1. 1 Market Reform Forum Update on business reform 27 January 2005 Roy Laker LMP

2. 2 Objective: up to speed in half hour…… Contract Certainty and Documentation – coming next Electronic Claims Files Accounting and Settlement LMP slips Kinnect High level plans for 2005 Key recent progress

3. 3 Principles underpinning reform Reduce Londonisms: international firms must buy-in – governance role Change requires authority and a degree of neutrality: individual firms cannot do it alone; Lloyds and the Associations will lead Commitment to co-operate essential, on design and implementation Network effects: a convoy for implementation Cost / benefit case is rarely convincing on its own. FSA – the smouldering platform. Transparency – the (now) burning platform Minimum requirements; dont over satisfy

4. 4 Overall approach to market reform Drive standards for data and harmonisation of process LMP slip; A&S; claims management; ACORD work; contract certainty initiatives Build supporting electronic infrastructure, throughout the life cycle of a contract A&S; electronic infrastructure for claims (CLASS, ECF); Kinnect Result: transparency in processes and performance. Then market firms and trading partners can measure and manage LMP slips, policy production, A&S take-up, claims processing

5. 5 Contract Certainty and Documentation 4 Process options identified by the Contract Certainty Steering Group -XIS role and timing is the focus Initial implementation areas identified by Brokers, LMBC documentation overview committee (DOC) and CCSG – 300 risks starting Q1 2005, include old way to assess impact. Broker meetings held, planning underwriter involvement. Implementation guide on LMP web site LMP Policy being designed for initial implementations Performance monitoring group has agreed requirements regarding measurement with London Market Standards Committee Policy checking by XIS: needs to be explicit and earlier Lloyds and XIS codifying the checks; rationalise; publish performance data. Binder checking detail published by Lloyds for market feed back Tiner (FSA) speech on contract certainty – core objective for market place over next two years

6. 6 Electronic Claims File XIS development work Phase 1 (Repository enhancements) MAT scheduled to start 31 st January Phase 2 (Improved search and usability) build underway Overall business process requirements scheduled for 31 st January DRI design underway Slow rate of signing contract schedule for CLASS for Lloyds Governance – not simple, but should work Claims project board set up -Target of 10% of new Lloyds claims by end 2005 -Formulating targets for 2006 -Working with LMA Systems Delivery Group Market associations in support Programme office Putting control structures in place – risk and issue logs Identifying implementation partnerships -Broker, carrier, XCS, line of business

7. 7 LMP Slips December BSA headline (sneak preview): 90% -Formatting hit 95% (contract certainty, process efficiency) -Improvements by firms that the team has seen Will continue to check 25% of Lloyds slips in 2005 Persistent underperformance LMP slip a year on – some changes to update Implementation guide -in discussion with Market Associations prior to publication Thematic work -On going -Law and Jurisdiction: still a problem area LMP slips for binders -Check list produced; database built; first slips being checked -Binders performance of 2004 (Feb – Nov) – high rejection rate ACORD GPD published

8. 8 Accounting & Settlement Detailed business design published Sign off progressing (2 out of 3 confirmed) Xchanging costs being reviewed Funding sign up ongoing Brokers contribution agreed Subsequent deliverables Technical and data information -To support the business design -Planned in two tranches (premiums first) -Will include e.g: Data requirements; Business conditionality; Data model; process sequence diagrams; etc MRIB and Project Board working on implementation timetable -Implementation approach -Sequence and timetable for deliveries -Convoy membership

9. 9 Purpose of measurement Trustworthy data (vs. Ive heard it takes…..) To drive process improvements Provoke firms to improve performance – measurable targets where possible Measure impact of reform agenda Dimensions Timing; Quality; Cost; Satisfaction – customer service survey Sequence of delivery LMP Slips – more of the same Document production; XIS policy checking; start with binders CCSG Implementations Use of A&S and Claims electronic infrastructure Overseen by the London Market Standards Committee Measuring reform

10. 10 Kinnect Continuous use by Marsh and Willis over renewal season, passing risks to markets Hiscox live and Liberty Syndicates in implementation -Two brokers and eight managing agents May 2005 – move to next stage of use – full submission process with brokers recording underwriter responses -Release in April -Customers developing adoption plans for May Sep 2005 – endorsement functionality roll out and adoption -Initially brokers record underwriters responses -Underwriter response follows New risk classes -Terrorism available Q2 -International property available Q3/4 -Roll out sequence decided Q2

11. 11 Market reform objectives for 2005+ Compliance checking – push for 100% accuracy (Q4) Implement LMP standard for Binding Authorities (Q1) and Lineslips (Q2) Define more of the content of LMP slip (on-going); put this into ACORD data dictionary (Q2); sponsor incorporation of LMP slip within ACORD placement message (Q3/Q4) Further standardisation of the placing process for endorsements Fully claused slip used for several lines of business (initially 300 risks; Q1-Q2) Policy production; codify XIS policy checking (binders, Q1; other, Q2); publish statistics on checking process(Q2); track and reduce error rates (H2) Agree approach to Legacy wordings (Q2) MRIB to set out timetable for phased implementation (At minimum) new procedure for premium (Q4?) Complete phased roll-out through 2006 Implement Electronic Claims File (repository) – (Q1 2006) Implement CLASS at Lloyds – (final deliverable Q1 2006) Drive implementation by lines of business; 10% electronic (Q4) Explain plan for common claims procedure in London (Q4) Agree formal training programme with CII (Q2) Measure use of new infrastructure and (hence) business benefits (on-going) Ramp up communication (on-going) LMP Slips Contract Certainty and Insurance Documentation Accounting & Settlement Claims Other

12. 12 Project updates 2005 + ObjectiveKey Recent Progress LMP Slips Compliance Checking – push for 100% accuracy (Q4) Slip checking by Audit Team to continue until at least April 2005 Ongoing broker and underwriter feedback meetings, monthly reports and league tables Updating LMP Slip guidelines for publication at end of February Implement LMP standard for Binding Authorities (Q1) and Lineslips (Q2) Work complete and published on analysing rejections of Binding Authority submissions to Xchanging for Feb – Nov 2004 Define more of the content of LMP Slip (on-going); put this into ACORD data dictionary (Q2); sponsor incorporation of LMP Slip within ACORD placement message (Q3/Q4) Latest ACORD GPD published in December – groups being set up for further classes Further standardisation of the placing process for endorsements Contract Certainty Fully claused slip used for several lines of business (initially 300 risks; Q1 – Q2) CCSG implementation guide publicised in December Finalising plans for broker and underwriter participation in initial implementations Work continues on the development of LMP policy guidelines for use in initial implementations

13. 13 Project updates 2005 + ObjectiveKey Recent Progress Policy production; codify XIS policy checking (binders, Q1; other, Q2); publish statistics on checking process (Q2); track and reduce error rates (H2) Insurance checks for Binding Authorities published in December for market review Agree approach to legacy wordings (Q2) Work commenced on Legacy policies Accounting & Settlement MRIB to set out timetable for phased implementation Development of implementation approach in progress with workshop for carriers and brokers Scoping and planning of the remaining technical and data work in progress Xchanging costs being reviewed (At minimum) new procedure for premium (Q4?) Complete phased roll-out through 2006 Claims Implementation Electronic Claims File (repository) – (Q1 2006) Phase 1 of Xchanging deliveries on schedule to be released for acceptance testing by LMA claims practitioners from 31 st January Acceptance test approach agreed between LMA and Xchanging Xchanging building enhancements required for phase 2

14. 14 Project updates 2005 + ObjectiveKey Recent Progress Implements CLASS at Lloyds – (final deliverable Q1 2006) Review of integrated CLASS at Lloyds and ECF business process underway with LMA, Xchanging and brokers with first pass requirements definition targeted for 31 st January Drive implementation by lines of business; 10% (Lloyds new claims) electronic (Q4) Explain plan for common claims procedure in London (Q4) Other Agree formal training programme with CII (Q2) Measure use of new infrastructure and (hence) business benefits (on-going) Re-launched Benchmarking Ramp up communication (on-going) Reforms newsletter produced monthly Monthly Market Reform Forums

15. 15 Market Reform Forum Update on business reform 27 January 2005 Roy Laker LMP