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Future Processing in the London Market

London Market Group. Future Processing in the London Market. Tim Carroll, Canopius LMG Forum, 29th January 2010. With. Agenda. Where are we now? Why do we want further change? Progress to date What has been proposed? Expected benefits Next Steps Questions. Where are we now?.

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Future Processing in the London Market

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  1. London Market Group Future Processing in the London Market Tim Carroll, CanopiusLMG Forum, 29th January 2010 With

  2. Agenda • Where are we now? • Why do we want further change? • Progress to date • What has been proposed? • Expected benefits • Next Steps • Questions

  3. Where are we now? • Close to finishing latest round of reform • Xchanging provides: • Economies of scale • Single point of audit for regulators • Consistent process, standards & SLAs • Pool of resource; reduced insurer overheads • Common infrastructure for the market • Still have legacy issues • Still have too many Londonisms

  4. Why do we want further change? • Information is rekeyed numerous times throughout the process – leading to significant query and error rates • A growing number of Lloyd’s market organisations want the same choice as Companies and either outsource some processes to a different supplier, or perform them in-house • There is a perception that overseas brokers are placing certain types of business elsewhere as result of London’s complex operating environment • Initiatives such as Finish What We Started are improving processing, but still based on legacy systems and inherent Londonisms

  5. Progress to date • Current processes for central services mapped to a detailed level • Future models proposed • Future mandatory and optional central services proposed • Workshops held with Heads of Associations and Lloyd’s • Future Process Working Group established…

  6. Progress to date (cont.) • The Future Process Working Group has: • Agreed a set of principles that should underpin any future model eg • Insurers have the choice to perform certain functions themselves or to outsource to a third party. • The Future Process Model will support both face-to-face and entirely electronic trading and negotiation. • The Future Process Model should benefit all practitioner firms in the London Market. • The Future Process Model should retain the benefits of the subscription market • There will be a core central service that monitors the overall status of transactions and which aggregates carrier responses in support of subscription business processing. • Recommended to the LMG, which agreed, that the proposed future process is workable and warrants much more detailed design • An LMG-sponsored project has been initiated to deliver: • A robust London Market process model, expressed in sufficient detail that it can be adopted and implemented by the market. • A recommended transition/implementation plan; likely to identify a two stage approach, with a new model for 100% written business as the first implementation, followed by subscription business

  7. What has been proposed? • Move to electronic “straight through processing” and re-use of information throughout the value chain (i.e. without any need for re-keying) • Adoption of ACORD standard messages throughout the risk lifecycle • Provide insurers with central core services and the option to select from a suite of supporting services, or to undertake processes themselves

  8. The expected benefits • Throughout 2010 the project will seek to validate the below benefits and ensure that they are built into any future model design • Insurer benefits: • Choice - perform services in-house or outsource to another party • Cost reduction - processing costs will be reduced by reusing data and decreasing transactional query costs • Reduced operational risk • Access to risk data earlier in the process, allowing for improved exposure management • Opportunities to automate various processes

  9. The expected benefits • Broker benefits: • Consistent processes - working in accordance with global (ACORD) processing standards; leading to a consistent process across many markets using the same process and data • Direct interface to insurers - ability to interface directly with insurers using standard data; vastly reducing re-keying and query rates throughout the risk lifecycle • Opportunities to automate various processes • Easier to access London market – allows small/medium overseas brokers to access direct and more efficient process for global brokers => more choice for clients (and potentially lower cost)

  10. Proposed next steps • Make sure we have the right governance in place – proposal

  11. Proposed next steps • 2010 • Stage 1: Q1 • Market communication • High level cost / benefit analysis • Risks/issues/benefit analysis of each service model • Stage 2: Q2/Q3 • Develop process models to lower level • Address risks/issues • Identify transition/implementation options • Re-assess/update Working Group’s Principles & Assumptions • Stage 3: Q4 2010 / Q1 2011 • Market consultation • Finalise proposals/documentation • First implementations of programme in 2011, likely to commence with 100% written business followed by subscription business

  12. Questions?

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