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Control Framework. A warm Welcome to the January market Breakfast Group. Control Framework. Breakfast Group agenda. 9:00 Arrival , breakfast & networking All 9:15 Welcome Ali Dove 9:20 ANV – Coverholder business and Ian Mallery Control Framework risks

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A warm Welcome to the January market Breakfast Group

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  1. Control Framework A warm Welcome tothe January market Breakfast Group

  2. Control Framework Breakfast Group agenda 9:00 Arrival, breakfast & networking All 9:15 Welcome Ali Dove 9:20ANV – Coverholder business and Ian Mallery Control Framework risks 9:35 Phase II update Jaana Rouvari 9:50 ClusterSeven – meeting requirements via the best in systems Ralph Baxter and spreadsheet management 10:15Q & A All 10:30 Close

  3. CONTROL FRAMEWORK Presentation to Lloyd’s – 21st January 2014

  4. CONTROL FRAMEWORK • Acknowledge Key on-going discussion re: audit scope and coverholder communications and will work with market to address these issues. • We had completed extensive work on Phase 1 (Service Companies) of the Control Framework. • Utilised and adapted as much of this work as possible in our approach to Phase 2.

  5. CONTROL FRAMEWORK • We agreed our starting point is to embed the Control Framework as business as usual. • Ownership – Our DUA team are responsible and accountable for the Control Framework • Work carried out will be shared with: • Compliance • Risk for review & challenge - adapted accordingly

  6. CONTROL FRAMEWORK • New DUA team – changes introduced by the DUA team in last 12 months validated by internal audit (KPMG). • DUA procedures were reviewed to ensure they compliment the Control Framework. We anticipate further amendments as we proceed. • Control Framework approach documented and reviewed with Lloyd’s - a high level ‘first draft’. We anticipate this will require further updates.

  7. CONTROL FRAMEWORK • Hierarchal Flowcharts produced to see full process from start to finish. • Key risks identified throughout the flow charts to identify where controls needed to mitigate risk. • Coverholder risk rating matrix produced in line with Control Framework guidance. • Remediation Plan to be drawn up to ensure remaining gaps are managed to completion.

  8. CONTROL FRAMEWORK • The on-going market discussion re audit scope and coverholder communications are essential. • Our documentation will evolve to reflect changes the market approve. • Example High-level Flow Chart • Questions?

  9. Control Framework Control framework Phase II update by Jaana Rouvari

  10. Control Framework Today… Coverholder risk rating exercise Educating auditors Board sign off wording Next steps and new stuff

  11. Control Framework Combined risk ratings from the market 29% What is in the ‘red rated’ section? 48% • Approx. 1000 coverholders • Approx. 700 unique coverholders 23%

  12. Control Framework Duplication for Lloyd’s brokers Broker No. of managing agents

  13. Control Framework Duplication for Coverholders coverholder No. of managing agents

  14. Control Framework What can we do to manage communications? Quick wins – Get the right people talking Focus on where duplication is highest in the ‘red’ rated section Lloyd’s to engage with those brokers where duplication is highest

  15. Control Framework Educating Auditors Control Framework team working closely with Lloyd’s Delegated Authorities team on auditor communications. Objectives are to: Ensure that auditors have sufficient knowledge on the new scope and why we focus on tax and regulatory information. Sufficient Lloyd’s licencing structure and skills to scrutinise risk location with the tools available.

  16. Control Framework New version of board sign off letter • Key changes are: • Explicit on lead only • Risk based approach to coverholders • Remove explicit reference to 'Appendix 1' - the Control Framework data items • This DOES NOT mean that the data items are 'defunct', they remain as a key statement of fact. • Concentration in phase II should be on processes and controls that ensure data quality throughout the distribution chain.

  17. Control Framework New Stuff Next steps • Analyse the risk rating data and engage with managing agents and brokers during Q1 • Develop and commence communications with auditors • Requests for extension reviewed by Lloyd’s, feedback on this in February • New Board sign off wording online – www.lloyds.com/controlframework • Updated FAQs: TPA’s formulate part of scope for Phase III • Recruiting for a new stakeholder manager • Please remember monthly status reports!

  18. Control Framework Questions?

  19. Control Framework Q & A

  20. Control Framework Close Further information on Control Framework – controlframework@lloyds.com Next Breakfast Meeting – 18th February www.lloyds.com/controlframework