Market Reform Forum Andy Brookes, MRPO Steven Haasz, Lloyds Mike Smith, Hugh Maltby, Brit 22 February 2007

Market Reform Page 1 Market Reform Update – game of 3 halves Andy Brookes –Context – Vision, 2007 plans and objectives –Recent progress – headline projects –Recent progress – all other work Steven Haasz - Lloyds reform work Mike Smith, Hugh Maltby - Brit reform progress Headlines: –Get on with it: A&S ramping up; ECF likewise; legacy ditto –Publications: Past month - FSA CC verdict; slip guidance; Lloyds QA tool and slip audit –Forthcoming: legacy stats; recut of CC principles and guidance

Market Reform Page Market Reform Work Plan

Market Reform Page initiatives: Sponsorship Summary ProjectSponsorProject ManagerTimescale PLACING Embed Contract Certainty as business as usual Dane Douetil (MRG Chair)John Harvie (MRPO)Q1-Q4 Substantially reduce Legacy policies David Harris (Lloyds) David Matcham (IUA) Yvonne Bouman (Lloyds) John Hobbs (IUA) Q1-Q4 Development of Market Reform Slip and the Global Placing Document (ACORD slip) TBCSteve Hulm (MRPO)Q1-Q4 Complete Pilot: ACORD phase 1 - placing messaging; phase 2 - endorsement messaging; and, later, 2 way messaging Sue Langley (Hiscox)Anne Rannie (Hiscox)Q1-Q3 Define and complete Standardised Submissions pilot Jeremy Cooke (Marsh)Martin Lucey (Marsh)Q1-Q2 Define and complete Standardised Endorsement Documentation pilot Artur Niemczewski (Willis)Stuart Dean (Willis)Q1-Q2 Define and complete Electronic Policy Documentation pilot Steven Haasz (Lloyds)Yvonne Bouman (Lloyds)Q1-Q2 CLAIMS Increase use and deliver further phases of Insurers Market Repository Ewen Gilmour (Chaucer)Ben Sayles (Lloyds)Q1-Q4 ACCOUNTING & SETTLEMENT Increase use and deliver further phases of Insurers Market Repository Stephen Riley (Global Aerospace) Ben Sayles (Lloyds)Q1-Q4 Increased right first time submissions by brokers Nigel Roberts (Aon)Mark Barwick (LMBC)Q1-Q4 Increase use of delinkingNigel Roberts (Aon)Mark Barwick (LMBC)Q1-Q4 Define and complete ACORD Technical & Financial Account Messages pilot Rupert Swallow (Benfield)Paul Smith (Benfield)Q1-Q2 SUPPORTING Measurement FrameworkAndy Brookes (MRPO)John Harvie (MRPO)Q1-Q4 Develop Standards StrategyTBCRob Campbell (MRPO)Q1-Q2

Headline Projects for 2007 Contract certainty, including legacy Electronic claims take-up Electronic accounting and settlement IMR

Market Reform Page 5 Placing - Contract Certainty Market set to achieve 2006 targets – November broker figure 91% FSA have acknowledged the industrys achievement John Tiner said: "This is a major achievement by the UK insurance industry. Through their concerted hard work they have addressed an issue here in the UK that affects insurance globally. It will serve as a catalyst for the ongoing wider reform of the industry and will further raise the competitiveness of the UK industry. The FSA said: Contract certainty will continue to be a supervisory priority in 2007 and the FSA will ask the market to focus its efforts going forward on reducing the number of contracts that do not meet the market's contract certainty standards. In those cases where it believes that firms have fallen behind the rest of the market it will consider regulatory action to address this. Guidance consolidation – end Q1

Market Reform Page 6 Placing - Legacy Targets & Measurement Target – reduce mid 2006 numbers to 60% (Q2) and to 40% (Q4) Index showing legacy policy reduction progress will be published in March. Lloyds progress Lloyd's are progressing the proposed 'accelerating' approach to tackle priority 2 and 3 legacy policies in Q1 07 with Managing Agents and wider Lloyd's community. (Subsequent phases will focus on the remaining legacy policies.) 15% decrease in legacy policies in December compared to September. Lloyd's index at 84%. Company Market IUA are increasing the profile of legacy with their members. Bureau- based Company market legacy data to be available for Dec 06 onwards (in March 07).

Market Reform Page 7 Claims – Increased use of Insurers Market Repository (IMR ) –The top 18 Managing Agents (by capacity) have agreed that they are willing to accept all, in scope, ECF claims from any signed-up broker. –8% of (in scope) Lloyds first advices presented electronically –Further IMR releases planned: –6a into MAT end-March –6b into MAT mid-June –Analysis re. need for release 7 underway –IUA aiming for Q2 live use, following pilot

Market Reform Page 8 Accounting & Settlement - Use of IMR –Rapid increase in electronic submissions by brokers using IMR –Approx. 25% of submissions are now electronic, 700 per day –Release 2 scheduled for MAT in June (live August). More DRI functionality. –Release 3 scheduled for MAT in September (live November). Delivers utility repository.

Market Reform Page 9 A&S take up 9 brokers submitting electronically 25% of LPANS now electronic Cumulative total submitted since July is 45,750

Market Reform Update Other Projects

Market Reform Page 11 Placing - Slip Development Market Reform Slip - MRPO Guidance published on Orders + Fiscal & Regulatory sections. Not mandated at present. Further slip enhancements intended mid Global Placing Document (GPD) - MRPO Reviewing next steps with Associations & ACORD.

Market Reform Page 12 Placing – Other Projects –Improve contract documentation quality - G6/LMA/Lloyds –Developing plans to rollout contract documentation approach more widely –Roll-out electronic placing message (ACORD phase 1) – G6 –G6 have proposed that the placing message should be opened up to the market for wider rollout. –Develop standardised documentation and electronic messaging for endorsements - LMBC –LMBC project: To standardise endorsement documentation, processes and methodology. –Develop electronic policy documentation - Lloyds/XIS –XIS have developed a proposal which Lloyds are reviewing.

Market Reform Page 13 Accounting & Settlement – Other Projects –Increase right first time submissions by brokers - LMBC –Working Group established & existing documentation reviewed. –Increase use of de-linking to speed up movement of money - LMBC –Work underway. –Introduce ACORD messages between brokers and carriers/bureau - LMBC –eBOT (with ACORD), ELPAN2 & Londonisms work underway.