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Electronic Placing in the London Market adding value to the broker underwriter relationship

Electronic Placing in the London Market adding value to the broker underwriter relationship. Rob Gillies, LMA Market Reform Forum 2007. What is electronic placing and what’s in scope? Who’s doing what Experiences and lessons so far A look forward.

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Electronic Placing in the London Market adding value to the broker underwriter relationship

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  1. Electronic Placing in the London Market adding value to the broker underwriter relationship Rob Gillies, LMA Market Reform Forum 2007

  2. What is electronic placing and what’s in scope? • Who’s doing what • Experiences and lessons so far • A look forward

  3. “They always say that time changes things, but you actually have to change them yourself” Andy Warhol

  4. 1700 2000 2010? “They always say that time changes things, but you actually have to change them yourself” Andy Warhol

  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 (Dennis Mahoney – Acord Forum London, 2007)

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

  8. Electronic exchange of data and documents Selective use of face-to-face negotiation enables Benefit delivery Benefit delivery Benefit delivery Increased Operational Efficiency Reduced Costs Increased Regulatory Compliance and Increased Market Transparency Strategic Opportunities Improved customer service + Increased return on capital

  9. 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

  10. Who’s doing what? • Lloyd’s Brokers • 4 trading live • 2 investigating and developing • Insurance Companies • 1 trading live • 8 investigating and developing • Managing Agents • 7 trading live • 18 investigating and developing • 130 ‘markets’ trading with Aon via Ri3K • Much increased general level of interest over 2007 Resource: Electronic Placing Landscape Analysis

  11. 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

  12. 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 Barriers • Absence of market critical mass • Absence of key trading partners • Absence of leadership (CEO) support and endorsement in firms • Failure to recognise the benefits • Reluctance to accept the benefits as a convincing business case • Failure of firms to simplify the benefits message and relate to the firm

  13. 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) • 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

  14. Look forward • Development • Enhancement of the data message • Value of the data • Compatibility with accounting and settlement processes • Market Engagement • Brokers • Carriers • Suppliers • Vision, Objectives and Roadmap • Developing a common picture of the end game • Knowing whether we’re getting there; metrics • Target driven adoption?

  15. Accounting and Settlement Claims adjustment and settlement Contract Amendments Evidence of Cover Risk Renewal Electronic Lifecycle of the Risk 2010? Electronic Placing

  16. Rob Gillies Head of Market Reform Policy Lloyd’s Market Association 020 7327 8377 robert.gillies@lmalloyds.com www.the-lma.com John Hobbs Director of Market Services International Underwriting Association 020 7617 4445 john.hobbs@iua.co.uk www.iua.co.uk Resources: www.the-lma.com

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