Electronic Data Interchange In Reinsurance

1. Electronic Data Interchange In Reinsurance Thomas Neff Brokers and Reinsurance Markets Association

2. What Is BRMA? • BROKERS & REINSURANCE MARKETS ASSOCIATION • REPRESENTING 34 REINSURANCE ORGANIZATIONS • MISSION: IMPROVE EFFICIENCY & EFFECTIVENESS OF BROKER CHANNEL • ELECTRONIC COMMERCE A FOCUS • EMPHASIS ON ELECTRONIC DATA INTERCHANGE (EDI)

3. Today’s Processing CEDANT Post Office Post Office BROKER REINSURER

4. REINSURANCE FOCUS • PAPER INTENSIVE INDUSTRY • CUSTOM SYSTEMS HAVE BEEN DEVELOPED • E-MAILS, FAXES, ETC. • NO STANDARD APPROACH • NOT INTEGRATED INTO BUSINESS OR COMPUTER SYSTEMS • COSTLY TO DO BUSINESS

5. Challenge: to Improve the communication of insurance and reinsurance data between trading partners. REINSURANCE FOCUS

6. WHAT IS ELECTRONIC COMMERCE (“EC”) ? • DO BUSINESS ELECTRONICALLY • MOVE AWAY FROM PAPER • STORE & EXCHANGE BUSINESS INFORMATION DIGITALLY • USE COMPUTER TECHNOLOGY & STANDARDS • NOT JUST THE INTERNET

7. FAX E-MAIL FILE EXCHANGES EXTERNAL LINKS TO SYSTEMS EDI IMAGING VIDEO COMPUTER TELEPHONY THE INTERNET THE WWW Electronic Commerce… INTEGRATE WITH BUSINESS PROCESSES

8. WHAT IS EDI?ELECTRONIC DATA INTERCHANGE “THE COMPUTER-TO-COMPUTER EXCHANGE OF BUSINESS DATA IN A STANDARDIZED FORMAT”

9. OBSTACLES TO EDI • AGREEMENT ON A NEED FOR PROGRESS • AGREEMENT ON DATA • AGREEMENT ON STANDARDS • OVERALL RESISTANCE TO CHANGE • WORKFLOWS • BUSINESS PROCESSING

10. BENEFITS OF EDI • CONSISTENT DATA • ELIMINATE RE-KEYING • REDUCE STAFF NEEDS FOR ROUTINE PROCESSING • FASTER RECEIPT/TURN-AROUND • ENABLE BUSINESS PROCESS CHANGES

11. EDI Processing VAN VAN VAN TRANSLATOR TRANSLATOR TRANSLATOR REINSURER APPLICATION CEDANT APPLICATION BROKER APPLICATION

12. COMPONENTS OF EDI • STANDARDS (“MESSAGES”) DEFINED BY INDUSTRY PARTICIPANTS • SECURE NETWORKS • “OFF THE SHELF” SOFTWARE AVAILABLE • BUSINESS PROCESS & SYSTEM CHANGES TO REALIZE FULL POTENTIAL

13. EDI IN REINSURANCE • FORMED A JOINT VENTURE IN 1992 • TO LOOK AT GLOBAL INDUSTRY NEEDS • TO DEFINE STANDARD BUSINESS TRANSACTIONS • MISSION TO DEVELOP ONE SET OF EDI STANDARDS FOR REINSURANCE • ALLOW FOR DIFFERENCES IN LEGAL AND MARKET ENVIRONMENTS • DID NOT WANT TO REINVENT THE WHEEL

14. THE JOINT VENTURE: WHO • PARTICIPANTS • BRMA • RAA • LIMNET (LONDON) • RINET (EUROPE + ) • WIN (UK, US +) • IVANS

15. THE JV PRODUCTS • REINSURANCE BUSINESS TRANSACTIONS AS EDI STANDARDS • DOCUMENTATION DESCRIBING THE STANDARDS • “HOW TO” MANUALS TO USE THE STANDARDS

16. THE JV MESSAGES • COVER ALL RELEVANT BUSINESS AREAS: • LOOKED AT THE OVERALL REINSURANCE BUSINESS • IDENTIFIED THE PROCESSES THAT MADE SENSE TO HANDLE VIA EDI • DID NOT JUST REPLACE PAPER WITH ELECTRONIC TRANSACTIONS

17. RETACC RESETT JV ACCOUNTING MESSAGES • TECHNICAL ACCOUNT (“RETACC”) • INVOICE (TREATY & FAC) • PREMIUMS, CLAIMS AND EXPENSES • SETTLEMENT OF ACCOUNTS (“RESETT”) • PAYMENT ADVICES/REQUESTS • TIE TO ELECTRONIC FUNDS TRANSFER

18. JV CLAIMS MESSAGE • CLAIMS NOTICE (“RECLAM”) • INITIAL LOSS NOTICE • RESERVES & CHANGES • LOSS DETAILS RECLAM

19. REBORD REPREM RECALC JV SUPPORTING MESSAGES • BORDEREAU (“REBORD”) • POLICY LEVEL DETAIL • PREMIUMS AND LOSSES • COMMISSIONS (“RECALC”) • PREMIUM ADJUSTMENTS (“REPREM”)

20. REDIAL JV CONTROL MESSAGES • DIALOG (“REDIAL”) • ACKNOWLEDGMENTS • REJECTIONS/ERRORS • EXCHANGE KEY REFERENCES

21. JV PLACING MESSAGES • Two JV Messages used in Electronic Placing of Reinsurance Business: • RECORD Message • RELIST Message

22. RECORD RECORD MESSAGE • Purpose: • Provide Core data for the initial placement and endorsement of Reinsurance Coverage in a standardized format Cedant  Broker  Reinsurer

23. RECORD MESSAGE • Placing Stages Can Include: • pre-quotation/quotation/order offer proposal • request for line/binder • request for additional information • acceptance/declination • closing • endorsement request • acceptance/cancellation

24. RELIST RELIST MESSAGE • Purpose: • Provides some detail regarding individual risks (acts as a schedule of items): • Details include only items normally captured by insurers or brokers or required by reinsurers • Data fields describe the risk in detail (parties, dates, periods, code lists, etc.) • Coverages, Deductibles, Premiums and Deductions can be specified per risk or per insured peril • Some limited text can be captured

25. RELIST MESSAGE • The RELIST Message allows for the identification of key pieces of information: • Provides links to supporting RECORD message • Gives details regarding one or more INDIVIDUAL risks, such as: • Fleets (aircraft, vessels) • Buildings • Machines (engineering risks) • Cargo • Vehicles • Etc.

26. GESMES STATISTICS MESSAGE • Purpose: • Used to exchange statistical data between two trading partners • Multi-dimensional data of any type can be exchanged • such as the usual contents of a spreadsheet exchanged in the paper environment today

27. GESMES MESSAGE • Concepts: • NOT a JV Developed Message • NOT using all segments of the Message • Used by other industries and the reinsurance industry to convey general statistical information • GESMES has different segments than “traditional” JV message segments • Functionality within message differs from other JV messages: Define the data within the message GESMES

28. GESMES MESSAGE • Generic Exhibits were used to determine the applicability of the message for Reinsurance Placing support, including: • Loss/Premium Development • Loss/Detail Listing and Losses By Event • Contract Experience • Historical Rate Change • Limits/Risk Profile • Not limited to these exhibits

29. GESMES MESSAGE SEGMENTS • HOW WILL IT WORK? • Message Sender Tells Message Receiver how the data is set up - • allows for FLEXIBILITY!!! • Define Heading Information • Define Rows and Columns • Populate Heading and rows/columns with data to be analyzed by message receiver Message Sender

30. RECORD & GESMES REBORD RELIST RETACC RECLAM RESETT REPREM RECALC REDIAL SECURE NETWORK Now The Picture Is Complete…

31. REINSURANCE EDI IS HERE • ACCOUNTING/CLAIMS MESSAGES ARE TESTED, DOCUMENTED & READY • PLACING/STATISTICS SHORTLY • S2 INITIATIVE UNDERWAY • 19 + BRMA MEMBERS ARE DOING EDI NOW • SOME BRMA MEMBERS HAVE DONE AWAY WITH THE PAPER !

32. THE BRMA S2 INITIATIVE • ACHIEVE CRITICAL MASS IN BRMA • ELIMINATE PAPER TRANSACTIONS • REMAIN COMMITTED TO USING THE STANDARDS CONSISTENTLY • RESOLVE MESSAGE ISSUES FAST • PROVIDE AN IMPLEMENTATION FORUM

33. INDUSTRY COMMITMENT • REINSURANCE SOFTWARE VENDORS ARE BUILDING EDI COMPONENTS • DIRECT REINSURANCE WRITERS ARE IMPLEMENTING EDI • LARGE CEDING COMPANIES ARE LOOKING TO HANDLE THEIR REINSURANCE PROGRAMS VIA EDI • WEBSITES ARE BEING REVIEWED AS POTENTIAL “PULL FORWARD” SOLUTIONS

34. Timetable of Deliverables • RECORD - 6/98 for Approval by JV • RELIST - 6/98 for Approval by JV • GESMES - Next Deliverable from contractor scheduled for 5/98

35. Where Are We Going? • More Use of Accounting/Claims Messages • Use of the RECORD, RELIST and GESMES • Development of Industry and Company Repositories • Ceding Company Implementations

36. ? ? ? QUESTIONS??? ? ?