LMP Insurance Documentation

1
LMP Insurance Documentation Contract Certainty
Initial Implementations THIS DOCUMENT APPLIES TO
THE INITIAL IMPLEMENTATIONS OF THE CONTRACT
CERTAINTY PROPOSALS ONLY, AT THIS STAGE
January 2005
2

• 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 (Lloyds) Head of BPR
• Phillip Sexton (Hiscox)
• Peter Spires (Lloyds)

3

• Developed the process in detail (4 options)
• Contract certainty end-vision. Slip leader
  confirms policy (may use service provider).
  Broker/Slip Leader finalise policy.
• XIS technical check. Broker/Slip Leader finalise
  policy.
• XIS technical check (early) signing
• XIS technical check (after placing) signing
• Prepared an Implementation Guide
• Developed an Implementation Strategy Plans
• Gained Lloyds 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 Lloyds markets
• Engaged with broker group (DOC) to implement
  now engaging with companies LMA

4

• 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

5
DRAFT Documentation Process Overview.

• Process objectives
• Achieve contract certainty
• Evidence to the client
• Macro process steps
• Quote
• Firm order placement
• Provide closing information
• Technical regulatory policy check
• Finalise policy evidence to client

• 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

• Process inputs
• Risk information
• Client requirements
• Relevant wordings clauses

Start Client Requests Quotation
End Contract evidenced to client
6
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

7
DRAFT Documentation Options 1 2.
Options 1 Conducted by Slip Leader or service
provider. Option 2 Conducted by XLMS.
Options 1 2 Conducted by broker/slip leader

• Finalise Policy
• Confirm technical regulatory check performed
• Add jacket / attestation clause and security
  schedule
• Sign policy
• Prepare copies
• Issue evidence to client

Quote Request quote Draft policy Present agree
policy Quote Review quote(s) Confirm policy
Firm Order Placement Firm order Seek write
lines Placing complete Identify changes
Provide closing information Signing down Prepare
closings Submit / issue closings Submit
policy Check closings
Technical ( for Lloyds Regulatory) policy
check - if changes
Proceed to Finalise Policy if no change from
original draft policy
Technical ( for Lloyds Regulatory) policy check
Options 1 Conducted by Slip Leader or service
provider. Option 2 Conducted by XLMS.
8
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

9
DRAFT Documentation Options 3 4.
Option 4 Proceed to Firm order placement from
quote
Option 4 Conduct Technical Regulatory review
after signing down

• Finalise Policy
• Confirm technical regulatory check performed
• Add jacket / attestation clause and security
  schedule
• Sign policy
• Prepare copies
• Issue evidence to client

Quote Request quote Draft policy Present agree
policy Quote Review quote(s) Confirm policy
Firm Order Placement Firm order Seek write
lines Placing complete Identify changes
Provide closing information Signing down Prepare
closings Submit / issue closings Submit
policy Check closings
Technical ( for Lloyds Regulatory) policy check
Option 3 Proceed to Finalise Policy if no change
from original draft policy
Technical ( for Lloyds Regulatory) policy check
Option 3 Review draft policy prior to, or at,
Firm order placement
10
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
W
Wording Certainty (amber provisional) Firm
Order Contract Certainty (amber provisional) Date
Evidenced to Client
F
C
D
11
DRAFT Interim approach for Lloyds and Companies
pending Lloyds review of XLMS activities -
Option 3.
?
1.1 Request Quote
5.3 Receive Evidence
F
2.1 Firm Order
1.2 Draft, Present Agree Policy
1.4 Select Quote
1.5 Confirm Policy
Client
Policy
3.2 Prepare Closings
D
5.2 Issue Evidence
2.3 Placing Complete
3.1 Sign Down
3.3 Submit Closings
2.2 Request Write Line(s)
Placing Broker
?
?
3.4 Submit Policy
?
2.4 Identify Changes
FDO
SA
Stage 2
1.3 Quotes/Support Quotes
?
?
?
?
Slip Leader(s)
W
C
Following Underwriters
3.5 Check Closings
If changes applied
4.1 Technical ( Regulatory) Check
?
Bureau/Service Provider
W
5.1 Finalise Client Policy
XLMS
4.2 Technical ( Regulatory) Check
XLMS
W
Inception
Inception
TIME
C
12
DRAFT Interim approach for Lloyds and Companies
pending Lloyds review of XLMS activities -
Option 4.
?
1.1 Request Quote
5.3 Receive Evidence
F
2.1 Firm Order
1.2 Draft, Present Agree Policy
1.5 Confirm Policy
1.4 Select Quote
Client
Policy
3.2 Prepare Closings
D
5.2 Issue Evidence
2.3 Placing Complete
3.1 Sign Down
3.3 Submit Closings
2.2 Request Write Line(s)
Placing Broker
?
?
3.4 Submit Policy
?
2.4 Identify Changes
FDO
SA
Stage 2
1.3 Quotes/Support Quotes
?
Slip Leader(s)
W
C
Following Underwriters
3.5 Check Closings
If changes applied
?
Bureau/Service Provider
5.1 Finalise Client Policy
4.2 Technical ( Regulatory) Check
XLMS
W
Inception
Inception
TIME
C
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DRAFT Documentation Summary.
Key Differences

• 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

• Both options 3 4 can meet our objectives
• Contract Certainty by inception
• Evidence of Coverage by inception
• After the Lloyds Review
• Options 1 2 could offer potential for
  streamlining the process

14
Process Failures what can go wrong ?

• Significant risk factors
• Changes are applied during placing AND either
• It is not reflected in all documentation
• It is wrongly applied
• Insufficient agreement is gained
• 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

15
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 DO 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)

16
Implementation Timetable

• Publish implementation guide (options 34) Dec
  2004 CCSG
• Confirm participants Dec 2004 CCSG
• Initial implementations Q1Q2 2005 CCSG
• Initial performance monitoring Q1Q2 2005 LMSC
• Lloyds review of checking Q1-Q2
  2005 Lloyds/XIS
• Amend Lloyds underwriting reqts TBC Lloyds
• Review LMP Policy Guidelines Q1 2005 LMP
• Determine impact of Lloyds 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