1. 1 Market Reform Forum Update 24 February 2005 Andy Brookes

2. 2 Objective: up to speed in half an hour…… Overall approach, end vision Contract Certainty LMP slips Documentation, early implementations Kinnect Electronic infrastructure Accounting and Settlement Electronic Claims Files – todays special topic

3. 3 Vision for market processes Exchange of data and progress of transaction is captured in a collaborative electronic system Placing process built into electronic system Placing data to international standards Standard slip generated by electronic system. Ditto, the policy. slip/policy distinction blurs Policy based on standard wordings; changes tracked and audited electronically. Or auditable bespoke wording created. Checking in real time Placing systems retain the data and audit trail Claims: international standard messages for data and claims management. Repositories for simultaneous access Accounting and settlement: ditto

4. 4 Approach To support each stage in the life cycle of a contract: simplified, harmonised business process standardised data structured electronic messages community infrastructure platforms - minimise interfacing costs and enforce discipline Why? Drive changes – including behaviour - within firms. Hence -reduce risk -reduce cost -make process transparent to market users so that they can measure and manage

5. 5 Contract certainty: overview Governance Market Reform Group (MRG) with new members Market Reform Group executive (= Project Board) BPR/LMP drive – plan to MRG by April LMP slips – compliance and development Policy checking by Xchanging - publish checks, drive compliance Binders – model wordings Slip fully claused XIS checks and data – (old) rejection rates; top five reasons Contract Certainty Implementation Group Get wordings agreed during bind Get checking done during bind Kinnect Consistent with all this – but reduces compliance cost Other: Market Wordings Database; attributes of CC - measurement

6. 6 Contract certainty: LMP Slips January BSA headline (another sneak preview): 93% Continue to check 25% of Lloyds slips in 2005; IUA? LMP slip a year on – publish once agreed, March? (not Feb) Implementation guide – brokers signing-off; to be published Thematic work -Claims guidance after 2005 Lloyds claims scheme - FSA headings LMP slips for binders -Checked 75 in January; BSA 94% compliance -Still high XIS rejection rate ACORD GPD published -Marine and reinsurance sub group formed

7. 7 Contract certainty: documentation 300+ risks in Q2 Xchanging check earlier Policies produced earlier Documentation available Brokers lined up; underwriters being briefed FI or D&O first? Producing timetable of firms participation Legacy : information collection; priorities (Q2)

8. 8 How Kinnect fits into reform Reform is about Harmonised process Structured data (ACORD international standards) Embedded in electronic messaging Community infrastructure platforms Kinnect provides the front office layer - and offers high quality data to subsequent processes – A&S, policy production, claims LMP slip enforces a structured output of placing Do it properly through Kinnect Checking enforces Lloyds standards (contract certainty, regulatory, tax – but post placing) Do it during placing through Kinnect

9. 9 Kinnect Continuous use by Marsh and Willis over renewal season, passing risks to markets Slip sponsored by Marsh and Willis to increase carrier use Hiscox live and Liberty Syndicates in implementation (8 MAs) 1 June 2005 – move to next stage of use – full submission process with brokers recording underwriter responses -Release in April (demo then; properly live in May) -Includes terrorism -Customers developing adoption plans (= usage for real) Sep 2005 – endorsement functionality roll out New risk classes -Terrorism available 1 June -International property available 1 November -Further roll out sequence decided Q2 (earlier)

10. 10 Accounting & Settlement Detailed business design published in December Live issues Xchanging costs (£10.4mn) being reviewed Technical and data information Accounting splits Migration (legacy and crossover): complete for premium Testing – first convoy on behalf of market; subsequent convoys MRIB and Project Board working on implementation timetable -Had aimed to publish in Q1, will be Q2 - greater certainty required on costs -Sequence and timetable for deliveries -Convoy one membership Commercial framework