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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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slide1

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

slide2

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)
slide3

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
slide4

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
slide5

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

slide6

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
slide7

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.

slide8

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
slide9

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

slide10

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

slide13

DRAFT: Documentation – Summary.

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
slide14

Process Failures – what can go wrong ?

  • 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
slide15

CCSG Implementation Planning

  • 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)
slide16

Implementation Timetable

  • 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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