Control Framework

Breakfast Groupagenda

9:00 Arrival, Breakfast & networking

9:20 Welcome and The “gold star awards” - Ali Dove

9:25 Delegated authorities update - Sarah Thacker

9:45 Phase II: risk assessment, data flow - Jaana rouvariand next steps to launch

10:05 Broker engagement - John Hibbert

10:15 Q & A - All

10:30 Close

Lloyd’s market gold star awards…

MONTPELIER

MARKEL

NEWLINESPORTSCOVER

TRAVELERS

LIBERTY

ALTERRA

ASCOT

Control Framework

BRIT

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Should Lloyd’s Mandate the CH reporting standards?Sarah Thacker, Lloyd’s Delegated Authorities

21 May 2013

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The consultation

► Representatives from DUC, BACG, BOLT, DUM, Lloyd’s country managers and Xchanging were consulted

► Stakeholders were told that there had been a request to mandate the reporting standards in a response to the proposed roll-out of the control framework to coverholders

► Stakeholders were asked if they thought the reporting standards should be mandated on coverholders because of the control framework

► They were also asked for general comments around mandating the reporting standards on coverholders

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Issues with mandating, London

► Changes only typically take place annually at renewal

► Underwriters are largely not aware of the standards, their usefulness and importance

► Many London stakeholders still do not have systems to put this data into

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Issues with mandating, coverholders

► Domestic carriers typically collect this sort of data as a bi-product of processes, this is asking for something extra

► Customised versions of off-the-shelf systems mean charges for implementing standards

► Over time, as coverholders change systems so these issues are likely to be reduced

► Retail agents at the start of the chain need to collect the data

► Coverholders want to be asked for the same thing by all syndicates; but this is not what was proposed

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The reporting standards and the DATA control framework1. Information Requirements

The reporting standards ≠ the data items in the control framework

Control framework is what to capture and the controls, reporting standards is what to send into London

The red fields in the standards are not all in the control framework

The control framework includes Lloyd’s data which a coverholder would not know

Examples – risk codes, year of account

The control framework includes data which London already knows

Examples – Currency if always $; state if always Florida, Contract Type

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The reporting standards and the DATA control framework2. Risk model Will mandating help?

Risk 1 – requirements are not understood

The reporting standards ≠ control framework so may confuse

Risk 2 – data capture is inadequate Would help to explain, but see above may confuse and would not give the full picture

Risk 3 – data is processed incorrectly No

Risk 4 – data is corrupt No

Risk 5 – data is lost and cannot be recovered

No

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The reporting standards and the control frameworkControl Framework continued

Summary Will mandating help?

3. Apply risk model Each data item to be risk assessed and prioritised

No

4. Identify and document key controls

Identify and document the controls mitigating the risks

Might be an example of a control…

5. Gather evidence Gather evidence of controls No

6. Provide assurance This is about assuring Lloyd’s that controls are in place

No

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Lloyd’s should not mandate the coverholder reporting standards at this time

► Limited understanding of standards amongst London stakeholders, and insufficient current take-up for this to be accepted in London

► Costs for coverholders seen as prohibitive

► Information to be mandated is unclear – reporting standards ≠ data control framework

► Will not deliver the requirements of the Data Control Framework

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What next? ► The proposal to mandate the reporting standards on coverholders has been rejected.

► But

► There are still other activities separate to the Control Framework project which can be pursued.

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Audit Scope review

► Market project with reps from DUC, DUM, BACG, BOLT and Lloyd’s:- Charles Rowley, Steve Hart, Patricia Beaton, Dan Lott, Ian Whitehead and Sarah Thacker

► Scope is currently being reviewed

► Plan for draft in summer and final version in autumn

► This will be followed by training/education for auditors

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Audit Scope Review

Initial recommendation for questions RE control Framework

► How do you determine where the risk is located for entry onto your system?

► How would you risk locate for a policyholder in your country insuring a property in another country?

► How would you determine the location of risk for a policy holder outside your country but insuring property in your country?

► How do you determine what is the tax liability for the insured or insurer?

► Does this entry drive the bordereaux or is this entered manually onto a spreadsheet?

► Are you aware and use Crystal/Risk locator Tool?

► Note, these are draft only……

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Draft

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Data and technology

► BAU work with market promoting and educating on data and reporting standards

► Reporting standards are mandatory for new coverholders

► Brokers to be encouraged to provide all data to leads and followers via IMR or similar in a spread-sheet or other useable format

► Conversations with Xchanging around how they can help

► Working with market stakeholders to promote use of technology, automation and XML

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Education ► Application process could be amended, for example, coverholders could be asked to complete Crystal Assist

► Coverholder Toolkit includes information about data and reporting which can be enhanced when next updated

► Information can be put in Delegated Authorities Area on Lloyd’s web pages

► Promote use of Crystal and Risk Locator Tool at coverholder events

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Control Framework

phase ii Update

Coverholder risk assessmentData flow and controlsNext steps to launchFuture meetings

Control Framework

Coverholder risk assessment

Complexity of business written Nature of operations

Binding Authority- Single or multiple

territories

Principal Regional Complexity

Lines of Business Premium written

Coverholder Resources and

information provided

Historic Issues

Use of Lloyd’s Tools

Use of Lloyd’s coverholder

reporting standards

Control Framework

Dataflow and controls

Coverholder

TPA

Broker

XIS

XCS

Lloyd’s

Managing agent

Data is captured/ manipulated/ held

Premium

Claims

A/S

ECF

Premium

Claims

Premium

Claims

Information

Lloyd’s Coverholder

reporting standards

Lloyd’s Control

Framework ‘Green Book’

Control Framework

Purpose:To ensure required information is provided for premium and claims processing purposes

Purpose:To ensure tax and regulatory information at source meets the minimum requirements and is of good quality

Control Framework

Next steps to launch of phase ii

Lessons learnt

Phase II communications

approach

Delegated Authorities

engaged

Tool kit &

market group consultation

Control Framework

Next steps to launch of phase ii

Finalise Lloyd’s tool kit:

Phase II road map Coverholder risk assessment guidance notes Data items spreadsheet adapted for phase II Broker/ coverholder leaflet Control Framework Standard presentation for phase II ‘Board’ sign-off wording Phase II FAQs Guidance on what good looks like

Look for these @ lloyds.com/controlframework in July

Control Framework

Next step to launch of phase ii

Your contacts for phase II

Scheduled meetings for phase II Initial 1-2-1 meetings within the first 3 months Follow up meetings on request

Regular status reports from managing agents

The LAUNCH event

Control Framework

Future meetings

From July..

Project updateDelegated Authorities updateBroker engagement updateManaging agent/ broker/ other

presentation

Control Framework

Update on broker engagement

John Hibbert

Control Framework

Progress so farLIIBA endorsement of project frameworkIndividual broker meetings undertaken

• Millers• Towers Watson• Willis• Cooper Gay• Crispin Speers• Integro• Decus• THB• Bell and Clements

Control Framework

Next steps

Establish broker working group• LIIBA and BIBA members

Present to BOLT meeting 2nd JulyCommunicate to the wider broking

community through Phase II Launch in July

Individual Managing Agent/broker meetings