1. Market Reform Office With Market Reform “from the top” Andy Brookes Market Reform Office 30 April 2008

2. Market Reform 1 Agenda 9.30 – 10.10Market Reform Overview – Andy Brookes (MRO) 10.10 – 10.30Standards and ACORD – Steve Hulm (MRO) 10.30 – 10.50Endorsements – plans for increased efficiency in processing contract changes – Steve Hulm (MRO) 10.50 – 11.05Break 11.05 – 11.30Electronic Claims Files – Adam Stafford (Lloyd’s) 11.30 – 12.00e-Accounting – Brian Austin (Lloyd’s) 12.00 – 12.30Electronic Placing - Rob Gillies (LMA) 12.30 – 12.45Wrap up & Questions – Christopher Croft

3. Market Reform 2 Why reform? To sharpen London’s competitive edge… London losing share of the global commercial insurance market –For example: Marine 32% 1988, 15% 2006 Customers dissatisfied with the speed of processing –2006 - Lloyd’s customer survey - market poor on: speed of contract documentation; information about claims; speed of claims settlement –2007 - better Regulatory pressure –Dec 2004: FSA CEO John Tiner challenges market to put an end to “deal now, detail later” culture –Emphasis on achieving contract certainty or face rules to enforce –Operational Risk

4. Market Reform 3 Why reform? Deliver more for less… Reverse the trend and make London the market of choice Collaboration between firms can deliver a larger, more competitive market Addressing inefficiencies will reduce costs and remove barriers to profitable business coming to London

5. Market Reform 4 Market Reform: Who is involved?

6. Market Reform 5 Slip creation guidelines providing certain and consistent placing documentation MRC - complete Clear, unambiguous contracts agreed at formation Improving the speed of premium processing - delinked premiums Repository (IMR) in use Delinking circa 70% Contract Certainty - complete Early delivery of single insurance document to client Contract Certainty - complete PLACING & SETTLEMENT What have we achieved so far ?

7. Market Reform 6 Endorsements Claims IMR in use for 90+% new in scope Lloyd’s claims Electronic storing of documents allowing simultaneous access MRCE adopted; e- endorsements being used Improved speed of endorsement processing What have we achieved so far ?

8. Market Reform 7 What have we achieved so far ?

9. Market Reform 8 Key 2008 priorities Placing: –Electronic placing support – increase proportion of risks for which structured data is exchanged –Endorsements – adopt MRCE & increase use of e-endorsements –Legacy – further reduce legacy risks Claims: –Electronic Claim Files – develop system & expand usage –Service targets - implement Accounting & Settlement: –Insurers’ Market Repository – develop system & expand usage –‘De-linking’ – extend use –ACORD Messaging – increase use

10. Market Reform Initiative Time scale TargetProgress Placing document standard for London (MRC) Q1Confirm whether update required Minor changes to be published mid year Implement MRC for Binding Authorities and Lineslips Q2Adopt as market standardNew standard published; 1 July adoption Further reduce Legacy policiesQ1-Q4Reduce mid 2006 numbers to below 20% (Q4) Ahead of target Adopt Electronic policiesQ480% of bureau policies©50% of electronic submissions ©20% overall so far; bit slow? Market Reform Contract Endorsement (MRCE) Q2Adopt as market standardNew standard published: 1 April deadline; adoption data lagging Endorsements via e-messagingQ4To be defined by Steering Group (Q1) Decision put back to Q2, once measurement in place Promote take up of electronic support for placing Q4To be defined by Steering Group (Q1) Targets would be premature. Vision and milestones set e.g. 2 way placing Measurement/benchmarking framework Q1-Q4Continue measurement. Review need for benchmarking (Q3) Each project supported by measurement Collaboration with ACORD on standards development Q1-Q4As per ACORD 2008 objectives Test Certification Facility being extended Placing Supporting MRG 2008: Q1 Progress against plan

11. 10 Market Reform MRG 2008: Q1 Progress Initiative Time scale TargetProgress ECF enhancements to increase scope and improve usage Q2, Q4Enhancements deliveredLimited progress, CLASS changes difficult Full ECF usage for new in-scope (as at end 2007) claims Q1 Q3 For Lloyd’s For IUA companies 90+% Awaiting data ECF for legacy claimsQ2-Q4Complete pilot, review targets (Q1) Limited pilot; review put back to Q2 Implement service targets for ECF claims Q1Approach to service targets defined Agreed to establish measurement regime first Implement A&S enhancements (Release 4) Q2Enhancements deliveredOn track Use repository for original premiumsQ1100% of original premiums 77%; publishing broker usage data Use repository for additional and return premiums Q4100% of submissions50% achieved Adopt de-linkingQ3100% use for in-scope transactions Rising, but slowly © 60% Implement Premium Payment Working Party recommendations Q3, Q4Successful implementation Agreement in principle A&S ACORD messaging for bureau & non-bureau Q4To be set by Steering Group (Q1) Target decision put back to Q2 Claims A&S

12. Market Reform 11 Next phase…? Begin the thinking – what comes next? Candidates –Role of broker and underwriter –Single claims platform –Others? Associations and Lloyd’s to start with