Market Reform Group With Electronic Market Reform Contract Endorsements Market Briefing 14 th & 18 th March 2008

Market Reform Page 1 Agenda Introduction MRCE – The new document standard for endorsements e-MRCE – Submission and agreement of endorsements electronically e-MRCE – Broker perspective e-MRCE – Insurer perspective Questions and discussion Andy Brookes, MRO John Muir/Stuart Dean, Willis Trevor Maddison, Marsh Ian Fantozzi, Beazley

Market Reform Page 2 MRCE & e-MRCE John Muir, Willis Market wide project sponsor

Market Reform Page 3 MRCE – The new document standard for endorsements Previously no explicit standard and no guidance Benefits –Supports Contract Certainty –Enables contract change documentation to client promptly –Reduces the effort required to handle contract endorsements –Document format consistent with original contract (MRC) –Mapped to ACORD standard – paves the way for structured electronic messaging –Unambiguous Settlement Due Date

Market Reform Page 4 Reforming endorsements: a big prize Approx ½ million endorsements p.a. High admin cost relative to low value that clients attach to non- complex endorsement Faster agreement process Save broker queuing and underwriter consultation time Frees brokers and underwriters for more productive use of time Agreed endorsement forms basis of contract change sent to client –Improved contract certainty –Saves broker rework –Documentation to client quicker Bridgehead into electronic trading

Market Reform Page 5 MRCE & e-MRCE Detail Stuart Dean, Willis Market Wide Project Manager

Market Reform Page 6 Endorsements – Past + HoneycombCover Note Addendum

Market Reform Page 7 Endorsements – Present: The MRCE Future starts now: End March deadline

Market Reform Page 8 Endorsements – Present: The MRCE Risk Identification and Endorsement Details section (Additional details may be included) Contract Change(s) Section using MRC format and headings

Market Reform Page 9 Endorsements – Present: The MRCE Settlement Due Date default Agreement Boxes (sig, date and name) Contract Administration and Advisory Section Agreement Section (Non-GUA Example)

Market Reform Page 10 MRCE Summary Logical extension to MRC – consistent format, basis of client documentation In line with Contract Certainty – speeds up contract change documentation to client Reduces the effort required to handle contract endorsements London Market standard from end of March 2008 (for new endorsements) Honeycomb + Cover Note Addendum MRCE

Market Reform Page 11 + HoneycombCover Note Addendum Endorsements – Past

Market Reform Page 12 e-MRCE – Submission and agreement of endorsements electronically What is it? How does it work? Broker perspective – Trevor Maddison, Marsh Insurer perspective – Ian Fantozzi, Beazley

Market Reform Page 13 What is e-MRCE? or other forms of electronic processing London based brokers are currently using to agree endorsements for business outside the London Market … do this for London Market business as well! The process: –Broker assesses the suitability of endorsement for –Basic agreement process then as per existing practice Simple template

Market Reform Page 14 Simple steps using BrokerSlip Leader Agreement Parties Notification Parties Request agreement + GUA category Response + GUA category Request agreement Response Notify

Market Reform Page 15 Broker requests Slip Leader agreement GUA category request Settlement Due Date request MRCE attached to References: - Subject line - Insurer reference Response request

Market Reform Page 16 Slip Leader agrees MRCE – within the reply Agreement response GUA category details Settlement Due Date details

Market Reform Page 17 Slip Leader agrees MRCE – within attachment to Response within a scanned and attached copy of agreed MRCE

Market Reform Page 18 Broker requests Agreement Party agreement Response request MRCE attached to Slip leader evidence of agreement attached to Agree

Market Reform Page 19 Broker notifies Notification Parties MRCE attached to Notify

Market Reform Page 20 e-MRCE summary: focus is Keep it simple – is sufficient – new technology is not a pre-requisite –Use structured data messaging when you have it –Certainly non-complex, but dont be afraid to go further Just do it – widely used for non-London Market business already –Brokers: extend use of to your London Market business particularly for non-complex endorsements –Insurers: respond using

Market Reform Page 21 Broker perspective Trevor Maddison, Marsh

Market Reform Page 22 Broker perspective Reduces time spent on submitting non-complex endorsements to insurers for their agreement Frees up valuable broker time to concentrate on our client needs Provides more control, clearer accountability and transparency Brokers are accustomed to using for endorsements Reduces hand-off between Account Handlers and Market Brokers Simplifies task of preparing contract change documents for client Faster endorsement agreement using parallel insurer agreement Importantly, encourages confidence in electronic trading in the London Market

Market Reform Page 23 Some Marsh facts We changed our internal document template for MRCE overnight Commenced use of new endorsement format in Dec 2007 We will commence eMRCE from April 1st 60,000 endorsements traded per year, approx 5 per risk Marsh involved in the eMRCE endorsement pilot –2,000 endorsements traded successfully with major markets

Market Reform Page 24 Insurer perspective Ian Fantozzi, Beazley

Market Reform Page 25 Insurer perspective Reduced face-to-face consultation time for non-complex endorsements Spend underwriting time with broker more productively Reduced scanning volumes through receipt of electronic documentation Easier transcription into insurer systems Earlier visibility of endorsements for follower agreement parties Use of allows for quick adoption: –A format that is well understood and readily used –Minimal cost (including training cost) Allows insurers to apply triage to incoming endorsements

Market Reform Page 26 Actions for brokers and insurers Use Assign sponsor and primary contact Measure Make it happen

Market Reform Page 27 Questions and discussion

Market Reform Page 28 Panel discussion John Muir, Willis (Project Sponsor) Jane Warren, ACE Global Markets Trevor Maddison, Marsh Ian Fantozzi, Beazley