Electronic Placing in the London Market Market Reform Briefing Rob Gillies Lloyd’s Market Association

What is electronic placing and what’s in scope Who’s doing what Experiences and lessons so far A look forward

“They always say that time changes things, but you actually have to change them yourself” Andy Warhol

“They always say that time changes things, but you actually have to change them yourself” Andy Warhol 2010?

Improved efficiency Reduced costs Exploit strategic business opportunities Why change? Global and market change Customer service demands Need for increased return on capital

Agents for Change The global marketplace Convergence of insurance and capital markets Growth of self-insurance High transaction costs Market process inefficiencies Restrictive practices (Dennis Mahoney – Acord Forum London, 2007)

What is electronic placing? Face to Face Complex Face to Face, Telephone, Electronic Moderate Electronic Simple Negotiation Data Exchange

Strategic Opportunities Increased Regulatory Compliance and Increased Market Transparency Reduced Costs Increased Operational Efficiency Electronic exchange of data and documents Selective use of face-to-face negotiation enables Benefit delivery Improved customer service + Increased return on capital Benefit delivery

Improved management information Earlier sight of data and documents Improved access to markets More productive use of time Electronic exchange of data and documents Selective use of face-to-face negotiation enables Brokers (examples)Insurers (examples) Benefit delivery Improving the broker-insurer relationship Resource: Electronic Placing Benefits Model Increased quality negotiating time Opportunity to grow business Increased attention to the customer

Who’s doing what? Lloyd’s Brokers 4 trading live 4 investigating and developing Insurance Companies 1 trading live 8 investigating and developing Managing Agents 7 trading live 22 investigating and developing 160 ‘markets’ reported to be trading with Aon via Ri3K Much increased general level of interest over 2007 Resource: Electronic Placing Landscape Analysis

Experiences and lessons so far Technological Barriers Upgrading internal core systems Conflict with other projects Conflict with other reform activity Integration with front and back office systems Development of functionality by suppliers Process Barriers Failure to deliver minimum levels of value required by organisations to participate Version control between paper and electronic slips and other documents Duplicate processes – EP and non-EP Slip signature and evidence of cover Predominance of Outlook as user interface and ‘workflow’ tool Differences between London and international processes

Other Barriers Absence of market critical mass Absence of key trading partners Absence of leadership (CEO) support and endorsement in firms Failure to recognise the benefits Reluctance to accept the benefits as a convincing business case Failure of firms to simplify the benefits message and relate to the firm Behavioural Barriers Fear of the impact on jobs, work routines, lifestyle, etc Workload Market reform and change burnout ECF and A&S seen as a priority (politically easy ‘back-office’ functions)

Other Barriers Absence of market critical mass (1) Absence of key trading partners (2) Benefits not yet fully recognised (3) Lack of leadership (CEO) support and endorsement in firms (5) Reluctance to accept the benefits as a convincing business case Failure of firms to simplify the benefits message and relate to the firm Behavioural Barriers Fear of the impact on jobs, work routines, lifestyle, etc (4) Workload Market reform and change burnout ECF and A&S seen as a priority (politically easy ‘back-office’ functions) Top Five Barriers to Adoption

Look forward Development Enhancement of the data message Value of the data Compatibility with accounting and settlement processes Market Engagement Brokers Carriers Suppliers Vision, Objectives and Roadmap Developing a common picture of the end game Knowing whether we’re getting there; metrics Target driven adoption?

2010? Electronic Placing Accounting and Settlement Electronic Lifecycle of the Risk Claims adjustment and settlement Evidence of Cover Risk Renewal Contract Amendments

Rob Gillies Head of Market Processes Lloyd’s Market Association Resources: