LMP – Insurance DocumentationLMP – Insurance Documentation

Contract Certainty Initial ImplementationsContract Certainty Initial Implementations

THIS DOCUMENT APPLIES TO THE INITIAL IMPLEMENTATIONS OF THE THIS DOCUMENT APPLIES TO THE INITIAL IMPLEMENTATIONS OF THE CONTRACT CERTAINTY PROPOSALS ONLY, AT THIS STAGECONTRACT CERTAINTY PROPOSALS ONLY, AT THIS STAGE

January 2005January 2005

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)

CCSG Has …

• Developed the process in detail (4 options):1. Contract certainty end-vision. Slip leader confirms policy (may use

service provider). Broker/Slip Leader finalise policy.2. XIS technical check. Broker/Slip Leader finalise policy.3. XIS technical check (early) + signing4. 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

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

DRAFT: Documentation – Process Overview.

Process objectives:

Achieve contract certainty Evidence to the client

Macro process steps:QuoteFirm order placementProvide closing informationTechnical & regulatory policy checkFinalise policy & evidence to client

Process inputs:• Risk information

• Client requirements

• Relevant wordings & clauses

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

Start:

Client Requests Quotation

End:

Contract evidenced to client

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

QuoteRequest quote Draft policyPresent & agree policyQuoteReview quote(s)Confirm policy

Firm Order PlacementFirm orderSeek & write linesPlacing completeIdentify changes

Provide closing informationSigning downPrepare closingsSubmit / issue closingsSubmit policyCheck closings

Technical (& for Lloyd’s Regulatory) policy check - if changes

Finalise PolicyConfirm technical & regulatory check performedAdd jacket / attestation clause and security scheduleSign policyPrepare copiesIssue evidence to client

Technical (& for Lloyd’s Regulatory) policy check

Options 1: Conducted by Slip Leader – or service provider.

Option 2: Conducted by XLMS.

Proceed to Finalise Policy if no change from original draft policy

DRAFT: Documentation – Options 1 & 2.

Options 1 & 2: Conducted by broker/slip leader

Options 1: Conducted by Slip Leader – or service provider.

Option 2: Conducted by XLMS.

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

QuoteRequest quote Draft policyPresent & agree policyQuoteReview quote(s)Confirm policy

Firm Order PlacementFirm orderSeek & write linesPlacing completeIdentify changes

Provide closing informationSigning downPrepare closingsSubmit / issue closingsSubmit policyCheck closings

Technical (& for Lloyd’s Regulatory) policy check

Finalise PolicyConfirm technical & regulatory check performedAdd jacket / attestation clause and security scheduleSign policyPrepare copiesIssue evidence to client

Technical (& for Lloyd’s Regulatory) policy check

Option 3: Review draft policy prior to, or at, Firm order placement

Option 3: Proceed to Finalise Policy if no change from original draft policy

DRAFT: Documentation – Options 3 & 4.

Option 4: Proceed to Firm order placement from quote

Option 4: Conduct Technical & Regulatory review after signing down

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

?

Wording Certainty (amber provisional)

Firm Order

Contract Certainty (amber provisional)

Date Evidenced to Client

W

F

C

D

DRAFT: Interim approach for Lloyd’s and Companies pending Lloyd’s review of XLMS activities - Option 3.

Client

PlacingBroker

Slip Leader(s)

Following Underwriters

1.1 Request Quote

InceptionTIME

1.2 Draft,

Present & Agree

Policy

1.4 Select Quote

2.1 Firm Order

2.3 Placing Complete

3.1 Sign Down

2.2 Request &

Write Line(s)

3.2 Prepare Closings

5.3 Receive Evidence

3.5 Check

Closings

5.2 Issue Evidence

Bureau/ServiceProvider

D

4.1 Technical (&

Regulatory) Check

Inception

C

C

5.1 Finalise

ClientPolicy

3.3 Submit

Closings

W

4.2 Technical (&

Regulatory) Check W

If changes applied

3.4 Submit Policy

FDO S&A Stage 2

?

W

?

?

? ??

F

2.4 Identify Changes

?

1.5 Confirm Policy

? ?

Policy

1.3 Quotes/Support Quotes

XLMS

XLMS

DRAFT: Interim approach for Lloyd’s and Companies pending Lloyd’s review of XLMS activities - Option 4.

1.1 Request Quote

InceptionTIME

1.2 Draft,

Present & Agree

Policy

2.1 Firm Order

2.3 Placing Complete

3.1 Sign Down

3.2 Prepare Closings

5.3 Receive Evidence

3.5 Check

Closings

5.2 Issue Evidence

D

Inception

C

C

5.1 Finalise Client Policy

3.3 Submit

Closings

W

4.2 Technical (&

Regulatory) Check W

If changes applied

3.4 Submit Policy

FDO S&A Stage 2

?

?

? ??

F

2.4 Identify Changes

?

1.5 Confirm Policy

Policy1.4

Select Quote

1.3 Quotes/Support Quotes

XLMS

2.2 Request &

Write Line(s)

Client

PlacingBroker

Slip Leader(s)

Following Underwriters

Bureau/ServiceProvider

DRAFT: Documentation – Summary.

Key Differences:

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

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

Process Failures – what can go wrong ?

Significant risk factors:

1. Changes are applied during placing AND either:• It is not reflected in all documentation• It is wrongly applied• Insufficient agreement is gained

2. 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

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)

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