Market Reform Solution Providers Forum, 17 th March 2006

Market Reform Page 1 Purpose of this forum Communication of ….. –Objectives –Progress/ Key messages –Future plans Interaction –An opportunity for you to discuss reform issues together Feedback Not part of the governance i.e. Not a decision making forum

Market Reform Page 2 Agenda MRG Objectives 2006 Progress / key messages –Contract certainty –Claims infrastructure –A&S Discussion Date of next meeting & ideas for agenda

Market Reform Page 3 MRG Objectives 2006 Market achievement of monthly volume of certain contracts (30% by Q4 05, 60% by Q2, 85% by Q4) Market slip compliance rated 99% (Q1); 85% of slips fully compliant (Q4) Resolve signed lines, late orders and other outstanding contract certainty issues (Q2) Clear plan for continued improvement of CC in (Q3) Avoid regulatory intervention Build user-friendly front-end for contract certainty checks (Q1) Market feasibility for next stage of development of QA tools (Q4) Establish measurement regime (Q1); publish accounting checks (Q1) For ACORD international standard A&S processes: –Agree and document outline processes (Q1) –Publish detailed technical and business information (Q2) –Agree implementation plan (Q2) –Secure public commitment to implementation by brokers and carriers; with timetable for migration from old processes (Q4) Implement A&S repository (Q4) Contract Certainty Accounting & Settlement

Market Reform Page 4 Publish processes and procedures for electronic claims – Lloyds first (Q1); IUA next (Q4) Publish implementation manual for electronic transfer of documents using (ACORD DRI) international standards (Q1) Plan for common claims procedure in London (Q1) Complete IUA repository pilot and agree next steps (Q2) Deliver Lloyd's electronic infrastructure into market testing (Q2) (At least 4) brokers and (9) Lloyds Managing Agents processing 100% of new claims electronically, supported by XCS (Q4) Set strategy for claims infrastructure beyond ECF (Q4) Publish legacy Code of Practice (Q1); measured progress against code (Q4) Measure use of new infrastructure and business benefits (on-going) Training: approved courses for contract certainty (Q1); framework for claims training (Q2); participation targets (Q4) MRG Objectives 2006 Claims Infrastructure Other

Market Reform Page 5 Progress Contract Certainty Claims Infrastructure A&S

Page 6 Market Reform Contract Certainty - highlights LMP Slip Quality –Market target quality of slip rated at 97% for Dec 05 - met –59% of slips were 100% compliant to the LMP checklist Market Guidance –All LMA and LMBC members have signed off the CC Code of Practice at Board level + 85% of IUA members –Late Placements & Legacy Code of Practice published –Model Signing Provisions – agreed, subject to legal review Lloyds specific –Policy checks codified (QA Tool) –Confirmation of pre-bind checks underway

Market Reform Page 7 Contract Certainty - highlights CC Implementation –The Market is making good progress toward the implementation of the Contract Certainty Code of Practice –This fact is recognised by the FSA –December CC statistics published –Market average (open-market + 65% –Encouraging start – but it is only the beginning –Meeting the end 2006 target, however, remains challenging. FSA Liaison –The FSA is currently in dialogue at senior executive level to assess what its next steps should be. –We will know by the end of March as to whether the FSA will move to consultation around implementation of rules or not.

Market Reform Page 8 Claims Infrastructure

Market Reform Page 9 Claims Infrastructure - Summary On track for software delivery to allow electronic claims in the Lloyds market using ACORD DRI Early implementation partnerships growing Substantial testing and implementation task this year Will change working practices from paper to electronic for many claims practitioners Named brokers and Lloyds managing agents committed to 100% of new Lloyds claims from Q IUA coming on board

Market Reform Page 10 Objectives To implement the electronic infrastructure for the London market to negotiate, settle, and record claims quickly and efficiently and to achieve a critical mass of live usage.

Market Reform Page 11 Electronic Claim Files- a Critical Requirement Enable parallel presentation to insurers Reduce overall transaction time Improve transparency of process Underwriters can control their own work load Allow brokers to concentrate on those claims where value is added Claim file always available to insurers Fundamental pre-cursor to the LMP objective of streamlined claims agreement

Market Reform Page 12 Repositories Multiple repositories in the London market –Brokers and carriers have their own –Carriers shouldnt have to learn different brokers repository dialects Insurers Market Repository –To hold electronic claim files for carriers –International ACORD Document Repository Interoperability (DRI) standard to exchange documents –CLASS will manage the claims transactions.

Market Reform Page 13 Technical Governance London Market ACORD DRI Technical Implementation Group Virtual Cross A&S/ECF Project Board

Market Reform Page 14 Overall Scope Deploys CLASS in the Lloyds market –acts as a simple workflow manager of claims transactions Delivers an interactive Insurers Market Repository to carriers (a shared electronic filing cabinet) –Interactive service available to brokers subject to XIS contract Adopts ACORD standards for the transfer of electronic documents –To/From brokers repositories (at no charge to brokers) –To/From carriers repositories

Market Reform Page 15 LMA Project Scope Implements CLASS at Lloyds –To support Lloyds Claims Schemes Integrates CLASS and IMR – a single electronic claims service for Lloyds managing agents Does NOT change CLASS for brokers – Multiple interactive services: one for each market – LIMCLM: operational for IUA –defined and trialled for Lloyds IUA Project Scope 3 month pilot of Insurers Market Repository –To identify any additional IUA requirements –Expected start during Q Does NOT –change IUA CLASS (Operational since 1987) –change CLASS for brokers

Market Reform Page 16 Implementation Broker-driven –with Lloyds and IUA carriers and XCS –by classes of business and risks –programme office monitoring progress New claims and their subsequent transactions –Existing paper based claims (legacy) to be tackled later Early Implementations –Using todays CLASS and repository in parallel with the enhancements –Gives early experience of electronic work and assess impact on procedures and processes

Market Reform Page 17 Early Implementers Brokers Benfield Cooper Gay Guy Carpenter Marsh Millers Willis Aon (waiting for full DRI) Carriers Aegis Amlin Chaucer Faraday Hiscox Kiln Limit MAP St Paul Travelers MAP Markel Brit Class of Business Marine Hull Aviation Direct Reinsurance PI Non Marine Property Binding Authorities FinPro Ace AIG Advent Atrium Welln Heritage Aspen Re XCS

Market Reform Page 18 Carriers Wanting to Participate (in the pipeline) –Allianz –Global Aerospace –Munich Re –Swiss Re –Beazley –Liberty –SVB –XL Re

Market Reform Page 19 Public Commitment to 100% Target Brokers Committed to deliver new claims to Lloyds electronically Aon Benfield Marsh Active support from: Cooper Gay Guy Carpenter JLT Millers Willis Managing Agents Committed to deal electronically with new claims Amlin Brit Faraday Hiscox Limit Marlborough St Paul Travelers SVB Wellington MRPO Seeking others through early implementers, testers and others

Market Reform Page 20 Next Steps Phase 5 delivery to MAT mid-May 2006 Delivers first version –of an integrated electronic claims service for Lloyds –replicating existing file electronically –with improvements where possible –companies and syndicates can see the same claim Things change and we wont have thought of everything There will be more issues and enhancements

Market Reform Page 21 Accounting and Settlement

Market Reform Page 22 A&S Objectives Rationalise and streamline business processes, specifically: –Speed up premium and claims payment –Remove reliance on paper –Reduce errors and reconciliation by capturing richer data once –Enable back office rationalisation Implement international standards for the communication and processing of accounting & settlement data (the ACORD XML RLC standards) Three workstreams …… –Measurement & checks –Strategy - ACORD messaging –Repository

Market Reform Page 23 A&S Measurement & Checks Introduction of benchmarking and monitoring of market performance in area of accounting, will begin with existing Stage One process Accounting checks will be documented and published, via a QA Tool and within the design documentation The validation and processing rules that the Market needs to work to will be available fully to both brokers and carriers Brokers should build the documented validation checks into their systems to prevent errors at source Improving presentation quality and reducing rejections drives down costs for all and gives potential for faster premium processing due to less rejections Reduced reconciliation errors on receipt of signing messages due to improved data quality

Market Reform Page 24 A&S Measurement & Checks Benchmarking & monitoring performance graphs to be available end of March Accounting checks to be available approx end 1 st Qtr – initial delivery; further delivery Q2 Procedures for paper, repository and electronic submissions to be available by end of 2 nd Qtr

Market Reform Page 25 A&S Strategy - Key Features of Approach The broker will deal directly with the carrier(s) using electronic (ACORD) messages The carrier(s) will have the choice to retain in-house or outsource services where they view a business benefit. This will be transparent to brokers Supports early adopters by enabling migration with trading partners as soon as they are able Significant departures from todays environment are: –There can be one or many service providers operating in the market –Service providers will sit behind the carrier –Roles will move to the appropriate responsible parties (e.g. Risk carriers become responsible for accounting splits)

Market Reform Page 26 Strategy Benefits of Approach Promotes process efficiencies –Potential for straight through processing, with greater automation –Re-use of data captured at source reduces re-keying and reconciliation –Consistent data definition makes interfaces more efficient –Faster payment cycles and reduced administration costs Reduces barriers to business –International data interchange standards will ensure business can be transacted consistently with other markets –Carrier adoption of non fundamental accounting removes Londonism and cost for business producers Promotes competition –Competition amongst additional service providers should lead to competitive pricing structures and service levels –Current service provider can re-position offerings for new approach

Market Reform Page 27 Strategy Challenges Encouraging broker and carrier investment in change and their acceptance of transition costs Identifying early adopters and progressing take up and managing legacy. Implications of a long tail from first to last adopter Role of service providers and smooth interaction of multiple service providers Impact on claims agreement practices and Lloyds claims scheme i.e. how to run a P2P approach along with a claims scheme Ability to continue to support reporting needs [mainly Lloyds] in the new environment

Market Reform Page 28 Strategy Next Steps Update Detailed Business Design and Technical Information documents (end of 2 nd Qtr 2006) Document and design; Implementation, Transition and Legacy processes (end of 2 nd Qtr 2006) Confirm the role of trading partnerships in implementation and roll out (tba) Identify Implementation Champions (tba)

Market Reform Page 29 Repository Broker loads slip, LPANs and supporting documentation to the repository thereby removing paper and the inherent transportation issues Gives insurers access to a copy of the slip and other premium submission documentation in the repository DRI enabled repository that also enables direct loading and enquiries to: –deliver documents to Xchanging Ins-Sure Services for checking –the Utility function of the repository, without XIS processing, allows brokers to distribute documents in a controlled manner to specified parties i.e. in support of non-bureau or P2P processes It is the same physical repository as used for ECF DRI functionality consistent with ECF. Brokers have options on how to connect, DRI Push, DRI Pull or Direct load (or additionally for delivery to Xchanging for checking) Faster turnaround times for documentation, and speedier query resolution means signed lines available quicker

Market Reform Page 30 Repository Project documentation sign off – Imminent Build is being delivered in three releases Release 1 –MAT Dates - June/July 2006 –Go Live dates - September 2006 Releases 2 –TBA Release 3 –TBA

Market Reform Page 31 WHAT MIGHT YOU NEED TO THINK ABOUT OR TAKE ACTION ON NOW?

Market Reform Page 32 Key thoughts for suppliers - Repository Early review of documentation – when published (on website) Consider – with your customers – how they initially wish to connect and what their path to ultimate connection would be How and when you can deliver to assist them; how will your systems work alongside? How you can assist your customers to participate in testing? Are you members of ACORD? Are you familiar with the ACORD DRI standards? Do you understand the ACORD certification process?

Market Reform Page 33 Discussion / Questions?

Market Reform Page 34 Next meeting Date Ideas for agenda