Post on 11-Jan-2016
description
With
LMG Secretariat
Future Processing in the London Market
Tim Carroll, CanopiusLMG Forum, 29th January 2010
With
London Market Group
Lond
on
Mark
et
Gro
up
Agenda
• Where are we now?
• Why do we want further change?
• Progress to date
• What has been proposed?
• Expected benefits
• Next Steps
• Questions
Lond
on
Mark
et
Gro
up
Where are we now?
• 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
Lond
on
Mark
et
Gro
up
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 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
Lond
on
Mark
et
Gro
up
Progress to date
• Current processes for central services mapped to a detailed level
• Future models proposed
• Future mandatory and optional central services proposed
• Workshops held with Heads of Associations and Lloyd’s
• Future Process Working Group established…
Lond
on
Mark
et
Gro
up
Progress to date (cont.)
• The Future Process Working Group has:
– Agreed a set of principles that should underpin any future model eg– Insurers have the choice to perform certain functions themselves or to outsource to a third
party.
– The Future Process Model will support both face-to-face and entirely electronic trading and negotiation.
– The Future Process Model should benefit all practitioner firms in the London Market.
– The Future Process Model should retain the benefits of the subscription market
– There will be a core central service that monitors the overall status of transactions and which aggregates carrier responses in support of subscription business processing.
– Recommended to the LMG, which agreed, 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
Lond
on
Mark
et
Gro
up
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
Lond
on
Mark
et
Gro
up
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
Lond
on
Mark
et
Gro
up
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 direct and more efficient process for global brokers => more choice for clients (and potentially lower cost)
Lond
on
Mark
et
Gro
up
Proposed next steps
• Make sure we have the right governance in place – proposal
Lond
on
Mark
et
Gro
up
Proposed next steps
• 2010
– Stage 1: Q1– Market communication– High level cost / benefit analysis– Risks/issues/benefit analysis of each service model
– Stage 2: Q2/Q3– Develop process models to lower level– Address risks/issues– Identify transition/implementation options– Re-assess/update Working Group’s Principles & Assumptions
– Stage 3: Q4 2010 / Q1 2011– Market consultation– Finalise proposals/documentation
• First implementations of programme in 2011, likely to commence with 100% written business followed by subscription business
Lond
on
Mark
et
Gro
up
Questions?