Market Reform Office Market Reform Forum Andy Brookes, MRO Jon Faulkner, Xchanging Helen Dines, Willis Thursday 25 October 2007

Market Reform Page 2 Market Reform Update Developments in the past month Upcoming work and plans Special topic – Electronic Policies –Jon Faulkner, Xchanging –Helen Dines, Willis

Market Reform Page 3 Contract certainty - Headlines Performance continues to exceed 90% target – August brokers achievement rate – 96% …..in line with managing agent (93% Sept) and company data (97% Aug)

Market Reform Page 4 Contract Certainty Survey - results Key message: Improvement and, crucially, no deterioration in a year of less intensive regulatory scrutiny Key stat – the proportion of firms which regard their systems and controls for achieving Contract Certainty to be either embedded or very well established in their business as usual operations up to 83% from 74% 168 firms responded (163 last year)

Market Reform Page 5

Market Reform Page 6 Contract Certainty – next steps Play back survey results to FSA Propose end to central measurement from end 2007 Down to individual firms to demonstrate performance to the regulator when asked…

Market Reform Page 7 Legacy Lloyds index currently 37% September IUA 41% August –Ahead of year end target; but do not stop

Market Reform Page 8 Legacy in 2008 Need approach to deal with residue Cases where current documentation prevails is the best answer –Insufficient counter parties still in existence –Live claim in progress –Little potential for a claim Clients requirement rules New Principles and Guidance (2 pages) with FSA Published shortly

Market Reform Page 9 Market Reform Contract New slip standard published in June. Mandatory in Lloyds market from November 1 Q&A from market sessions and from issues raised with Associations on MRPO website Binders and Lineslips –Working on any required changes –Unlikely to be mandatory before 01/01/08

Market Reform Page 10 ECF Lloyds ECF take up –Behind run rate, but substantial progress –45% of in scope Lloyds claims (4 week average to end Sept) –Over 50% in October

Market Reform Page 11 ECF Rollout –All Managing Agents open for all business –48 brokers live (80% of total volume), listed on website –Further 45 to be added by end 2007 (98% of volume) –© 20 IUA companies live or going live LMBC to distribute data to brokers on their take-up Managing agent data available from Lloyds FPD

Market Reform Page 12 ECF : Live issues Prioritising Phase 7 changes –Aim to get all new claims in scope Access Control List –Work arounds available from late November IUA changes –Eg Flag in Company Market CLASS : using IMR for this claim –Late November live Contract for IMR use –Getting sorted, but still slow Best practice workshop –will publish tips; contact Operational standards being developed

Market Reform Page 13 ECF – how to drive up usage in your firm…

Market Reform Page 14 Accounting and Settlement A&S use of IMR: rising but still disappointing 25% electronically 4 weeks to mid October –should have been 60% in September –Over 30% most recent week 36% of Original Premiums –APs more difficult if OP was in paper 80 firms now switched on (90+% of total volume) Plan for end of OP van service for A&S 1/4/08 Phase 3 MAT in progress –Proportional treaty, ACL work arounds

Market Reform Page 15

Market Reform Page 16 A&S Delinking Slightly below target ( >60% by end Q3) at 56% but seasonal… MRG reviewing end date. Includes addressing any blockers. Brokers receiving individual reports on delinking performance

Market Reform Page 17 Delinking – year on year comparison

Market Reform Page 18 Electronic Placement LMA Bulletin issued on 16 th August (via Associations or see Electronic Placing Steering Group in place LMA have developed a briefing pack for all interested participants Peter Holdstock – Rob Gillies –

Market Reform Page 19 Other news… MRG chair – Stephen Matanle from Jan 2008 MRG developing plans for 2008 –Welcome input – Beginners sessions scheduled Want to talk…? –General reform updates/discussions –Specific topics – MRC, IMR etc – to