With LMG Secretariat Future Processing Model Working Group Introduction Simon Collins 18 th March 2010 With London Market Group

Agenda Background What has been proposed? Project Governance Project Deliverables Timescales How will the Working Groups work? Questions

London Market Group Project business drivers Close to finishing latest round of reform Xchanging provides: –Economies of scale –Single point of audit for regulators –Consistent process, standards & SLAs –Pool of resource; reduced insurer overheads –Common infrastructure for the market Still have legacy issues Still have too many Londonisms

London Market Group Why do we want further change? Information is rekeyed numerous times throughout the process – leading to significant query and error rates A growing number of Lloyd’s market organisations want the same choice as Companies and the option to either outsource some processes to a different supplier, or perform them in-house There is a perception that overseas brokers are placing certain types of business elsewhere as result of London’s complex operating environment Initiatives such as Finish What We Started are improving processing, but still based on legacy systems and inherent Londonisms

London Market Group Background Current processes mapped to a detailed level Future models proposed, featuring mandatory and optional central services Workshops held with Heads of Associations and Lloyd’s 2009 Future Process Working Group established. –Agreed a set of principles that should underpin any future model –Recommended to the LMG that the proposed future process is workable and warrants much more detailed design An LMG-sponsored project has been initiated to deliver: –A robust London Market process model, expressed in sufficient detail that it can be adopted and implemented by the market. –A recommended transition/implementation plan; likely to identify a two stage approach, with a new model for 100% written business as the first implementation, followed by subscription business

London Market Group What has been proposed? Move to electronic “straight through processing” and re- use of information throughout the value chain (i.e. without any need for re-keying) Adoption of ACORD standard messages throughout the risk lifecycle Provide insurers with central core services and the option to select from a suite of supporting services, or to undertake processes themselves

London Market Group The expected benefits Throughout 2010 the project will seek to validate the below benefits and ensure that they are built into any future model design Insurer benefits: –Choice - perform services in-house or outsource to another party –Cost reduction - processing costs will be reduced by reusing data and decreasing transactional query costs –Reduced operational risk - access to risk data earlier in the process, allowing for improved exposure management –Opportunities to automate various processes

London Market Group The expected benefits Broker benefits: –Consistent processes - working in accordance with global (ACORD) processing standards; leading to a consistent process across many markets using the same process and data –Direct interface to insurers - ability to interface directly with insurers using standard data; vastly reducing re-keying and query rates throughout the risk lifecycle –Opportunities to automate various processes –Easier to access London market – allows small/medium overseas brokers to access the market directly and provides more efficient process for global brokers => more choice for clients (and potentially lower cost)

London Market Group Project Governance

London Market Group Project Deliverables Detailed process maps: for the entire risk lifecycle; i.e. placing, accounting, settlement, claims and reporting. Differences and variations to the process should also be documented, for example for different classes of business. Rule book: The process maps must be supported by a rule book providing narrative for processing all types of business via the future processes. Referencing structure: A signed-off document detailing the referencing structure and associated rules for future risks and claims. Data maps: Data maps that show where specific data items are captured in the process, where they are reused and their optionality. Definition of central services: A definition of the central services that will support the Future Processing Model, whether they are mandatory or optional and whether the service will be offered by a single supplier or possible multiple suppliers. Implementation plan: A plan that details the key tasks and timescales for implementation, including options available for transition. Cost Benefit Analysis: A breakdown of the costs and benefits associated with implementing the future model.

London Market Group Timescales LMG have set the following deadlines: –Accounting & SettlementDecember 2010 –ClaimsDecember 2010 –PlacingEarly Q1 in 2011 –Facilities & BindersEarly Q1 in 2011 A detailed project plan is currently in draft format and is due to be considered by the Steering Group at its March meeting Working Groups will be free to alter their own plans, provided that the signed-off milestones are not affected

London Market Group How will the Working Groups work? Up to the Working Groups! But: –Within the scope of the project Draft plan will be presented to the group for consideration Analysis by project team, review by groups Review process maps, messaging, referencing, supporting narrative, definitions of services, etc NOT starting from scratch – 2009 work forms the basis going forward –Principles and assumptions –Process maps –Items for further consideration

London Market Group Example of 2009 work

London Market Group IDEF0 Process Maps

London Market Group Further information For further information regarding the Future Processing Model project please visit the LMG website: Here you will find, amongst other things: –The Project Initiation Document (scope, deliverables, success criteria, etc) –Terms of reference for all project groups –Proposal to MRG (now LMG), including 2009 process maps and the principles & assumptions underpinning the project

London Market Group Questions?