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LMP – Insurance Documentation Contract Certainty Initial Implementations THIS DOCUMENT APPLIES TO THE INITIAL IMPLEMENTATIONS OF THE CONTRACT CERTAINTY PROPOSALS ONLY, AT THIS STAGE. January 2005. CCSG Membership. Kevin Collins (MPC) Chair + MPC member John Bentley (LMA)

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LMP – Insurance Documentation

Contract Certainty Initial Implementations

THIS DOCUMENT APPLIES TO THE INITIAL IMPLEMENTATIONS OF THE

CONTRACT CERTAINTY PROPOSALS ONLY, AT THIS STAGE

January 2005


CCSG Membership

  • Kevin Collins (MPC) Chair + MPC member

  • John Bentley (LMA)

  • Malcolm Forbes-Wilson (Aon) DOC Chair

  • Paul Gold (GE Frankona)

  • Steve Hulm (LMP) Secretary

  • Roy Laker (LMP)

  • Jo Langley (JLT)

  • Malcolm Massie (Amlin)

  • Dave Matcham (IUA)

  • Edward Moss (Catlin) MPC member

  • Rob Myers (XIS)

  • Mike Reidie (Marsh) DOC + LMSC member

  • Iain Saville (Lloyd’s) Head of BPR

  • Phillip Sexton (Hiscox)

  • Peter Spires (Lloyd’s)


CCSG Has …

  • Developed the process in detail (4 options):

    • Contract certainty end-vision. Slip leader confirms policy (may use service provider). Broker/Slip Leader finalise policy.

    • XIS technical check. Broker/Slip Leader finalise policy.

    • XIS technical check (early) + signing

    • XIS technical check (after placing) + signing

  • Prepared an “Implementation Guide”

  • Developed an Implementation Strategy & Plans

  • Gained Lloyd’s feedback on proposals:

    • Tax & regulatory checking performed by XIS.

    • Value XIS checks to safeguard licenses

    • Will review checking performed

    • Options 3 & 4 can proceed with Lloyd’s markets

  • Engaged with broker group (DOC) to implement + now engaging with companies & LMA


Key Features (for all options)

  • Fully-claused placing document

  • Use of model wordings and clauses, wherever possible

  • Leader-only agreement, wherever possible

  • Early agreement and checking of the wording

  • Early finalisation of the policy

  • Monitor performance – to demonstrate achievement

  • Early delivery of an evidence of coverage for the client


DRAFT: Documentation – Process Overview.

  • Process objectives:

  • Achieve contract certainty

  • Evidence to the client

  • Macro process steps:

  • Quote

  • Firm order placement

  • Provide closing information

  • Technical & regulatory policy check

  • Finalise policy & evidence to client

  • Process outputs:

  • Contract agreed and documented

  • Contract evidenced to the client

  • Process measures:

  • Wording certainty date versus inception date

  • Firm order date versus inception date

  • Contract certainty date versus inception date

  • Date evidenced to the client versus inception date

  • Process inputs:

  • Risk information

  • Client requirements

  • Relevant wordings & clauses

Start:

Client Requests Quotation

End:

Contract evidenced to client


DRAFT: Documentation – Options 1 & 2.

  • Option 1

  • Broker prepares draft LMP policy & agrees with slip-leader

  • Slip Leader confirms policy up-front

  • Service provider may conduct Technical / Regulatory check where required by Slip Leader

  • Broker/Slip Leader finalise policy after signing-down

  • Contract certainty can be achieved and evidenced to client by inception date

  • Option 2

  • Broker prepares draft LMP policy & agrees with slip-leader

  • Slip Leader confirms policy up-front

  • XLMS conduct Technical/Regulatory check and confirm to Slip Leader & broker

  • Broker/Slip Leader finalise policy after signing down

  • Contract certainty can be achieved and evidenced to client by inception date


DRAFT: Documentation – Options 1 & 2.

Options 1: Conducted by Slip Leader – or service provider.

Option 2: Conducted by XLMS.

Options 1 & 2: Conducted by broker/slip leader

  • Finalise Policy

  • Confirm technical & regulatory check performed

  • Add jacket / attestation clause and security schedule

  • Sign policy

  • Prepare copies

  • Issue evidence to client

Quote

Request quote

Draft policy

Present & agree policy

Quote

Review quote(s)

Confirm policy

Firm Order Placement

Firm order

Seek & write lines

Placing complete

Identify changes

Provide closing information

Signing down

Prepare closings

Submit / issue closings

Submit policy

Check closings

Technical

(& for Lloyd’s Regulatory) policy check - if changes

Proceed to Finalise Policy if no change from original draft policy

Technical

(& for Lloyd’s Regulatory) policy check

Options 1: Conducted by Slip Leader – or service provider.

Option 2: Conducted by XLMS.


DRAFT: Documentation – Options 3 & 4.

  • Option 3

  • Broker prepares draft LMP policy & agrees with slip-leader

  • Slip leader invokes XLMS check up-front

  • XLMS conduct Technical / Regulatory check and confirm to slip-leader & broker

  • XLMS finalise Policy after signing-down

  • Contract certainty can be achieved and evidenced to client by inception date

  • Option 4

  • Broker prepares draft LMP policy & agrees with slip-leader

  • Broker invokes XLMS check after signing down

  • XLMS conduct Technical / Regulatory check and confirm to slip-leader & broker

  • XLMS finalise Policy after signing-down

  • Contract certainty can be achieved and evidenced to client by inception date


DRAFT: Documentation – Options 3 & 4.

Option 4: Proceed to Firm order placement from quote

Option 4: Conduct Technical & Regulatory review after signing down

  • Finalise Policy

  • Confirm technical & regulatory check performed

  • Add jacket / attestation clause and security schedule

  • Sign policy

  • Prepare copies

  • Issue evidence to client

Quote

Request quote

Draft policy

Present & agree policy

Quote

Review quote(s)

Confirm policy

Firm Order Placement

Firm order

Seek & write lines

Placing complete

Identify changes

Provide closing information

Signing down

Prepare closings

Submit / issue closings

Submit policy

Check closings

Technical

(& for Lloyd’s Regulatory) policy check

Option 3: Proceed to Finalise Policy if no change from original draft policy

Technical

(& for Lloyd’s Regulatory) policy check

Option 3: Review draft policy prior to, or at, Firm order placement


DRAFT: Process Charts - Key.

  • Key:

  • Process flow (data transfer):

    • Prime process flow

    • Alternative process flow

  • Decision point

  • System or Database

  • Process Step

  • Document

?

1.1 Request Quote

Policy

W

Wording Certainty (amber provisional)

Firm Order

Contract Certainty (amber provisional)

Date Evidenced to Client

F

C

D


Draft interim approach for lloyd s and companies pending lloyd s review of xlms activities option 3
DRAFT: Interim approach for Lloyd’s and Companies pending Lloyd’s review of XLMS activities - Option 3.

?

1.1 Request Quote

5.3 Receive Evidence

F

2.1 Firm Order

1.2 Draft, Present & Agree Policy

1.4 Select Quote

1.5 Confirm Policy

Client

Policy

3.2 Prepare Closings

D

5.2 Issue Evidence

2.3 Placing Complete

3.1 Sign Down

3.3 SubmitClosings

2.2 Request & Write Line(s)

Placing

Broker

?

?

3.4 SubmitPolicy

?

2.4 Identify Changes

FDO

S&A

1.3 Quotes/Support Quotes

Stage 2

?

?

?

?

Slip Leader(s)

W

C

Following Underwriters

If changes applied

3.5 Check Closings

4.1 Technical (& Regulatory) Check

?

Bureau/Service

Provider

W

5.1 Finalise Client

Policy

XLMS

4.2 Technical (& Regulatory) Check

XLMS

W

Inception

Inception

TIME

C


Draft interim approach for lloyd s and companies pending lloyd s review of xlms activities option 4
DRAFT: Interim approach for Lloyd’s and Companies pending Lloyd’s review of XLMS activities - Option 4.

?

1.1 Request Quote

5.3 Receive Evidence

F

2.1 Firm Order

1.2 Draft, Present & Agree Policy

1.4 Select Quote

1.5 Confirm Policy

Client

Policy

3.2 Prepare Closings

D

5.2 Issue Evidence

2.3 Placing Complete

3.1 Sign Down

3.3 SubmitClosings

2.2 Request & Write Line(s)

Placing

Broker

?

?

3.4 SubmitPolicy

?

2.4 Identify Changes

FDO

S&A

1.3 Quotes/Support Quotes

Stage 2

?

Slip Leader(s)

W

C

Following Underwriters

If changes applied

3.5 Check Closings

?

Bureau/Service

Provider

5.1 Finalise Client Policy

4.2 Technical (& Regulatory) Check

XLMS

W

Inception

Inception

TIME

C


DRAFT: Documentation – Summary. Lloyd’s review of XLMS activities - Option 4.

Key Differences:

  • Option 3

  • Broker prepares fully-claused draft LMP policy & agrees with slip-leader

  • Slip leader invokes XLMS check up-front

  • XLMS conduct Technical / Regulatory check and confirm to slip-leader & broker

  • XLMS finalise Policy after signing-down

  • Contract certainty can be achieved and evidenced to client by inception date

  • Option 4

  • Broker prepares fully-claused draft LMP policy & agrees with slip-leader

  • Broker invokes XLMS check after signing down

  • XLMS conduct Technical / Regulatory check and confirm to slip-leader & broker

  • XLMS finalise Policy after signing-down

  • Contract certainty can be achieved and evidenced to client by inception date

  • Both options 3 & 4 can meet our objectives:

    • Contract Certainty by inception

    • Evidence of Coverage by inception

  • After the Lloyd’s Review:

    • Options 1 & 2 could offer potential for streamlining the process


Process Failures – what can go wrong ? Lloyd’s review of XLMS activities - Option 4.

  • Significant risk factors:

  • Changes are applied during placing AND either:

    • It is not reflected in all documentation

    • It is wrongly applied

    • Insufficient agreement is gained

  • XLMS technical check not satisfactorily completed due to either:

    • Rejections/queries not being resolved

    • Unable to complete in a timely fashion due to e.g.

      • Submitted too late

      • File queried/rejected

      • Seasonal peaks

      • Lack of resource

      • File lost


CCSG Implementation Planning Lloyd’s review of XLMS activities - Option 4.

  • Initial Implementations Q1-Q2 2005. 200-300 risks across all classes.

  • Process options 3 & 4 for Managing Agents.

  • 1 & 2 possible for companies ?

  • Classes identified: Aviation (Hull, War, Aviation General); PI; D&O; NA Property Fac R/I; Treaty; Binders; Marine

  • Performance Monitoring in parallel (broker spreadsheet returns) to monitor key dates achieved.

  • Brokers identifying possible risks to be processed within initial implementations: Aon, Benfield, Heath Lambert, JLT, Marsh, Miller, Willis

  • Now engaging with markets (via IUA, LMA & non-IUA companies)


Implementation Timetable Lloyd’s review of XLMS activities - Option 4.

  • Publish implementation guide (options 3&4) Dec 2004 CCSG

  • Confirm participants Dec 2004 CCSG

  • Initial implementations Q1–Q2 2005 CCSG

  • Initial performance monitoring Q1–Q2 2005 LMSC

  • Lloyd’s review of checking Q1-Q2 2005 Lloyd’s/XIS

  • Amend Lloyd’s underwriting req’ts TBC Lloyd’s

  • Review LMP Policy Guidelines Q1 2005 LMP

  • Determine impact of Lloyd’s findings Q2 2005 CCSG/MRGE

  • Publish initial performance results Q1-Q2 2005 MRGE

  • Evaluate initial implementations Q1-Q2 2005 CCSG/MRGE/XIS

  • Define strategic technology solution(s) end Q2 2005 CCSG/MRGE

  • Review service change requests Q3 2005 TBC IUA/LMA/XIS

  • Publish implementation guide (other options) Q3 2005 TBC CCSG/MRGE

  • Plan & prepare further implementations Q3 2005 TBC CCSG/MRGE

  • Commence further implementations Q3-Q4 2005 TBC CCSG


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