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Electronic Placing in the London Market Market Reform Briefing

Electronic Placing in the London Market Market Reform Briefing. Rob Gillies Head of Market Processes Lloyd’s Market Association. Why electronic placement The electronic placement process Progress, experiences and lessons so far The future. Why electronic processes

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Electronic Placing in the London Market Market Reform Briefing

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  1. Electronic Placing in the London Market Market Reform Briefing Rob Gillies Head of Market Processes Lloyd’s Market Association

  2. Why electronic placement • The electronic placement process • Progress, experiences and lessons so far • The future

  3. Why electronic processes • The electronic placement process • Progress, experiences and lessons so far • The future

  4. 1700 2000 2010?

  5. Why change? Global and market change Improved efficiency Reduced costs Exploit strategic business opportunities Customer service demands Need for increased return on capital

  6. Agents for Change • The global marketplace • Convergence of insurance and capital markets • Growth of self-insurance • High transaction costs • Market process inefficiencies • Restrictive practices Global and market change (Dennis Mahoney – Acord Forum London, 2007)

  7. “We remain convinced that electronic processing is the future for this market…” Ian Summers, Director of Change Strategy at Aon “Exchanging structured data to support the placing process is the way the market has to go in the next few years if we are to remain competitive” Trina-Lane Pearce, UK Operations Manager at Catlin “In this market, companies that embrace new technology not only improve their business today, but they also safeguard their business for tomorrow” Lisa Gibbard, Head of IT at Aspen

  8. Realisation of Benefits • Easy access to information from multiple systems • Less administration for underwriter – reduced re-keying of data • Ability to direct work to available resources (workflow) • Reporting (business activity monitoring) to assist with process transparency and management controls • External and internal auditing and compliance • Automatic recording of quotes • Improved data integrity • Increased operational efficiency through the electronic exchange of information and workflow (Lisa Gibbard, Aspen Re – Market Reform Forum, March 2008)

  9. Why electronic processes • The electronic placement process • Progress, experiences and lessons so far • The future

  10. Electronic Placing Steering Group - Vision The use of electronic processes, compliant with ACORD international data standards, for the submission of risk details, the agreement of terms, and contract formation for all risk placements and contract amendments in the London market, enabling the selective use of negotiation outside the electronic process where required by trading partners. The use of electronic processes, compliant with ACORD international data standards, for the submission of risk details, the agreement of terms, and contract formation for all risk placements and contract amendments in the London market, enabling the selective use of negotiation outside the electronic process where required by trading partners.

  11. Moderate Simple Complex Electronic Negotiation Face to Face Face to Face, Telephone, Electronic Data Exchange What is electronic placing?

  12. Electronic exchange of data and documents Selective use of face-to-face negotiation enables Benefit delivery Benefit delivery Benefit delivery • Increased Operational Efficiency • Improvement in peer review process • Earlier availability of data and documents for review • Reduced risk of errors associated with manual processes • Faster release of capital through earlier signed lines • Quotes bound on line, speeding up placement process • Improved exposure management • Standard data re-used for A&S process • Reduced Costs • Photocopying, scanning and indexing of paper documents no longer necessary • Reduced risk data capture time through straight-through-processing • Simple endorsements processed fully electronically • Lowering operational costs through efficiency gains • Increased Regulatory Compliance  • Increased use of industry model contracts eases compliance burden • Earlier checks made to meet regulatory and risk management requirement • Full audit trail for placing process • Enhanced security of information • Increased Market Transparency • Consistency in provision of data • Data seamlessly translated from one market to another • Strategic Opportunities • Less reliance on geographical boundaries • Time freed up to concentrate on business acquisition • Serve an enlarged customer base or branch network by increasing capacity to process business online • Increase portfolio of simple, low volatility business • Greater opportunities for market segmentation • Global management of orders enables clear view and assignment of responsibility. Improved customer service + Increased return on capital

  13. Improving the broker-insurer relationship Electronic exchange of data and documents Selective use of face-to-face negotiation enables Benefit delivery Brokers (examples) Insurers (examples) Increased quality negotiating time Opportunity to grow business Increased attention to the customer Improved management information Earlier sight of data and documents Improved access to markets More productive use of time Resource: Electronic Placing Benefits Model

  14. Peer-to-peer Gateway Gateway Messaging hub Broker System Insurer System Core systems Core systems Trading platform Document repository Document repository Desktop services Desktop services Workflow Workflow DI DI Face to face The system perspective

  15. The practitioner’s perspective

  16. Why electronic processes • The electronic placement process • Progress, experiences and lessons so far • The future

  17. Who’s doing what? • Trading Platforms • Aon use of RI3K • ACORD Messaging • Increasing numbers transacting live business • Increasing numbers positioning ready to participate • Benfield 1 April lead on two-way messaging • General • Much increased general level of interest over 2007 • Other activity such as broker and underwriter portals and eReinsure • Lloyd’s Information Exchange Resource: Landscape Analysis

  18. Technological Barriers • Upgrading internal core systems • Conflict with other projects • Conflict with other reform activity • Integration with front and back office systems • Development of functionality by suppliers • Process Barriers • Failure to deliver minimum levels of value required by organisations to participate • Version control between paper and electronic slips and other documents • Duplicate processes – EP and non-EP • Slip signature and evidence of cover • Predominance of Outlook as user interface and ‘workflow’ tool • Differences between London and international processes Experiences and lessons so far

  19. Behavioural Barriers • Fear of the impact on jobs, work routines, lifestyle, etc • Workload • Market reform and change burnout • ECF and A&S seen as a priority (politically easy ‘back-office’ functions) • Commercial and Other Barriers • Absence of market critical mass • Absence of key trading partners • Benefits not yet fully recognised • Lack of leadership (CEO) support and endorsement in firms • Reluctance to accept the benefits as a convincing business case • Failure of firms to simplify the benefits message and relate to the firm

  20. Behavioural Barriers • Fear of the impact on jobs, work routines, lifestyle, etc (4) • Workload • Market reform and change burnout • ECF and A&S seen as a priority (politically easy ‘back-office’ functions) • Commercial and Other Barriers • Absence of market critical mass (1) • Absence of key trading partners (2) • Benefits not yet fully recognised (3) • Lack of leadership (CEO) support and endorsement in firms (5) • Reluctance to accept the benefits as a convincing business case • Failure of firms to simplify the benefits message and relate to the firm Top Five Barriers to Adoption

  21. Why electronic processes • The electronic placement process • Progress, experiences and lessons so far • The future

  22. Current and Planned Activity • Roadmap • One way placing • Two way placing • Multi-section risks • Additional messaging capability • Additional structured data • Alignment with eMRCE • Broker engagement • Market wide Class of Business pilot • Implementation Group • Evidence of cover • Adherence to validation rules Resource: Roadmap

  23. Accounting and Settlement Claims adjustment and settlement Contract Amendments Evidence of Cover Risk Renewal Electronic Lifecycle of the Risk Electronic Placing

  24. Rob Gillies Head of Market Processes Lloyd’s Market Association 020 7327 8377 robert.gillies@lmalloyds.com Resources: www.lmalloyds.com

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