Control Framework Breakfast Group agenda 9:00Arrival, Breakfast & networking 9:20 Welcome and The “gold star awards”- Ali Dove 9:25Delegated authorities update- Sarah Thacker 9:45Phase II: risk assessment, data flow - Jaana rouvari and next steps to launch 10:05Broker engagement - John Hibbert 10:15Q & A - All 10:30Close

Lloyd’s market gold star awards… MONTPELIER MARKEL NEWLINE SPORTSCOVER TRAVELERS LIBERTY ALTERRA ASCOT Control Framework BRIT

© Lloyd’s Should Lloyd’s Mandate the CH reporting standards? Sarah Thacker, Lloyd’s Delegated Authorities 21 May 2013

© Lloyd’s The consultation ► Representatives from DUC, BACG, BOLT, DUM, Lloyd’s country managers and Xchanging were consulted ► Stakeholders were told that there had been a request to mandate the reporting standards in a response to the proposed roll-out of the control framework to coverholders ► Stakeholders were asked if they thought the reporting standards should be mandated on coverholders because of the control framework ► They were also asked for general comments around mandating the reporting standards on coverholders 4

© Lloyd’s Issues with mandating, London ► Changes only typically take place annually at renewal ► Underwriters are largely not aware of the standards, their usefulness and importance ► Many London stakeholders still do not have systems to put this data into 5

© Lloyd’s Issues with mandating, coverholders ► Domestic carriers typically collect this sort of data as a bi-product of processes, this is asking for something extra ► Customised versions of off-the-shelf systems mean charges for implementing standards ► Over time, as coverholders change systems so these issues are likely to be reduced ► Retail agents at the start of the chain need to collect the data ► Coverholders want to be asked for the same thing by all syndicates; but this is not what was proposed 6

© Lloyd’s The reporting standards and the DATA control framework 1. Information Requirements The reporting standards ≠ the data items in the control framework Control framework is what to capture and the controls, reporting standards is what to send into London The red fields in the standards are not all in the control framework The control framework includes Lloyd’s data which a coverholder would not know Examples – risk codes, year of account The control framework includes data which London already knows Examples – Currency if always $; state if always Florida, Contract Type 7

© Lloyd’s The reporting standards and the DATA control framework 2. Risk modelWill mandating help? Risk 1 – requirements are not understood The reporting standards ≠ control framework so may confuse Risk 2 – data capture is inadequateWould help to explain, but see above may confuse and would not give the full picture Risk 3 – data is processed incorrectlyNo Risk 4 – data is corruptNo Risk 5 – data is lost and cannot be recovered No 8

© Lloyd’s The reporting standards and the control framework Control Framework continued SummaryWill mandating help? 3. Apply risk modelEach data item to be risk assessed and prioritised No 4. Identify and document key controls Identify and document the controls mitigating the risks Might be an example of a control… 5. Gather evidenceGather evidence of controlsNo 6. Provide assuranceThis is about assuring Lloyd’s that controls are in place No 9

© Lloyd’s Lloyd’s should not mandate the coverholder reporting standards at this time ► Limited understanding of standards amongst London stakeholders, and insufficient current take-up for this to be accepted in London ► Costs for coverholders seen as prohibitive ► Information to be mandated is unclear – reporting standards ≠ data control framework ► Will not deliver the requirements of the Data Control Framework 10

© Lloyd’s What next? ► The proposal to mandate the reporting standards on coverholders has been rejected. ► But ► There are still other activities separate to the Control Framework project which can be pursued. 11

© Lloyd’s Audit Scope review ► Market project with reps from DUC, DUM, BACG, BOLT and Lloyd’s:- Charles Rowley, Steve Hart, Patricia Beaton, Dan Lott, Ian Whitehead and Sarah Thacker ► Scope is currently being reviewed ► Plan for draft in summer and final version in autumn ► This will be followed by training/education for auditors 12

© Lloyd’s Audit Scope Review Initial recommendation for questions RE control Framework ► How do you determine where the risk is located for entry onto your system? ► How would you risk locate for a policyholder in your country insuring a property in another country? ► How would you determine the location of risk for a policy holder outside your country but insuring property in your country? ► How do you determine what is the tax liability for the insured or insurer? ► Does this entry drive the bordereaux or is this entered manually onto a spreadsheet? ► Are you aware and use Crystal/Risk locator Tool? ► Note, these are draft only…… 13

© Lloyd’s Data and technology ► BAU work with market promoting and educating on data and reporting standards ► Reporting standards are mandatory for new coverholders ► Brokers to be encouraged to provide all data to leads and followers via IMR or similar in a spread-sheet or other useable format ► Conversations with Xchanging around how they can help ► Working with market stakeholders to promote use of technology, automation and XML 14

© Lloyd’s Education ► Application process could be amended, for example, coverholders could be asked to complete Crystal Assist ► Coverholder Toolkit includes information about data and reporting which can be enhanced when next updated ► Information can be put in Delegated Authorities Area on Lloyd’s web pages ► Promote use of Crystal and Risk Locator Tool at coverholder events 15

Control Framework phase ii Update  Coverholder risk assessment  Data flow and controls  Next steps to launch  Future meetings

Control Framework Coverholder risk assessment Complexity of business written Nature of operations Binding Authority- Single or multiple territories Principal Regional Complexity Lines of BusinessPremium written Coverholder Resources and information provided Historic Issues Use of Lloyd’s Tools Use of Lloyd’s coverholder reporting standards

Control Framework Dataflow and controls Coverholder TPA Broker XIS XCS Lloyd’s Managing agent Data is captured/ manipulated/ held Premium Claims A/S ECF Premium Claims PremiumClaims Information Lloyd’s Coverholder reporting standards Lloyd’s Control Framework ‘Green Book’ Control Framework Purpose: To ensure required information is provided for premium and claims processing purposes Purpose: To ensure tax and regulatory information at source meets the minimum requirements and is of good quality

Control Framework Next steps to launch of phase ii

Control Framework Next steps to launch of phase ii Finalise Lloyd’s tool kit:  Phase II road map  Coverholder risk assessment guidance notes  Data items spreadsheet adapted for phase II  Broker/ coverholder leaflet  Control Framework Standard presentation for phase II  ‘Board’ sign-off wording  Phase II FAQs  Guidance on what good looks like Look for lloyds.com/controlframework in July

Control Framework Next step to launch of phase ii  Your contacts for phase II  Scheduled meetings for phase II  Initial meetings within the first 3 months  Follow up meetings on request  Regular status reports from managing agents  The LAUNCH event

Control Framework Future meetings From July..  Project update  Delegated Authorities update  Broker engagement update  Managing agent/ broker/ other presentation

Control Framework Update on broker engagement John Hibbert

Control Framework Progress so far  LIIBA endorsement of project framework  Individual broker meetings undertaken Millers Towers Watson Willis Cooper Gay Crispin Speers Integro Decus THB Bell and Clements

Control Framework Next steps  Establish broker working group LIIBA and BIBA members  Present to BOLT meeting 2 nd July  Communicate to the wider broking community through Phase II Launch in July  Individual Managing Agent/broker meetings