The Lloyd’s Risk Blog » Carl Phillips

Future Processing in the London Market

Posted by Carl Phillips on Wednesday, January 27th, 2010 at 11:36 am

You may remember that back in November of last year, I blogged about the Future of Central Services processing work that Market Operations had presented to the London Market Group. Since then, the LMG have appointed Tim Carroll, Underwriting Director at Canopius, as the Project Sponsor to provide direction and report to them on the project’s progress. Tim comes with a wealth of experience in both the Companies and Lloyd’s markets, so is ideally suited to spearhead a cross-market initiative.

To quickly recap, the Future of Central Services project will define an optimum processing model for the London market beyond the “Finish What We’ve Started” workstreams. Throughout 2010, various working groups will design and review new ways of processing business that uses modern technology and data standards (ACORD). One of the key goals of the project; to provide insurers with choice in the central services that they utilise, will be at the front of everybody’s minds when designing these processes. The project team will be liaising significantly with the market to seek insurers’ views on whether the provision of services should be lightweight or heavyweight; in other words: to what extent should market infrastructure (e.g. document repositories) and business services (e.g. policy checking) be provided ‘on a one size fits all’ basis? Heavier provision of central services obviously runs contrary to enabling a choice of services and of service providers; therefore we expect the project to strike a balance between maintaining the economies of scale and efficiencies that we currently enjoy for subscription risks and enabling insurers to perform some processing in-house or with a third-party outsourcer. Additionally, we would be keen to hear the extent to which insurers would like to invest in internal infrastructure.

If you would like to share your views on this particular topic, please do not hesitate to contact me. Alternatively, please contact the Project Manager, Simon.Collins@lloyds.com.

I will be updating my blogs with the progress of this project, and the others that Market Operations are involved with, throughout the year, so please check back regularly to be kept informed.

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2009: bumper year for Market modernisation

Posted by Carl Phillips on Tuesday, December 22nd, 2009 at 9:48 am

As we approach the end of 2009 it seems an ideal time to reflect on the year – and what a bumper year we as a market have had! It has certainly been challenging and one that has been packed full of major developments helping to modernise the market, so let me begin….

The Lloyd’s Exchange

We have delivered the Lloyd’s Exchange which is essentially a messaging hub - it supports the face to face process of doing business in the room with information and documents being exchanged electronically using ACORD standards.

By the end of the year we expect over 50 organisations to have connected and we are currently working with the LMA to promote the completion of endorsements via the Lloyd’s Exchange – this is primarily being driven by the market with significant involvement from Aon, Marsh and Willis in addition to Beazley, Brit and Catlin amongst others.

-What’s in store for 2010? Initially we are focusing on exchanging placement messages; however the Exchange has the potential to support the complete end to end business process electronically. As such, we will explore with the Market how other message types could benefit from being passed over the Exchange. The technology has been proven and now the emphasis is on helping the Market realise the benefits of exchanging information electronically.

Lloyd’s Information Project

Part of this project aims to offer choice in how information is provided to Lloyd’s and I’m pleased to say that we have successfully delivered a solution that will allow a pilot group of Managing Agents to report their Service Company business directly.

Work has also been carried out behind the scenes to ensure standardisation in the information that we store and use for tax and regulatory reporting purposes, to prevent, on an ongoing basis, any duplication or inconsistency in the data captured. This will also facilitate the reduction in the number of reports needing to be produced and in time, reduce the reporting burden.

The Future of Central Services
We are working with the market to define a future model for the provision of central services, which reduces risk & costs, or increases processing efficiencies. We have been working closely with the London Market Group (LMG) & a cross market group which is made up of Managing Agents, IUA companies, brokers, IUA, LMA & LIIBA. They have reviewed the proposed model and agreed the next steps, which are to conduct detailed design work to support the Future London Market Process Model which we will complete throughout 2010 through the Future Processes Steering Group.

ACORD Standards

The progress in the market uptake of ACORD standards in 2009 has been encouraging. One of the highlights is the agreement on implementing one version of the standard for placing (2009.1) for the first time without customisations to suit individual’s processing needs.

Development of e-Accounting is well underway too – with some brokers hoping to send premium information to the bureau using ACORD accounting messages early in 2010.

There is more to look forward to in 2010. One of the ECF2’s (Electronic Claims File) project’s remits is to agree how the ACORD claims standard is to be used for the advice and management of multi-party claims using ACORD messages. For placing, apart from meeting the 2009.1 implementation deadline in February, the New Year will also be kick-starting with applying the standard in the Endorsement Pilot (via the Lloyd’s Exchange). We really are moving to an electronic world and a more efficient market place – let’s keep up the momentum!

London Market Group (LMG) (formerly Market Reform Group)
The change of name and extension of remit for this group is truly significant; it is a reflection that the market has been reformed through the implementation of Contract Certainty, ECF, A&S and Electronic Policies and now it is about wider collaboration and continuously improving the market through modernisation. This will ensure that London remains at the forefront of the global insurance industry, enhancing the competitiveness of the London market.

So, to everyone out there in the London market please pause for a moment to reflect on these achievements – congratulations are truly deserved for the progress that we have made together – this really is a time to celebrate! Particular thanks to the 100 or so individuals from over 30 firms that have been instrumental in delivering these achievements.
This is my last blog of 2009 but I look forward to blogging again soon in 2010 – if you would like further information on any of these subjects or would like to suggest a future topic for me to blog about please do get in touch. In the mean time, may I take this opportunity to wish Season’s Greetings to you all.

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Tags: Lloyd's Exchange, Market processes

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We’re getting the message

Posted by Carl Phillips on Monday, December 14th, 2009 at 2:17 pm

It’s hard to believe that this time last year we were still in the midst of a tender process to find a vendor for the Lloyd’s Exchange. Since then, we’ve achieved a lot. Having picked IBM in early 2009, the Exchange is now up and running with over 40 organisations connected. We are on target to connect 80% of Managing Agents (by capacity) and over 60% of the top 30 brokers (by premium) by April 2010. Thanks to the pilot participants, and a number of IT suppliers in the Market, we have the ‘tick in the box’ in terms of technology and the concept of electronic messaging has been proven. Pretty good going, but we’re not finished yet.

Gaining momentum

Over the last few weeks we’ve really gained momentum.

It was great to see that we were the talk of the Insurance Day Technology forum. There was a real buzz around the Exchange and the potential it has not just for placing and endorsements but across the whole risk lifecycle (we are exploring how other message types such as Accounting & Settlement and Claims could benefit from being passed over the Exchange next year). The range of connection options available now is also very encouraging; there really is something to cater for everyone – electronic messaging is firmly on the modernisation roadmap.

You may have seen the recent press release announcing that Aon, Marsh and Willis will pilot the Exchange for endorsements using version 2009.1 of the ACORD standard. The endorsements pilot, supported by the LMG and the associations, is due to start in 2010 and will essentially require all brokers and underwriters taking part to submit endorsements electronically. So far, the response to this has been overwhelmingly positive and this marks a real step forward in terms of kick starting the wider adoption and use of electronic messaging to support the face to face negotiation process. With the technology proven we now need to switch from ‘pilot mode’ to production volumes and I think the commitment we achieve around this pilot will be key a key enabler in delivering this.

On to 2010

So we have the capability to exchange data electronically. The challenge for 2010 will be to embed electronic messaging as business as usual. But this will be no easy job – breaking traditions that have become integral to the market for over 300 years is certainly a challenge. In conjunction with the LMG we will be setting some ambitious targets, but I’m confident that with the current level of interest and support in the Market, particularly around the endorsement pilot, we are on track to achieve this.

And if you aren’t connected yet – don’t get left behind.

Lloyd’s Exchange – Get the message

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Tags: electronic messaging, Lloyd's Exchange

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Operations – Completing the missing link

Posted by Carl Phillips on Friday, November 27th, 2009 at 4:15 pm

Feedback from brokers, managing agents and insured’s is consistent at praising Lloyd’s for its capital advantages, security and ratings, performance management expertise and market access. But one area of regular criticism is its operating environment. Market modernisation seeks to address this anomaly.

Earlier this year the Market Reform Group, now called the Market Group (see my previous blog), approved the Finish What We Started (FWWS) initiative.

The FWWS work includes projects such as ECF 2 release 1 (Electronic Claims File), IMR (Insurer’s Market Repository) Security Model Upgrade and E-accounting all of which will bring significant process benefits to the market. Whilst a huge step forward operationally, the lifespan of FWWS is only considered to be 5 years beyond its completion date.

In order to maintain the momentum for market modernisation, the London Market Group has been considering how to advance things further. Their goal was to consider how business should be serviced to preserve the advantages of the London market, and in particular of subscription, in a world where more and more information will be exchanged via structured data messages.

Coincidently Lloyd’s Market Operations had already been working on this very point through the Future of Central Services project.

The LMG examined a number of operational models and selected the one that met the following criteria:

Supports choice in terms of service provision
Removes negative Londonisms
Removes process burdens from brokers
Uses full ACORD messages to provide richer information throughout the risk lifecycle. This enables risk information to be re-used throughout the end to end business process, with business validation at the point of creation.

The LMG commissioned a cross market group to review the proposed model, with a view to recommending whether further detailed analysis should continue. The group was made up of representatives and practitioners from Managing Agents, IUA companies, brokers, IUA, LMA and LIIBA and was facilitated by Lloyd’s Market Operations.

The group met regularly to review the proposals and recommended that a project be initiated to progress detailed design work.

The LMG agreed and as result most of 2010 will be spent analysing lower level detail to produce the detailed designs that support the Future London Market Process Model. The chosen model and its designs will be published at the end of 2010 by the cross-market group.

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What’s the significance of a name?

Posted by Carl Phillips on Thursday, October 29th, 2009 at 9:48 am

It was recently announced that the London Market Group (LMG) has succeeded the Market Reform Group, is this just another renaming exercise or something more significant?

The change of name and extension of remit is truly significant; it is a reflection that the market has been reformed through the implementation of Contract Certainty, ECF, A&S and Electronic Policies and now it is about wider collaboration and continuously improving the market through modernisation.

As fundamental reform draws to a close and we move through to modernisation the LMG can address wider subjects that affect our market building the appropriate consensus around any issue that affects the competitiveness of our market. This will ensure that London remains at the forefront of the global insurance industry, enhancing the competitiveness of the London market. And maintaining London’s recently enhanced position in the global marketplace with the confidence to address future challenges as they arise.

Tags: Market processes

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ACORD 2009.1 – Placing: standardise to this version please

Posted by Carl Phillips on Friday, October 16th, 2009 at 1:49 pm

ACORD standards develop over time by taking account of members’ feedback, based on their experience of implementing the standard’s specifications.
ACORD may publish up to two new releases of their existing standards a year, depending on members’ demand.
However, there has been latency—especially by early adopters—in moving on to a newer version of the standard. Up to this point, most are operating on hybrids of an ACORD Placing standard published in 2005. The market’s inherent multi-trading relationships mean that updating an existing implementation without a coordinated approach can be a resource intensive activity, with little perceived benefits for individuals.
Market participants have put in a huge effort working with ACORD in specifying the 2009.1 version of the Placing standard, especially in aligning London market specialities with international practices. The decision to standardise on this version signifies:

The market’s recognition of synergy—in order to reap the maximum benefits, we must work together and move in sync
The market’s commitment in taking full advantage of the standard’s evolution through physical implementation, not stopping short at agreeing the specifications on paper only

This latest 2009 version of the standard focuses on complex business scenarios including:

Multi section risks
Declarations
Subjectivities
Management of endorsements
Capturing a richer set of structured information

The market has agreed to implement the ACORD 2009.1 structure for Placing on 19 February 2010 and to incorporate incrementally the above business capabilities throughout 2010.
Along with this decision, the market would deter operations on any other versions of the Placing standard. This means current implementers would need to complete their own preparations for upgrade by the market agreed deadlines, or risk missing out on their business.
The Lloyd’s Exchange will have the 2009.1 structure in place by Q4 2009. This means current and future participants on the Exchange can have a head start on the upgrade to the 2009.1 standard should they choose to.

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‘Data, but not as we know it…’

Posted by Carl Phillips on Thursday, October 1st, 2009 at 2:46 pm

You’ll notice ACORD is a recurring theme in my blogs and this is not just a coincidence. We are moving to an electronic world and the ACORD standard, which supports the use of structured data, is at the heart of this.

Structured data, so what?

Well the ’so what’ is actually quite big and while ACORD standards may seem rather unexciting, and to some may even seem intangible – the benefits of using structured data are many.

Think:

Validation of data before submission – recipients receive accurate and reliable data directly into their back office systems, no more re-keying!
Support for regulatory compliance – better quality and more accurate data is available faster and more securely (great for complying Solvency II, data protection and transparency rules)
Better management information available = better business decisions
The data becomes international and portable – businesses can easily hook into lower value but profitable global business
Exchange of information quietly running in the background leaving brokers and underwriters to focus on trading

And whilst in some individual cases it is difficult to define ‘how much bang for your buck’ it is important to realise what these changes are really about – and that’s modernising the Market.

The standards are already being implemented to support key business processes in the Market, I’ve highlighted some examples below:

Technical /financial accounts messages are being used in the eAccounting project. And these message types have been enhanced to support both bureau and non-bureau transactions
Placements and endorsements are supported. The 2009.1 standard, which will support multisection risks and declarations, is likely to be implemented within the next 6 months and tools such as the Lloyd’s Exchange will validate against this standard. First steps on the way to ensure single interpretation and use across the Market.
The ACORD standard for document repository interoperability (DRI) allows brokers and insurers to exchange documents, already in use for the Accounting and Settlement repository and the Electronic Claims File

And the technology is there to support this change – the Market have already laid the foundations with the Electronic Claims File, Accounting and Settlement and now the Lloyd’s Exchange – demonstrating the commitment there is to using technology to fulfil the vision of an efficient, modern market place.

The decision by underwriters and brokers to start this modernisation journey with the Electronic Claims File was bold, a step into the unknown. But here we are, five years on, the benefits of that decision are now real with quarter by quarter reduction in claims settlement time probably now halving the average time for claims handled on paper.

Any dilemma around an electronic world is less about the technology, the standards to support this, or even the pounds and pence business case (remember this is about modernisation) and more about the cultural change this brings.

A way to save time in keeping up to date

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A change is underway

Posted by Carl Phillips on Wednesday, August 19th, 2009 at 3:18 pm

Whether or not there should be a standardised risk bordereau has been much discussed over the years.

Risk bordereaux are reports listing all the risks that have been written in a given time period, usually a month, which the coverholder creates to keep the managing agents and brokers up to date with the business they have written.

Coverholders were keen on having a standard way of reporting risks they’d written. Managing agents and brokers were keen on getting standard data in a standard format so that they could more easily manage risks and wouldn’t need to spend so much time cleaning and reformatting data.

Late last year, the ACORD standard ER3001 was created. This is the ACORD Exposure Reporting Binder Standard.

The first application is to US coverholders reporting property risks. The format’s an Excel spreadsheet template, which is easy to create.

And as this standard isn’t peculiar to Lloyd’s—it’s an ACORD standard—people can use it when they’re doing business in the Lloyd’s market or outside it.

The standard was designed by Lloyd’s managing agents and brokers with support from Lloyd’s and ACORD so it’ll include the kind of information that people actually need.

But creating a standard template was only the first step. The focus now is on applying the standard.

The good news is that the standard has already been included in some binder contracts and it’s expected that the next renewal season will see it more commonly used.

Some submissions have already been received in the format. As system vendors start to implement standard functionality it will become easier for more and more data to be produced in the standard format.

AIR has just announced the implementation of an import facility for data in the standard format. That means data can now be imported into their catastrophe modelling tools (which is the end point for much data).

So, if your business has anything to do with US Property it’s probably time you took action too.

Go to www.lloyds.com/acord for more information

A way to save time in keeping up to date
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Tags: ACORD, Bordereau, Standardisation

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Lloyd’s Exchange sends first message

Posted by Carl Phillips on Friday, August 14th, 2009 at 10:24 am

Little more than five months after signing the contract to create the Lloyd’s Exchange the market sent its first live placement message over the Lloyd’s Exchange on Tuesday. The message was sent by Miller to Aspen Re.

The significance of this event is that it validates the statements made about the Exchange and satisfies the market’s expectations that it is:

• Simple technology
• Quick to install
• Easy to use
• Follows the small steps approach
• Proves the value of a messaging hub

When the market is ready the Exchange will validate the messages to the ACORD 2009-1 placement standard. This is the version that the market has decided to standardise on (more on this topic in an upcoming post).

The challenge now (as a comment to a previous post pointed out) is to involve the ‘grassroots’— the guys with the slip cases and the guys with the rubber stamps. That’s now viewed as a priority for the market associations.

A way to save time in keeping up to date
I’m sure you all like to keep up to date with the latest blogs and news on lloyds.com but do you find it takes a long time to find the relevant website or page, or you’ve missed something as it has moved off the front page before you got to it? Have you thought about using an RSS feed? Once setup you will be able to have all the websites and pages you are interested in one place and at a click of a button. The websites and pages are then automatically updated with the latest information without you doing a thing! Never miss an important event again!

RSS stands for Really Simple Syndication and it’s really easy to setup.

Click the link below to find out more about what an RSS link is, how it works and how to set one up.