1. Accounting & Settlement: Progress and Plans Mark Barwick, Project Manager, LMBC

2. Agenda 1.What has been achieved to date? PAPER LONDONISMS SPEED ACCURACY 2.What happens next? STANDARD PROCESSES ACORD MESSAGES QUALITY ASSURANCE 3.Summary 4.Questions

3. What has been achieved? 2 years ago the key challenges facing brokers were: PAPER – Cost of moving, storing and producing –Premiums –Policies LONDONISMS: –Non-Fundamental Accounting Splits –Involuntary funding of deferred premiums –Delinking SPEED – Time taken to process queries ACCURACY – Rework and reconciliation

4. PAPER - Premiums : Whats happened? As of 25 th January 2008 115 broking firms are live on A&S Represent 95%+ of all bureau transactions Approximately 27 brokers currently implementing Four of the key broker software houses have built DRI solutions W/C 14 th January - 71% of all original premiums now processed via A&S What happens next? 100% usage - see later slide

5. PAPER – Policies: Whats happened? Initial A&S implementation returned policies as paper documents Legal issues overcome Successful pilot held with Willis 30 Brokers live and 7 more registered or testing 17% of policies now electronic What happens next? Target is to connect all brokers during Q1 2008 MRG 2008 Roadmap target 80% all policies electronic

6. LONDONISMS - Accounting Splits: Whats Happened? Successful Pilot held by Marsh and Xchanging; 250 contracts + Broker creates splits at fundamental level only and Xchanging pre- processing team add the non-fundamental splits Xchanging sign in the normal way – BSM as today What happens next? Service proposal being discussed with Xchanging Review Boards Broker Signing Message (BSM) to be sent at fundamental level* Development of fundamental level settlement trigger system* Rollout to other brokers How will claims be attached to an OSND?

7. LONDONISMS – Deferred Premiums: Whats happened? Premium Payment Working Party produced report Lloyds/IUA and LMA involved Removing mandatory funding of deferreds a recommendation Way forward agreed – linked to mandatory delinking What happens next? Two solutions being evaluated – Instalment APs or Deferred with right of cancellation Premiums will move on due date unless broker hasnt been paid and chooses to stop the premium

8. LONDONISMS – Delinking: Whats happened? Delinking enhancements identified Q2 rollout target 40% – Achieved Q3 target 60% - 55% Achieved Q4 target 80% - 55% What happens next? Review scope of delinking – is it correct? Secure funding for delinking enhancements Implement delinking enhancements 100% usage during 2008

9. ACCURACY: Whats happened? Stage One Accounting checks documented and published Right first time project sought to reduce Stage One errors Project IT requirements could not be met Revisit requirements as part of Xchanging project to retire Tracker and replace with new method of query-capture What happens next? Resubmit requirements for inclusion in Xchanging workflow system development plans for 2008

10. What happens next? STANDARD PROCESSES A&S for all transactions ACORD Messages ELPAN2 EBOT QUALITY ASSURANCE Current A&S initiative Right first time ELPAN2

11. STANDARD PROCESSES: How do we stay ahead? A&S Release 4&5 planned in 2008 –Usability enhancements Mandatory usage by 1/4/08: –All Original premiums relating to open market Direct, Facultative, Excess of Loss and non-bulked declarations presented to Xchanging –All FDO signings for lineslips and Binding Authorities –Subsequent APs and RPs on Binding Authorities/ Lineslips/open market contracts where the OP or FDO was signed via A&S.

12. STANDARD PROCESSES: Out of scope of 1/4/2008 Mandatory usage: –DRI only – transactions which require different access control to that currently provided in the IMR as standard. E.G. Aviation Vertical placements, Mid term market change, Mid term change of handling broker, multi-section slips with different markets per section. –APs and RPs on contracts where the OP was processed on paper. –All Treaty FDOs and Treaty Balance statements. –Any premium transaction requiring simultaneous settlement where the claim transaction is out of scope of ECF. –Lloyds Outward Reinsurance – This should continue to be processed via LORS.

13. ACORD MESSAGES: How do we stay ahead? 2 projects exist. ELPAN2 and EBOT Both will deliver Technical Account & Financial Account (TA+FA) messages from broker to insurer EBOT Initiative being led by Guy Carpenter on behalf of LMBC Broker Strategy group ELPAN2 pilot broker is Aon, Marsh also building Brokers involved – Aon, Benfield, Guy Carpenter, JLT, Marsh, Miller, Willis

14. ACORD MESSAGES – ELPAN2 How do we stay ahead? Covers Lloyds syndicates and IUA companies processing via Xchanging Messages sent to Xchanging for central processing Insurers receive existing signing messages (USM/CSM) ACORD Messages at fundamental split level only Phased delivery Phase 1 (December 2007) = TA + Delinking Phase 2 ( Q2 2008) = TA + FA Phase 3 (Subject to demand) = Proportional Treaty

15. ACORD Messages – EBOT How do we stay ahead? A global project, not just London ACORD Messages from Broker to individual carriers on a P2P basis European Carriers live - Frankona / Swiss Re, SCOR US Carriers live – Axa Corporate Solutions, Converium, Federated, Reliance Insurance Company, SCOR Re, Shelter Re, Transatlantic Re, Trenwick America, XL Re America Other Carriers engaged – talking to significant number of Bermuda companies

16. QUALITY ASSURANCE Current A&S initiative A&S has changed some working practices A&S SP&P equivalent being developed Right First Time Integration of Stage One accounting checks into Xchanging premium processing Periodic query reporting based on Stage One checks ELPAN2 Of 350+ Stage One checks, 200 are based on slip terms ACORD TA and FA data cant perform these 200 checks Potential to develop Wordsensa checks similar to QA Tool

17. SUMMARY The market has changed Market needs to adopt A&S 100% in line with the MRG Target by 01/04/08 Market needs to adopt delinking 100% in 2008 More change is coming –ELPAN2 –EBOT Source: LMBC