The Lloyd's Risk Blog » Market Operations

Another Step Closer…

Carl Phillips — Wed, 17 Mar 2010 10:30:33 +0000

I spoke back in November 2009 on the ‘Finish What We’ve Started’ (FWWS) initiatives which aim to complete the work started with the development of the ECF and A&S systems and processes. You may recall the initiatives comprise a new version of ECF (ECF2) with improved usability and functionality, a new method for processing accounting transactions via ACORD messages (eAccounts) and, last but by no means least, a new IMR Security Model which improves the access rights that users have to documents held within the Insurer’s Market Repository.

The market has taken another step forward in market modernisation with the successful implementation of the IMR Security Model in December 2009 (with further enhancements to come at the end of March). As a result the market is already starting to see the benefits of these enhancements.

The Security Model enhancements have allowed certain types of claims and associated expert fees to come into the scope of the ECF and A&S systems and equally importantly have stopped the need for certain types of claims to have to revert back to paper processing. For example, contracts that had been processed electronically but then were subject to Mid Term Broker Changes or Mid Term Carrier Changes, may have had to revert back to paper to preserve the appropriate access rights to the documents for those contracts. However, the enhancements of the Access Control Lists that sit behind each document now allow these types of claims to continue to be handled electronically.

Improvements to the way that documents relating to confidential terms, or to claims that may be subject to conflicts of interest, has meant that brokers and carriers handling certain types of business (for example, aviation) have increased confidence that the IMR is the appropriate way for them to service the business. We have started to see the resultant increase in the volumes handled electronically.

Finally, the IMR Security Model enhancements have, for the first time, provided the ability for Third Parties to access the system. Experts such as lawyers and adjusters can now view documents, subject to permission, and fee collectors can now process fee bills that are linked to the claims they relate to.

The net result of all of this is that more types of claims can now be handled more effectively and efficiently which can only be good news for the London Market and our customers. I’ll keep you posted on the further developments of the FWWS programme.

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All systems go…

Carl Phillips — Wed, 17 Feb 2010 09:11:39 +0000

A lot can happen in a month and the Endorsements Initiative is certainly testament to this. To date the initiative has received an overwhelmingly positive response and as a result received unanimous sign off by the Endorsements Management Group to move to ‘live’ status.

Broker involvement was spearheaded by Aon, Marsh and Willis and the LMA and IUA sought a mirror commitment from the insurer community. To date we have ’signed up’:
• 48 managing agents which represents 100% of the relevant Lloyd’s market
• 18 IUA members, together accounting for 61% of the premium endorsements on business processed through the bureau by IUA member companies
• 10 major brokers representing some 53% of the total business placed in Lloyd’s.

So what’s it all about?

The ultimate aim of this initiative is for all endorsements in the London Market, irrespective of complexity, to be submitted and agreed electronically using electronic messaging – specifically via ACORD XML. This will initially focus on direct Marine Cargo and Hull classes of business – but to ensure we get maximum participation, a limited number of other classes will be included where there is a sufficient level of interest.
Not only will this help prove that electronic processes can by used effectively, it will enable the front line brokers and underwriters to get real experience of the benefits offered by the use of electronic messaging to support the process.
Support is an important word when talking about electronic messaging and it really is important to emphasise that while the submission and agreement must be done electronically, face to face negotiation between broker and underwriter is not precluded. This is true across the placement process.
This initiative really is important in kick-starting the wider adoption and use of electronic messaging, particularly from a practitioner perspective. It is encouraging to see the level of interest around the London Market, now we just need to ensure that we are both technically and operationally ready for the 01 June. A tall order? Not at this rate…
More information on the endorsements initiative can be found on the LMA website.
And the newly relaunched Exchange site.

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Future Processing in the London Market

Carl Phillips — Wed, 27 Jan 2010 11:36:07 +0000

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

Carl Phillips — Tue, 22 Dec 2009 09:48:41 +0000

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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We’re getting the message

Carl Phillips — Mon, 14 Dec 2009 14:17:30 +0000

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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Operations – Completing the missing link

Carl Phillips — Fri, 27 Nov 2009 16:15:20 +0000

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.

What’s the significance of a name?

Carl Phillips — Thu, 29 Oct 2009 09:48:25 +0000

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.

ACORD 2009.1 – Placing: standardise to this version please

Carl Phillips — Fri, 16 Oct 2009 13:49:05 +0000

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.

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, 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:

http://www.lloyds.com/News_Centre/RSS_feeds.htm

‘Data, but not as we know it…’

Carl Phillips — Thu, 01 Oct 2009 14:46:05 +0000

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

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.

http://www.lloyds.com/News_Centre/RSS_feeds.htm

Monte Carlo – are the tables turning in reinsurers’ favour?

Garry Booth — Thu, 03 Sep 2009 10:51:00 +0000

It’s only right that the world’s ultimate risk takers should have their annual convention in a place famed for its casino–Monte Carlo.

Each year at the beginning of September the industry’s decision makers fill the hotel lobbies of the tiny principality to start their contract renewal discussions.

They’ve been doing it for over 50 years—and every year seems to deal a new hand with a different wild card: a run of costly nat cats, terrorism, tighter regulation or a sapping financial crisis.

What will it be this year? With a relatively calm hurricane season so far and financial markets stabilising, could it be that lady luck is smiling on reinsurers?

New numbers just out bode well. The Guy Carpenter Global Reinsurance Composite, which tracks earnings, posted an aggregate increase of US$4.6bn for the first six months of 2009, compared to an aggregate loss of US$3.5bn for the same period last year.

Unrealised and realised investment losses fell by 87% and 43% respectively year on year. Underwriting earnings for the composite rose by 9.6%, compared to last year, reaching US$2.2bn, with combined ratios dipping from 85.6 to 84.9.

This combination of recovering asset values and positive earnings helped restore balance sheets too: aggregate shareholders equity for the Guy Carp composite climbed by 8.2% during the first half of 2009.

What does all this mean for premium rates? The big picture, according to brokers, is for the rating environment to be relatively unchanged from the July 1 renewals: in other words ‘holding firm’.

But a lot can happen between now and the January 1 call for reinsurers to ‘faites vos jeux’.

Related links:

RVS—Les Rendezvous de Septembre