-time MI information as well as some standard reporting e.g. tax and regulatory reporting etc. Develop optional central solution to enable the validation of risks pre and post bind against binder terms, agreed market rules and processes for managing errors and corrections Develop optional central solution to enable the creation and checking of policies and certificates Develop optional central solution to enable the automation of referrals – to ensure robust referral/escalation mechanism whereby e.g. declaration bound is not within terms of binding contract Background & Context Planned Activities 52

Delegated Authority Access to data (Binder, Risks, Claims, Premiums) eliminating re-keying of data in different systems Set and agree standards for receiving data (e.g. ACORD) improving the quality of data captured Support for multi formats for transferring data to stakeholders e.g. broker, carriers etc. Improve timeliness of data capture Improve data validation Improve accessibility and visibility of data across different departments and organisations Impose data security and protection measures to ensure individuals and organisations only have access to data they are permitted to Improve reporting capabilities by providing real-time MI as well as some standard reporting e.g. regulatory reporting etc. Link/ availability of delegated authority data to other processes and systems (e.g. claims, settlements etc.) Optional central solution to enable the validation of risks pre and post bind against binder terms, agreed market rules and processes for managing errors and corrections Optional central solution to enable the creation and checking of policies and certificates Optional central solution to enable the automation of referrals – to ensure robust referral/ escalation mechanism whereby e.g. declaration bound is not within terms of binding contract Optional central solution to enable automated credit control Optional central solution to enable automated ‘within authority’ claims checks Functional Component DA5 (Part 2) “Transactional Processing” Benefits Sought Develop optional central solution to enable automated credit control Develop optional central solution to enable automated ‘within authority’ claims checks Develop support for straight through processing (STP) including the following: Roll out training on STP, specifically referencing 'Project Tomorrow' Identify key regulatory, reporting, administrative and commercial benefits of STP Encourage brokers and underwriters to identify binders that would suit STP Encourage supporting vendors to engage with coverholders to identify businesses that are amenable to STP Planned Activities (continued) 53

Contents 54 Contents Data Integration Settlement Delegated Authority Claims Core Services CL1 – Access CL2 – Shared Services CL3 – Messaging and Workflow CL4 – Data & Reporting Claims Management Local Shared Service Centre Page 32 37 43 55 58 59 61 62 63 67

Claims – Initiative summary What is Claims Core Services initiative? Aims to enhance the customer experience, service and accessibility to the London Market, using technology as an enabler to replace legacy systems and processes with modern tool, data structures and central shared services. These elective shared services comprise non-competitive activities common across the London Market that would benefit from central governance, purchasing and management for the shared benefit of the London Market. In-scope components Claims Management Services and Processing – Deliver a modern, global standard claims system supporting improved messaging Claims Reporting Suite – Performance measures for core claims processes Customer & Competitor Analysis – Market research to validate and inform claims modernisation Enhanced customer experience through transparency of service and simpler agreement processes Policyholders experience a faster claim cycle, primarily for small claims, by reducing manual carrier processes Rich and structured data for all Gaining an accurate understanding of customer needs and appetites, enabling improved customer retention Drive service improvements through claims benchmarks Benefits Key Challenges 55 Legacy system and architecture is inhibiting ability to straight through process and automate Legacy nature of systems is driving up cost of ownership as skills become scarcer Limited direct access for customers to the market and their data Little differentiated approach to handling simple vs. complex claims Duplication of effort for executing pre adjusting checks Disparate approaches to triage of claims in to departments No standardised vetting/approving of Experts used in the claims assessment process

Claims Core Services 56 The Core Services initiative was developed under the TOM programme with the aim to solving the following problem: Customer service is suffering as current systems and processes are restrictive to satisfying the growing needs of the London Market. This is illustrated by the current mainframe Claims Loss Advice and Settlement System (CLASS) that is built on obsolete technology and costly to change and maintain, due to a shortage of appropriate resources particularly for coding changes. The system does not easily integrated to modern digital architecture. The new claims community has begun to develop ideas about what an enhanced claims core system and shared central services should look like in order to incorporate the planned improvements and the more customer focussed ideal that the SME group discussed. The initial draft of the high level design is below, and gives some context to the proposed work packages and services. There are several areas of analysis that need to be performed before the detailed design on the new services is finalised. A number of non-competitive activities have been identified that appear suitable for including into a suite of central shared services that the London Market participants could draw on electively. These are under further investigation to understand their viability, cost and depth of benefit to the Customer an therefore the London Market. The overarching objective of the Claims Core Services Initiative is to improve the customer experience of London Market Claims. The main ways to achieve this that have been identified are: Improving end-to-end processing time Improving visibility of and access to Claims data In order to achieve this we have identified the following objectives and aspirations: Objectives and Aspirations 1 Efficient standardised processes  Single Agreement Party Protocol  Pre Adjusting Checks: Sanctions, Fraud, KYC (Know Your Customer), ABC (Anti-Bribery and Corruption), Regulatory data  Automated Triage for all Claims  Standard Claims Processing  Loss Fund Management 2 Better data quality and availability to reduce manual rekeying, including straight through processing ability 3 Standard messaging 4 Performance measures, KPIs, etc. to improve overall market standards 5 Better access to Claims information for all parties in a claim (policyholders, brokers, TPA, Coverholders, Experts) 6 Accurate management information for participants Note – in order to support coverholders and the delegated authority initiative the claims core service initiative is also seeking to deliver; Straight Through Processing Transparent/interactive repository holding TPA and Coverholder data Structured Data Capture Data Transformation Service Real Time Processing Standardised Claims Bordereaux Raw Data capture – raw data consisting of data dumps e.g. Spreadsheets, SCV files and lists The Business Challenge Our Ambition

Claims Core Services Functional Component CL1 “Access” The following are key challenges relating to access associated with the existing process and system environment that the initiative seeks to address: Customers cannot access the London Market directly; they have to use a broker to be able to effect even routine transactions within the London market Customers cannot easily gain secure access to relevant claims data held within the London Market Access to real-time data is difficult to implement for the entire market and data is therefore batched There is currently no ability to straight through process claims within the core system There is no flexibility around how to transact or submit information to the London Market This initiative will undertake the following high level activities to realise the desired improvements: Create interfaces to allow all stakeholders in the process to securely access relevant claims data e.g. APIs (Application Program Interface, these specify how software components should interact) and/or enable claims portal Scope and design approach for enabling Direct Flexible Access to the London Market (including 24/7 access) and relevant claims data (subject to security and authority permissions) Evaluate and select Portals and System Options Scope and design approach for Data capture, analytics and reporting against Real Time Transactional Data Scope and design approach for enabling straight through processing and implement the change Direct access to claims related data for all stakeholders in a claim A more customer-centric service Easier and more complete contact for the customer throughout the lifecycle of the Claim Improved data transparency for users and customers Reduce unnecessary manual work and enable automation where required 57 Background & Context Planned Activities Benefits Sought

Claims Core Services Functional Component CL2 (part 1) “Shared Services” The following are key challenges relating to shared services associated with the existing process and system environment that the initiative seeks to address: Standard Claims Processing There is no market wide SLA for handling simple or straightforward claims Simple or straight forward claims are processed individually in the market, often alongside complex claims, despite there being little or no competitive advantage in doing so. There is an opportunity for standardised claims processing of a defined population of claims to be effected centrally, to a defined standard and fee Pre-adjusting Checks Claims teams in the market currently effect individual checks and activities for routine checks comprising Sanctions, Fraud, KYC (Know Your Customer), ABC (Anti-Bribery and Corruption) and certain mandatory Regulatory Reporting activities – these are non-competitive, repetitive and often costly transactions that are mainly manually triggered Duplication is common as checking is done throughout the subscription market and throughout the life of a claim multiple times. There is currently no coordination of common checks A central light touch check is currently carried out at the end of the process, potentially holding up payment if something is found to be not quite right Loss Fund Management In order to reduce transactions back to the lead insurer on claims involving multiple claimants (e.g. pollution/spills), loss funds are placed with the broker in order to pay numerous small claims. These funds are often set up on a claim by claim basis and are an expensive and time consuming method of disposing of these types of losses as there needs to be a regular auditable reconciliation and “top-up” process to keep the fund active and regulated This initiative will undertake the following high level activities to realise the desired improvements: Create standardised services including: Single Agreement Party Protocol Pre Adjusting Checks (aka Sanctions, Fraud, KYC, ABC, Regulatory Reporting) Standard Claims Processing Loss Fund Management services Expert Management (due diligence of professional experts used on claims) Replace or upgrade legacy systems where necessary 58 Background & Context Planned Activities

Claims Core Services Functional Component CL2 (part 2) “Shared Services” Increased operational efficiency and reduced duplication, delay and operational costs Consistent high service levels across the market which result in claims being a differentiator for London, increasing growth and a more effective claims handling of lower value claims Increased operational efficiencies and reduced set-up and run costs Increased technology flexibility as demanded by the Market, lower development costs, increased capacity and higher performance levels Benefits Sought 59

Claims Core Services Functional Component CL3 “Messaging and Workflow” The following are key challenges relating to messaging and workflow associated with the existing process and system environment that the initiative seeks to address: There is currently no common standard for data messages and CLASS uses its own proprietary standard making it costly and time consuming to create links into the core system, in either direction The workflow capabilities of the core system are basic, there is no automation and manual processing is commonplace Currently there is no capability to run any automated triage processes to stream claims into claim departments by cost, complexity or other criteria. Stakeholders currently do their own triage process and their own streaming This initiative will undertake the following high level activities to realise the desired improvements: Implement standardised messaging throughout the claims process to allow connectivity to other systems (ACORD XML) Create an automated triage process – a business rules capability for electively controlled automation of claims processes; this in turn would enable straight through processing of selected or elected transactional type claims A reduction in the amount of manual re-keying, saving operational costs and reducing delay, duplication and error potential Business rules capability for electively controlled automation of claims processes, to enable straight through processing of selected or elected transactional type claims – resulting in faster claims handling and focus of claims handling experts on more value add activities 60 Background & Context Planned Activities Benefits Sought

Claims Core Services Functional Component CL4 “Data & Reporting” The following are key challenges relating to data and reporting associated with the existing process and system environment that the initiative seeks to address: There is currently no predictive element to report generation and due to the low availability of good quality structured data, the production of regular reports internally within member organisations is highly manual and inefficient Reports are not centrally stored or accessible leading to duplication of effort and output This initiative will undertake the following high level activities to realise the desired improvements: Implement performance measures surrounding core claims processes to inform market participants, particularly about performance against benchmark, KPI and regulatory reporting requirements Develop and implement standards for structured and raw data capture Implement basic and predictive analytics Implement shared and accessible repositories for storing and retrieving captured data Drive higher performance across the market and differentiate London as a centre of claims excellence Enrich the available data, allowing firms to make more informed business decisions More effective sharing of information; predictive analytics will push automated analysis to stakeholders, reducing time to decision for response to key business triggers – e.g. highlighting a deteriorating claims experience pattern early Economies of scale, reducing costs 61 Background & Context Planned Activities Benefits Sought

Contents 62 Contents Data Integration Settlement Delegated Authority Claims Core Services Complaints Management CM1- Complaints Management Local Shared Service Centre Page 32 37 43 55 63 65 67

In-scope components Complies with regulation, avoiding financial penalties Improved customer service Efficiency in dealing with complaints centrally Improved quality of complaint MI to improve operations and performance Protects London Market reputation by solving issues before they develop into serious complaints 63 Benefits Complaints Management – Initiative summary What is the Complaints Management initiative? The initiative aims to improve the customer experience and protect the London Market reputation by delivering systems and processes for complaints handling. This initiative responds to FCA policy statements (15/19) that outlined new rules on complaints handling, Lloyd’s minimum requirements and international regulation. Key Challenges Current complaints process does not meet regulatory requirements: Complaint resolution is currently too slow and inefficient Not all complaints are currently reportable to the FCA Limited consumers’ awareness of their right to refer a complaint to ombudsman service, where they remain dissatisfied Complaints Registration – A system to comply with impending regulation, improve efficiency and support the swift resolution Data & Document repository- To establish the ‘single source of truth’ of market complaints with; document repository and system interfaces with other supporting systems Complaints Handling – Embed processes and standards to enable continuous market improvement for complaints handling Education and Training – Develop and rollout to support complaints operational standards

Complaints Management The Complaints work stream will address the following challenges faced by business: Complaints Management System (Elective) – Technology to support the registration, tracking and resolution of complaints, accessible by Coverholders, Brokers, TPAs, Carriers and ultimately the Customer (policyholder). The following components are mandatory: Central Market Complaints Repository - To establish the ‘single source of truth’ data store of market complaints with: Interfaces to exchange information with market participant systems Integration to other supporting systems to look-up relevant complaint information A secure portal for users to access with a reporting engine and several methods for capturing data from market participants Define the service orchestration services to support the above Market Complaints Standards - Define complaints handling standards and, where appropriate, common processes that can be flexed in line with regulatory environment. Complaints System & Regulatory Training - Develop and rollout regulatory and systems training to market participants. The underlying objective of the Complaints initiative is to improve the customer experience of London Market Complaints. The main ways to achieve this that have been identified are: Improving end-to-end processing Centralised repository of claims data Reducing duplication of work to minimal Improving visibility and access to Complaints data Defining a set of Market complaints standards In order to achieve this we have identified the following objectives and aspirations: Objectives and Aspirations 1 To offer an improved customer experience, which differentiates the London Market from its competitors. This will be achieved through the delivery and development of a system and processes that enable the effective handling of complaints. In turn, improving customer satisfaction, perception and confidence in the consistency of standards and service. 2 To comply with new FCA regulation and international requirements for managing customer complaints [PS15/19: Improving complaints handling – outlined above]FCA is CP14/30 – Improving Complaints Handling FCA is CP14/30 – Improving Complaints Handling Polcy StP]]}. For Lloyd’s carriers, the solution must address any outstanding matters to meet the Conduct Management Information (CR13) requirements, part of the MS 13 Conduct Risk – Minimum Standards issued by Lloyd’s in July 2014. 3 To provide the London Market with a central repository of complaints data (and documents); providing connectivity and standard data flows (two-way) between discrete complaints databases, improving the standard of reporting, quality of Management Information (MI) and ease of regulatory reporting. 4 To define a set of operational standards aligned to regulations that provide the Market with a consistent approach to complaints handling. 5To establish an education and rollout plan for all stakeholders based on the operational standards, system usage and new regulations. The Business Challenge Our Ambition 64 Functional Component CM1 “Complaints Management”

Complaints Management Background & Context The effective handling of complaints is a key part of any insurer’s customer service proposition and has become a focal point by regulators in the financial industry. Customers identify with both the Company Market and Lloyd’s as a brand as much as the insurers that carry their policies, many carriers (25-30% of Lloyd’s market share) consider that the most effective, and cost efficient way to resolve this is by acting collectively within the market. This will allow:  Consistent and effective regulatory reporting under increasing focus on customer care and Conduct Risk by regulators  Economies of scale and up to 30% efficiencies gained by improved co-ordination between stakeholders, workflow and visibility  Simplified and common standards for complaints handling for use by all coverholders and claims TPA’s  London market to strengthen its position as the premium location to transact insurance business due to its focus on the customer Planned Activities This initiative will undertake the following high level activities to realise the desired improvements:  Development of an RFP outlining the functional and non-functional requirements  Select two or three vendors to participate in a Proof of Concept (PoC) to test the vendors ability to deliver on the identified requirements as well as further refine/define requirements (for all rollout phases) and the overall solution  In parallel to the PoC the community will work closely with the LMA, IUA and Lloyd’s Complaints team to develop the Complaints Operations, System and Regulatory Training  Implement the solution for other jurisdictions. Implementation of the solution will (where possible) align with the rollout of Lloyd's conduct risk standard. It is understood that this will result in a phased approach for the subsequent roll out Benefits Sought  Reduces effort in dealing with complaints across all parties involved in the complaint process  Improved customer satisfaction through timely response to complaints  Improved quality of complaint MI to improve operations and performance  Economies of scale reducing the overall cost of the services  A scalable platform to manage increased volumes or extended functions driven by new regulatory or legislative requirements  Ability to benchmark performance against market-wide KPI’s 65 Functional Component CM1 “Complaints Management”

Contents 66 Contents Data Integration Settlement Delegated Authority Claims Core Services Complaints Management Local Shared Service Centre LSSC1- Local Shared Service Centre Page 32 37 43 55 63 67 69

Local Shared Service Centre – Initiative summary What is the Local Shared Services initiative? The Local Shared Service Centre initiative aims to create locally enabled post-bind Shared Service Centres where a ‘menu’ of unified, value for money and scalable back-office services can be offered to customers operating in territories outside the UK. This should make it easier for London Market carriers to operate in emerging markets. In-scope components Data Capture – Provide structured risk data capture to enable the below post-bind services Document Management and Production – Validate and provide assurance of documents including policy issuance in local language, Facilitate contract checking Premium Handling – Includes premium matching, IPT, credit controls, net country and central settlement, premium accounting and debit notes Claims Payment – Enable direct payment in local currency and net settlement, receipt of notification Reporting – Facilitate tax and regulatory reporting, Month end reports, management information (MI) and Reporting Establishing post-bind shared services centres is designed to make it more attractive for Lloyd’s and Company Market carriers to enter a market, saving on set-up and operating costs and hence provide economies of scale in terms of administering any local operations Brokers will be provided with a more seamless process, with the ability to interact with Lloyd’s through a single standardised interface. LSSCs will deliver more efficient post-bind services (reducing frictional costs & improving data quality), currently provided by local carriers, thereby, offering greater capacity within local markets Benefits Key Challenges 67 Working with ‘London’ centric processes and systems is a barrier to business in global territories Interaction with the market needs to be enabled at a local level in local language Increase speed/reduce cost of entry into new territories Sufficient volume through LSSCs to reap the benefits of economies of scale

Local Shared Service Centre (Part 1) 68 The Local Shared Service Centres (LSSC) Initiative was created under the TOM programme to deliver the following benefits: Create economies of scale for participating carriers Facilitate the entry into new territories without the need for heavy investment in premises and infrastructure Provide a high level of control, streamlined processes, integrated systems and high quality structured data for carriers and local regulators Provide local net settlement and single payment for subscription business Provide policy documentation quicker and in local language In order to derive the full value from this TOM investment, the usage of the LSSCs is proposed to be a mandated post-bind service with the business benefits to the market participants being demonstrated. The Global Core Services to be offered by LSSCs fall across five areas: Data capture Document production and document management Premium handling Claims payment Reporting To deliver the benefits outlined above, this initiative has the objective of designing and implementing the global core systems that will be used by the LSSC and their integration to existing ‘called services’ and implementing a pilot. The emerging overarching service catalogue for the LSSC is depicted in the figure to the right where grey shaded cells are services that need to be created by the initiative and orange coloured cells are centralised services that need to be able to be called by the LSSC. Core local shared services – hosted locally, built into the requirements of the system Called services. Requires an interaction with either 1. London Market services 2. BPO support service 3. Managing Agents or Service providers directly The Business Challenge The Service Catalogue Functional Component LSSC1 “Local Shared Service Centre”

Local Shared Service Centre (Part 2) 69 In addition to supporting the overarching TOM ambitions of improving the ‘ease of doing business’ and improving service consistently across the market, the implementation of shared service centres should help to address some of the key international challenges highlighted through market engagement: The current processes and systems in place internationally are not conducive to winning business over local insurers. Providing post-bind shared services, which are tailored for local markets, allows Lloyd’s to compete more effectively against local insurers The Lloyd’s carriers use different systems resulting in re-keying of data, human errors corrupting the non-standardised data and duplicated inefficient processes Seven key operational principles have been identified for shaping the requirements and approach: 1.Focus on what best serves the customer, including local brokers 2.Focus on a ‘Plug and Play’ model that facilitates managing agents’ ability to rapidly and easily enter a new market with minimal support staff and infrastructure 3.Ensure ‘Open for all’ policy, i.e. open to Lloyd’s and the Company market (within the limitations of Lloyd’s licence in the given jurisdiction) 4.Services should be: global where possible, local where required 5.Ensure critical mass justified with a business case 6.Consider mandating, where required 7.Standardisation of processes – between local, regional and global centers Vendors are welcome to challenge this design or align their submission to it based on their experience and capabilities. The Business Challenge (continued) Functional Component LSSC1 “Local Shared Service Centre” Brokers and Carriers can reduce the initial setting up costs of their own offices and/or infrastructure and reduce (Lloyd’s related) operational process delays to conduct business in local markets, saving on: Set up costs Operating costs LSSC able to produce a single bordereau rather than producing a reporting bordereau for Lloyd’s managing agents and carriers, reducing the reporting burden for coverholders or service companies Reduction in bank charges, as a result of central accounting/settlements Timely and accurate reconciliation of premiums Respond to increasing trend of regulatory requirements for certain activities to be performed locally Synergies from different countries sharing services for Lloyd’s central reporting Make it easier to conduct business with Lloyd’s internationally Data capture services will make regulatory reporting and compliance more straightforward and reduce data duplication (re-keying) and data errors LSSCs facilitate efficient international growth for Lloyd’s and Market participants, making it easier to enter the market Settlement in original currency improving the ease of doing business with the London Market through improved operational efficiencies and removes need for currency conversion Tangible Benefits Sought Intangible Benefits Sought

Local Shared Service Centre (Part 3) 70 Should align with brokers' operational strategy by reducing operational demands for brokers (work with the Broker Relationship Management being undertaken by Lloyd’s) Brokers will be provided with a more seamless process, with the ability to interact with Lloyd’s through a single standardised interface. LSSCs will deliver more efficient post- bind services (reducing frictional costs & improving data quality), currently provided by local carriers, thereby, offering greater capacity within local markets Establishing post-bind shared services centres is designed to make it more attractive for Lloyd’s and Company Market carriers to enter a market, saving on set-up and operating costs and hence provide economies of scale in terms of administering any local operations Reduce manual administration Facilitation of subscription/Consortium & Lineslip business – one contract, one premium, one bank account, one contact Improved efficiency and consistency of processing Timely and accurate reconciliation of premiums Ability for brokers to group payments Pro-active credit control procedures Specialist focal point for data input, quality assurance and quality control checking Provide consistent checking and processing of tax and regulatory data Ease for broker – paying into one bank account for multiple transactions/service companies Service companies received matched funds into premium trust funds Supported by robust credit control procedure. Intangible Benefits Sought (continued) Functional Component LSSC1 “Local Shared Service Centre”

Consultation Approach TOM 71

Consultation Approach Overview 72 Our consultation is aimed to balance flexibility and structure. To make it the most efficient for both vendors and the TOM project team, Vendors have the opportunity to provide a response to: a.Thought Leadership, that is not constrained by the initiative specific elements of this consultation b.Initiative specific, to all of the functional components within the initiative or partial c.Common services such as a system integrator that would span across multiple initiatives d.All or partial of the above Initiative aInitiative bInitiative c Functional Component n -Problem statement -Underpinning technology / system(s) Functional Component n -Problem statement -Underpinning technology / system(s) Functional Component n -Problem statement -Underpinning technology / system(s) Functional Component n -Problem statement -Underpinning technology / system(s) Functional Component n -Problem statement -Underpinning technology / system(s) Functional Component n -Problem statement -Underpinning technology / system(s) Functional Component n -Problem statement -Underpinning technology / system(s) Functional Component n -Problem statement -Underpinning technology / system(s) Functional Component n -Problem statement -Underpinning technology / system(s) Common Services Common Service a -Problem statement -Underpinning technology / system(s) Common Service b -Problem statement -Underpinning technology / system(s) Common Service c -Problem statement -Underpinning technology / system(s) Thought Leadership 1 2 3 4 1 2 3 4

Pace of change – is our plan too ambitious or not ambitious enough? What do you perceive to be the key challenges and opportunities associated with a technology-enabled business change of this type and how do you manage and exploit this?’ What needs to happen to ensure architectural alignment of initiatives – what does good technology governance look like in a programme of this nature? What does the programme need to consider in order to manage the complexity of an evolving degree of data and message standardisation during the transformation process? How should the programme approach long term integration of non-standard data configurations where standardisation is economically unattractive? How should our programme approach delivering and enforcing a security model that ensures the privacy of market participants commercially confidential data whilst enabling broad access to services and collaboration when desired? Consultation Approach – Thought Leadership 73 The emergence and growth of Robotic Process Automation The opportunities and implications of the evolution of Cognitive Machine Learning The role of Analytics and ‘Big Data’ in shaping the future of the industry What impact will/should cloud technologies have on our programme – how will the EU Digital Single Market (DSM) strategy facilitate/inhibit this? Considering the recent high profile breaches of enterprise data security from external threats; how should the protection of networks, systems and data be approached within our programme? Consider: Macro Industry Trends When structuring your response We encourage responding vendors to contribute thought leadership that is not constrained by the initiative specific elements of this consultation Vendors are at liberty to provide only a thought leadership response or an initiative specific response without a thought leadership element Thought leadership contributions are free form and may consist of any information the vendor deems relevant. However, some themes and key questions are set out to provide guidance on areas of specific interest to the London Market Vendors should aim to make the link between the thought leadership view and what the vendor has developed or is planning to assist the industry in dealing with these issues Thought leadership contributions should be submitted as a single standalone document using the naming convention Company Name_Thought Leadership Consider: Key Programme Questions 1

Consultation Approach – Responses to 74 To help the ensure the consultation is as efficient for both the TOM project team as well as you as a vendor we ask that any contributions follow the below guidelines. Note: it is not mandatory to provide a response for every functional component within an initiative – partial responses are valid and welcome For each functional component consider, how the proposed product or service will enable TOM to address the challenges To help us better understand your company’s scale and operations please include general information about the company such as number of employees, number of countries they operate in, type of markets they operate in and any other information regarding scale and capability When responding When structuring your response For each functional component consider, how the proposed product or service will enable TOM to address We ask that vendors of products and technologies, developers of bespoke applications or providers of system integration who are intending to respond submit a single document for each initiative We request Vendors to include our unique reference for a functional component in the relevant section heading within the initiative specific document submitted Initiative specific documents should use the naming convention Company Name_Initiative Name Where a vendor is submitting information in relation to the support of mission critical systems, the vendor may include this information within an initiative specific submission or a standalone document covering multiple initiatives, documents should use the naming convention Company Name_Service Support Responses to multiple components should not be consolidated into a single document response and in an editable format to help make the segmentation and distribution of different parts easier for the TOM project team to review and evaluate Vendors may opt to provide a single response addressing the end-to-end TOM programme which should be submitted as a standalone document using the naming convention Company Name_TOM Responses should be in Microsoft Word but may include appendices in Microsoft PowerPoint or Excel 423 or

Key Information for Product and Technology Vendors A description of the product or technology, its features and how it can be deployed to meet our challenge How you would challenge our ambition and what additional benefit we could realise from your technology if we expanded the scope of our initiative to leverage broader inherent product features? Information regarding where the product or technology has been successfully deployed within the insurance industry, or an industry with similar challenges The core benefits of the product or technology A description of how the offered product or technology brings the required level of innovation The roadmap and investment plan for the product or technology The architectural components of the product or technology How does your technology integrate to heterogeneous enterprise architectures including: how the product or technology integrates with an industry standard identity management infrastructure? the workflow capabilities the product or technology can provide and whether it can participate with an orchestration regime how the product or technology could interact with a Master Data Management repository? the Document Management capabilities that are inherent within the product or technology and whether it can operate within federated enterprise content regime the capabilities of the product or technology to support the publication of application programming interfaces using API management technologies how the product or technology supports the interaction with data marts/warehouse infrastructure? What are the non-functional considerations or constraints of deploying your product technology and how these may impact on scalability or performance? The licensing/ commercial approach to provision of a product or technology Provide case studies to demonstrate your real world experience 75 This process is designed to gather innovative contributions and vendors need not be constrained and may offer alternative views and ideas. However responses may wish to consider the following for each functional component:

Key Information for System Integrators & Bespoke Development Vendors A description of your approach and methodology used for delivering a technology implementation/development project to address the challenges outlined incorporating the following elements: Detailed requirements analysis and definition Early stage design and proof of concept Detailed design including Functional design / Use cases, UI design, Solution architecture, Database design, Integration design, Infrastructure design Referencability matrix Build process Functional, non-functional and user acceptance testing Release management Documentation and training A description of how the offered solution brings the required level of innovation What is your experience of implementing system driven transformation within the insurance sector? What do you view as the key challenges of implementing or developing systems within the financial services sector? Which technologies and products do you have specific experience of delivering? What systems have you developed to address similar challenges, what benefits were realised and what were the major challenges faced and overcome? What do you regard as the major implementation risks for a programme of this type? What experience do you have of operating in an eco-system of multiple integrators and what are the benefits and challenges of this approach? What experience do you have of operating as a master integrator in a complex multi-vendor environment and what are the benefits and challenges of adopting this approach? How would you approach implementation and enforcement of data governance to assure integrity of inputs and outputs across multiple parallel change projects? What is your preferred delivery model including use of onshore/offshore resources for delivery of integration projects? What is your preferred commercial approach for contracting integration or development projects of this type? Provide case studies to demonstrate your real world experience 76 This process is designed to gather innovative contributions and vendors need not be constrained and may offer alternative views and ideas. However responses may wish to consider the following to each functional component:

Key Information for System Support / Management Vendors Describe the extent to which you have standardised support services that could be applied to our target solutions versus the need to develop and implement bespoke support solutions Describe where you are supporting mission critical core business systems today in (a) the insurance sector and/or (b) FCA/PRA regulated business outside of the insurance sector Describe your capability to support self-hosted versus supplier-hosted systems. Describe how you approach the integration of system support services into a broader IT Service management environment involving multiple client entities and client third parties – what would you expect to be in place as a prerequisite to service deployment within a client service management environment? How would you approach adoption of responsibility for supporting systems where you are not the integrator that has deployed the original system? Please describe your service management methodology and system management framework including management systems and processes Describe how the offered solution brings the required level of innovation Provide case studies to demonstrate your real world experience 77 This process is designed to gather innovative contributions and vendors need not be constrained and may offer alternative views and ideas. However responses may wish to consider the following to each functional component:

Consultation Approach – Submission Tracker Please complete the attached spreadsheet, following the instructions therein. File should be saved and submitted using the naming convention Company Name_Tracking Spread Sheet. InstructionExample Indicates vendor has a product to address our challenge but works through channel partners to implement Indicates vendor has no capability in this initiative Vendor has a product and is an expert in the deployment of that product (or is positing that they will custom develop a technology) Vendor cannot support the end-to-end initiative but has a document management solution they could supply and implement alongside other vendors Vendor does not provide ongoing support and management services Vendor has submitted a thought leadership document 78 Vendor has submitted a TOM document

Consultation Approach – Consultation Timeline ActivityDateTimeVenueOwner Vendor Briefings5 th November & 10 th November 15:00 – 16:00 08:45 – 09:45 KPMG, 15 Canada Square Old Library, Lloyd’s TOM Issue Vendor Briefing Pack5 th November TOM Vendor Townhall Q&A20 th November 23 rd November 24 th November (4 sessions) 27 th November 11:15 – 12:15 10:30 – 11:30 09:30 – 10:30 11:00 – 12:00 13:30 – 14:30 15:30 – 16:30 15:30 – 17:30 i2, Beaufort House i2, Beaufort House Old Library, Lloyd’s TOM Vendor Question Submission Period (Submit via email at: TOM@isupporttom.London) 5 th November – 16 th November Vendor Issue answers to Vendor questions 23 rd November TOM Vendor Response Submission (Submit via email at: TOM@isupporttom.London) 7 th December noon Vendor Evaluation and Analysis8 th December – 18 th December TOM 79

Legal Notices & Disclaimers TOM 80

Legal Notices And Confidentiality This consultation document is issued by Lloyd’s on behalf of the London Market Group and is subject to the following legal notices. Legal Disclaimer This consultation document has been prepared by the Society incorporated by Lloyd’s Act 1871 by the name of Lloyd’s whose principal place of business is One Lime Street, London EC3M 7HA (“Lloyd’s”). This document constitutes an invitation participate in the consultation only. Lloyd’s is not under any obligation to include any recipient or respondent that participates in the consultation in any subsequent consultation or procurement activity. The term “Vendor” is used to refer to any person or entity that participates in the consultation with Lloyd’s in response to this document. This document does not impact upon any contractual arrangements currently in place between Lloyd’s and any Vendor. Nothing contained in this consultation document or any other communication made between Lloyd’s or its representatives and a Vendor or part thereof shall constitute an agreement, contract or representation between Lloyd’s and any other party. Receipt by the Vendor of this consultation document does not imply the existence of a contract or commitment by or with Lloyd’s for any purpose and Vendors should note that this consultation may not result in the execution of any subsequent tender or analogous procurement process. Lloyd’s reserves the right to change any aspect of, or cease, the consultation process at any time. The information contained in this consultation document may be subject to updating and amendment in the future and is necessarily selective. It does not purport to contain all of the information which a Vendor may require. While Lloyd’s has taken all reasonable steps to ensure, as at the date of this document, that the facts which are contained in this ITT are true and accurate in all material respects, Lloyd’s does not make any representation or warranty as to the accuracy or completeness or otherwise of this consultation document, or the reasonableness of any assumptions on which this document may be based. Lloyd’s may exclude any Vendors from the consultation process for any reason whatsoever at Lloyd’s sole discretion and it is not obliged to provide any explanation of any such exclusion. It is the responsibility of Vendors to obtain for themselves, at their own expense, all additional information necessary for the preparation of their response to this consultation document. Confidentiality Lloyd’s may use the information included in any Vendor’s response for any reasonable purpose connected with this consultation. Lloyd’s will treat all information provided to it by the Vendor as confidential and confirms that such information will not be disclosed by Lloyd’s to any third parties, other than advisers and consultants who are involved in the consultation process. Lloyd’s reserves the right to reflect the themes of the Vendors response and specific functional and non-functional capabilities that may be identified through this consultation as requirements in any future process, whether by way of a further consultation or a formal procurement activity. Costs Incurred Vendors shall be responsible for and bear all their own costs, liabilities and expenses which may be incurred in preparation of a response to this consultation process. Lloyd’s will not reimburse any part of any Vendor’s costs associated with this consultation process or any process that may follow. 81

Appendix I Other Initiatives TOM 82 This section is for your information only. The section provides an overview of two in-flight initiatives, CSRP (PbS) and PPL, which form an integral part of TOM.

Contents 83 Contents Central Service Refresh Programme (PbS) Placing Platform Ltd (PPL) Page 84 87

Central Service Refresh Programme (PbS) – Initiative summary What is the CSRP (PbS) initiative? Central Service Refresh Programme (PbS) focuses on modernising the current central services provided by a third party supplier for accounting and claims processing to remove London specific, paper-based inputs and automate wherever possible. Key Challenges Brokers are required to maintain complex London-specific systems and processes Current e-placing solutions do not support a full range of functionality for all classes and types of business Excessive contract checking and query resolution is delayed until accounting Many activities are being undertaken because of inefficiencies in London Large number of queries to brokers resulting in delayed premium payments and re-work 84 In-scope components Addresses post-bind technical accounting and reporting back office processes Establishes new ACORD EBOT/ECOT Submission Channel and Carrier query management, thereby removing the use of LPANs Remove Signing Number and Date (Londonism) from Claims Submission Delivers Market utility Structured Data Capture Service to support capture and processing of information in ‘Digital’ format Establishes new efficient automated business processes for accounting splits and reporting Contributes to making LM to do business with (by using global processes) Reduce broker administration substantially Improved data quality and richness via global standard (ACORD) Reduced cycle times and complexity through simplification and automation Fewer delays to premium and claims settlement Benefits

Central Service Refresh Programme (PbS) Post-bind Submission (PbS) was identified by the initial programme definition work on CSRP (PbS) to help the London Market acquire and retain more business by reducing the frictional cost of post-bind administration for brokers by: Increasing the accessibility of the London Market through simpler, more globally aligned business processes between brokers and carriers using ACORD messaging Reducing the cost of operating in the London Market by reducing the complexity and effort involved in these back-office interactions with Central Services Shortening cycle times through simplification, increased automation and better integration with carrier and broker systems Providing better quality information on the status of submissions and overall Market performance to participants, while ensuring the current level and quality of information to carriers is not compromised This initiative will undertake the following high level activities to realise the desired improvements: Post – Bind Submission Release 1: EBOT/ECOT (Broker) – Q2 2016, EBOT/ECOT (Carrier) – Q3 2016 Post – Bind Submission Release 2 Design – Q1 2016 Structure Data Capture service (whole market utility) – Q4 2016 Efficient back office processes with automated / straight through processing – Q4 2016 Removal of the Londonisms (the complex administration that the broker performs for the London Market) related to the submission processes Insulation of the originators from future change in CSRP (PbS) and mitigation of Market operational risk, particularly during implementation of full CSRP (PbS) Removal of barriers to the delivery of full CSRP (PbS) Ensuring carriers continue to receive the same level and quality of information despite the broker no longer performing certain functions on behalf of the carrier Enabling the capability for any authorised party to initiate Central Services through the carriers Background & Context Planned Activities Benefits Sought 85

Contents 86 Contents Central Service Refresh Programme (PbS) Placing Platform Ltd (PPL) Page 84 87

Placing Platform Limited – Initiative summary What is the PPL initiative? Electronic placing platform which allows brokers and carriers to quote, negotiate and bind business, replacing traditional channels such as paper and e-mail, enabling remote placing globally but also supporting face-to-face placing of (re)insurance business. In-scope components Placing quotes and binding Document comparison Improves access to London that may have previously been restricted due to prohibitive processing costs Structured and visible workflow processes will allow firms to measure, manage and potentially increase productivity Removes duplicated effort (re-keying data), reducing processing time and errors when fully integrated Benefits Key Challenges There are multiple solutions available however do not cover do not support a full range of functionality e.g. quotation, document negotiation Market adoption to use a single platform for e-placing 87

Placing Platform Limited The principal objective of Placing Platform Limited (PPL) is to improve access to the Market for brokers and their clients, making it easier to initiate business transactions. Brokers and carriers are currently using a mix of different electronic and paper-based solutions, with paper being predominant. There is a general consensus that the market cannot maintain its current manual placing processes forever and that there is a great opportunity to create a single solution; hence PPL was formed. PPL is a limited company formed by the three market associations: LIIBA, LMA and IUA. The underlying objective of the PPL initiative is to create a single solution for electronic placing. As part of the drive to deliver a modernised market infrastructure for London – identified as a critical challenge by the London Market Group’s (LMG) London Matters report – Placing Platform Limited (PPL) has been set up by the market associations (LIIBA, LMA and IUA) to identify and source a single market solution for electronic placing. The development of a central placing platform by PPL that supports both traditional face-to-face negotiations and purely electronic placements, or a combination of both, is a critical component in the work LMG is leading to develop the London Market Target Operating Model (TOM). Objectives and Aspirations 1 Improved Client Service and Access: Improves access to London that may have previously been restricted due to prohibitive processing costs Speedier placement and endorsement agreement Full contract audit trail 2More Efficient: Structured and visible workflow processes will allow firms to measure, manage and potentially increase productivity Removes duplicated effort (re-keying data), reducing processing time and errors when fully integrated Additional management information on placement (processes and data) 88 The Business Challenge Our Ambition

 Improved client service through improved efficiencies and access  Faster placement and agreement processing  A modern infrastructure for business to be placed by London Market participants  A facility to allow business to flow both locally and remotely  Improved audit trails and reporting Placing Platform Limited The following are key challenges relating to the placing value chain that the initiative seeks to address:  There are multiple solutions available however do not cover do not support a full range of functionality e.g. quotation, document negotiation  Market adoption to use a single platform for e-placing  Reduce re-keying of data  Lack of transparency and availability of accurate and complete information  Remove costs associated with the discovery phase of an E&O claim through better audit trails This initiative will undertake the following high level activities to realise the desired improvements:  Continue product development with mainly annual major release and minor releases twice yearly  Have three Product Releases a year  Product Releases start small but get bigger as we build knowledge/experience  Go Live may include phased roll-out 89 Background & Context Planned Activities Benefits Sought

Appendix II TOM Design Principles TOM 90

Appendix II – TOM Design Principles The TOM Design Principles set out below are a working draft that will be evolved by the programme design authority in consultation with the London Market participants and broader stakeholder community. As such they are subject to change but may be used as an indicative guide for the purpose of this consultation. 91

Appendix III TOM Conceptual Data Model TOM 92

Appendix III – TOM Conceptual Data Model Overview 93 The TOM Conceptual Data Model captures the key high level subject areas, data entities and their links which are of significance to the London Market. This will help us define solutions across Data Integration to support other initiatives. Purpose ► Define the scope of data required to support the TOM and out to the London Market ► Achieve a common understanding of this data ► Determine usage of data by initiatives ► Define a model by which will facilitate improvement in data ► Expand to use for detailed data design activities

Appendix III – TOM Conceptual Data Model Overview 94 The TOM Conceptual Data Model is a first attempt at capturing the complexity of the data used within the market and hence will be subject to further definition and review. Some key omissions for the moment include: Sanctions Lloyd’s verifications prior to joining or annual financial/business plan verification Coverholder Audit P&L or balance sheet information Data created for reporting aggregations e.g. Regulatory or Tax splits External data We have attempted to include all data within the following contract types: Direct Insurance Facultative Reinsurance Delegated Authority The CDM offers limited coverage, and therefore will need to be further enhanced for the following: Treaty Reinsurance Lineslips Open Cover Contract Hierarchy Market Reform Contract Insurance Contract Facility (FDO) Direct Insurance Treaty RI Facultative RI Proportional Treaty Non- Proportional RI (XOL) Bulking Lineslip Year of Account Scheme Open CoverLineslip Delegated Authority (via CH)

Appendix III – TOM Conceptual Data Model and Definitions 95 TOM Conceptual Data ModelData Definitions

Appendix IV Glossary TOM 96

Appendix IV – Glossary This appendix contains a glossary of terms commonly used within the London Market that maybe used within this document. 97

TOM London Market Target Operating Model (TOM) Vendor Consultation Briefing Pack November 2015 TOM Version 2.4.

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TOM London Market Target Operating Model (TOM) Vendor Consultation Briefing Pack November 2015 TOM Version 2.4.

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