LMP – Insurance Documentation
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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

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Lmp insurance documentation contract certainty initial implementations

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


Lmp insurance documentation contract certainty initial implementations

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)


Lmp insurance documentation contract certainty initial implementations

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


Lmp insurance documentation contract certainty initial implementations

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


Lmp insurance documentation contract certainty initial implementations

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


Lmp insurance documentation contract certainty initial implementations

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


Lmp insurance documentation contract certainty initial implementations

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.


Lmp insurance documentation contract certainty initial implementations

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


Lmp insurance documentation contract certainty initial implementations

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


Lmp insurance documentation contract certainty initial implementations

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


Lmp insurance documentation contract certainty initial implementations

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


Lmp insurance documentation contract certainty initial implementations

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


Lmp insurance documentation contract certainty initial implementations

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)


Lmp insurance documentation contract certainty initial implementations

Implementation Timetable

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

  • Confirm participants Dec 2004CCSG

  • Initial implementationsQ1–Q2 2005CCSG

  • Initial performance monitoringQ1–Q2 2005LMSC

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

  • Amend Lloyd’s underwriting req’tsTBCLloyd’s

  • Review LMP Policy GuidelinesQ1 2005LMP

  • Determine impact of Lloyd’s findingsQ2 2005CCSG/MRGE

  • Publish initial performance resultsQ1-Q2 2005MRGE

  • Evaluate initial implementationsQ1-Q2 2005CCSG/MRGE/XIS

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

  • Review service change requestsQ3 2005 TBCIUA/LMA/XIS

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

  • Plan & prepare further implementationsQ3 2005 TBCCCSG/MRGE

  • Commence further implementationsQ3-Q4 2005 TBCCCSG


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