Electronic Market Reform Contract Endorsements Market Briefing

1. Electronic Market Reform Contract EndorsementsMarket Briefing 2008

2. Agenda • Introduction • MRCE – The new document standard for endorsements • e-MRCE – Submission and agreement of endorsements electronically • e-MRCE – Broker perspective • e-MRCE – Insurer perspective • Questions and discussion Page 1

3. MRCE – The new document standard for endorsements • Previously no explicit standard and no guidance • Benefits • Supports Contract Certainty • Enables contract change documentation to client promptly • Reduces the effort required to handle contract endorsements • Document format consistent with original contract (MRC) • Mapped to ACORD standard – paves the way for structured electronic messaging • Unambiguous Settlement Due Date Page 2

4. Endorsements – Past “Honeycomb” Cover Note Addendum + Page 3

5. Endorsements – Present: The MRCE Future starts now: End March deadline Page 4

6. MRCE Structure Page 5

7. Endorsements – Present: The MRCE Risk Identification and Endorsement Details section (Additional details may be included) Contract Change(s) Section using MRC format and headings Page 6

8. Endorsements – Present: The MRCE Contract Administration and Advisory Section Settlement Due Date default Agreement Section (Non-GUA Example) Agreement Boxes (sig, date and name) Page 7

9. + Cover NoteAddendum Honeycomb MRCE MRCE Summary • Logical extension to MRC – consistent format, basis of client documentation • In line with Contract Certainty – speeds up contract change documentation to client • Reduces the effort required to handle contract endorsements • London Market standard from end of March 2008 (for new endorsements) Page 8

10. Endorsements – Past “Honeycomb” Cover Note Addendum + Page 9

11. e-MRCE – the big prize • Approx ½ million endorsements p.a. • High admin cost relative to low value that clients attach to non-complex endorsement • Faster agreement process • Save broker queuing and underwriter consultation time • Frees brokers and underwriters for more productive use of time • Agreed endorsement forms basis of contract change sent to client • Improved contract certainty • Saves broker rework • Documentation to client quicker • Bridgehead into electronic trading Page 10

12. e-MRCE – Submission and agreement of endorsements electronically • What is it? • How does it work? • Broker perspective • Insurer perspective Page 11

13. What is e-MRCE? • Email or other forms of electronic processing • London based brokers are currently using email to agree endorsements for business outside the London Market … do this for London Market business as well! • The email process: • Broker assesses the suitability of endorsement for email • Basic agreement process then as per existing practice • Simple email template Page 12

14. Request agreement + GUA category Response + GUA category Request agreement Response Notify Simple steps using email Broker Slip Leader Agreement Parties Notification Parties Page 13

15. Broker requests Slip Leader agreement References:- Subject line- Insurer reference Response request GUA category request Settlement Due Date request MRCE attached to emaIl Page 14

16. Slip Leader agrees MRCE – within the email reply Agreementresponse GUA category details Settlement Due Date details Page 15

17. Slip Leader agrees MRCE – within attachment to email Response within a scanned and attached copy of agreed MRCE Page 16

18. Broker requests Agreement Party agreement Agree Response request Slip leader evidence of agreement attached to email MRCE attached to email Page 17

19. Broker notifies Notification Parties Notify MRCE attached to email Page 18

20. e-MRCE summary: focus is email • “Keep it simple” • Email is sufficient – new technology is not a pre-requisite • Use structured data messaging when you have it • Certainly non-complex, but don’t be afraid to go further • “Just do it” • Email widely used for non-London Market business already • Brokers: extend use of email to your London Market business particularly for non-complex endorsements • Insurers: respond using email Page 19

21. Broker perspective • Reduces time spent on submitting non-complex endorsements to insurers for their agreement • Frees up valuable broker time to concentrate on our client needs • Provides more control, clearer accountability and transparency • Brokers are accustomed to using email for endorsements • Reduces hand-off between “Account Handlers” and “Market Brokers” • Simplifies task of preparing contract change documents for client • Faster endorsement agreement using parallel insurer agreement • Importantly, encourages confidence in electronic trading in the London Market Page 20

22. Insurer perspective • Reduced face-to-face consultation time for non-complex endorsements • Spend underwriting time with broker more productively • Reduced scanning volumes through receipt of electronic documentation • Easier transcription into insurer systems • Earlier visibility of endorsements for follower agreement parties • Use of email allows for quick adoption: • A format that is well understood and readily used • Minimal cost (including training cost) • Allows insurers to apply “triage” to incoming endorsements Page 21

23. Actions for brokers and insurers • Use email • Assign sponsor and primary contact • Measure • Make it happen Page 22

24. Questions and discussion Page 23