MRG Endorsements Initiatives Rob Campbell (for Stuart Dean), 23 January 2008.
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Transcript of MRG Endorsements Initiatives Rob Campbell (for Stuart Dean), 23 January 2008.
MRG Endorsements Initiatives
Rob Campbell (for Stuart Dean), 23 January 2008
Content
Background
Project Summary
Approach to delivering Endorsement initiatives• Market Reform Contract Endorsements (MRCE)
• Electronic Endorsements roll-out of (e-mail) revised process
Benefits/success/risks and issues – “business case”
Next steps
Background
• Endorsement is generic term for all mid-term contract changes from simple vessel name change to adding a construction project for Olympic development in London
• Endorsement is a binding agreement on insurers and policyholder and has to be evidenced in writing
• There are on average 3 endorsements for every contract, they can be administratively ‘heavy’ and in the London Market, many agreed by a face-to-face ‘broke’
• Clients can regard them as ‘hygiene’, ranking them below policy issuance and claims negotiation in importance/value
• Goal is therefore to reduce time and effort spent of agreeing endorsements and reduce turnaround time from the insured’s instructions to confirmation to the insured of agreement
Approach to delivering Endorsements initiatives
The work has been split into three main initiatives:
1. The introduction and implementation of Market Reform Contract – Endorsements (MRCEMRCE) standards to mandate the form and use of Endorsement documentation and agreement methodologies. This was published 3/12/07 for adoption as the Market Standard by 31 March 2008
2. The introduction and implementation of revised remote agreement process using email agreement and other messaging communications (e-MRCEe-MRCE). This will start in Q4 2007 and continue through 2008.
3. To co-ordinate endorsement activity with other Market forums with particular emphasis on input and adherence to ACORD standards for Endorsements and compliment the work of the MRG/LMA Electronic Placing Group. This will be accomplished via the Endorsements Steering Group as part of its general remit.
MRCE – Key elements
• Why Guidance• No prior definitive guide to Endorsements• Standardise the Endorsement format• Formal launch of new style documentation
• Benefits• Supports the principles of Contract Certainty by speeding up the
prompt provision to the insured of contract change documentation• Reduces the effort required to handle contract endorsements• Encourages the document format to be consistent with that used in the
original contract (MRC)• Provides an unambiguous Settlement Due Date default position
• Facilitation• Sets out that the revised documentation can streamline the submission
and agreement of non-complex contract changes• Can be used as part of an electronic process for submission and
agreement
‘Old’ Honeycomb style
Cover Note Addendum
Market Reform Contract Endorsement (MRCE)
CONTRACT ENDORSEMENT
UMR: B123412345678Endorsement Ref: 001 Type: All Risks of Physical Loss or DamageReinsured: ABC Insurance LtdOriginal Insured: XYZ Ltd
The contract is amended as follows:
Effective Date: 00.01 hours 1 August 2007 local standard time as the location of the property insured
Situation: Amended to include the insured’s location at:1 Lime StreetLondon EC3M 7HA
Sum Insured: GBP 100,000.00 any one loss in respect of the above location
Premium Additional Premium due in respect of these changes is GBP 100.00
Tax payable by insured 5% UK Insurance premium Taxand administered byInsurers
All other terms and conditions remain unchanged.
Risk Identification and Endorsement Details section- Additional details may be included
Contract Change(s) Section using MRC format and headings
Market Reform Contract Endorsement (MRCE)
CONTRACT ENDORSEMENT
UMR: B123412345678Endorsement Ref: 001 Type: All Risks of Physical Loss or DamageReinsured: ABC Insurance LtdOriginal Insured: XYZ Ltd
The contract is amended as follows:
Effective Date: 00.01 hours 1 August 2007 local standard time as the location of the property insured
Situation: Amended to include the insured’s location at:1 Lime StreetLondon EC3M 7HA
Sum Insured: GBP 100,000.00 any one loss in respect of the above location
Premium Additional Premium due in respect of these changes is GBP 100.00
Tax payable by insured 5% UK Insurance premium Taxand administered byInsurers
All other terms and conditions remain unchanged.
Contract Administration and Advisory Section (mandatory where applicable)
Settlement Due Date default position (always include on APs)
Agreement Section – GUA Example
Agreement Boxes – ensure date of agreement is captured
MRCE Structure
RISK AND ENDORSEMENT IDENTIFICATION DETAILS
CONTRACT CHANGES
INFORMATION (Where required)
AGREEMENT
CONTRACT ADMINISTRATION AND ADVISORY (Where required)
The order of these two sections is reversible
Mark
et
Refo
rmMRCE Summary
• Logical extension to MRC – consistent format, client documentation
• No prior definitive guide to Endorsements
• Supports the principles of Contract Certainty by speeding up the prompt provision to the insured of contract change documentation
• Reduces the effort required to handle contract endorsements
• Open Market, *Line Slips and *Binding Authorities* Forthcoming attraction!
Honeycom
b
Honeycom
b
+Cove
r Note
Addendum
Cover N
ote
AddendumM
RCEM
RCE
Endorsement process map – Open Market
Agreement
Agree, decline or request negotiation; determine
other agreement parties
If 'decline’ then counter-proposal
Reply with electronicSignature or signed Endorsement (scanned or postal)
If ‘negotiation' then request Box/ office visit or similar instruction
Broker notifies endorsement to all
Market (e-mail)
Assess requirements
Receive change advice
Create
endorsementNegotiation
Broker Create MRCE to ‘go to Market
Other Agreement Parties
InsuredRequest contract
amendment
Bureau
Slip Leader
Capture Agreement and send request to any other Agreement
Parties
Agree, decline or request negotiation
Ensure all agreements
captured, process any premium
changes
Confirm Agreement process complete,
handle any premium change
Send Insured the MRCE and any Debit
(or credit) Note
Receive copy of the MRCE that the ‘market’ agreed
Reply with electronicSignature or signed Endorsement (scanned or postal)
Deliver by e-mail or e-message (or ‘box’ visit)
Deliver by e-mail or e-message
Send Work Pack to IMR Using ‘direct load’, DRI.Delink if premium involved
Endorsement process map – Binding Authorities (SCHEDULE CHANGES)
Agreement
Assess requirements
Receive change advice
Create
endorsementNegotiation
BrokerCreate
Endorsement for Coverholder
sign-off
Other Agreement Parties
CoverholderRequest contract
amendment
Bureau
Slip Leader
Capture Agreement and send request to
Sip Leader
Agree, decline or request negotiation
Ensure all agreements
captured
Confirm Agreement process complete
Send coverholder Endorsement and any Debit (or Credit) Note
Receive same Endorsement as the
‘market’ agreed
Agree, decline or request negotiation
Capture agreement and send request to any other agreement
parties
Countersign Endorsement
If slip leader declines, revert to revised contract
amendment
Deliver by e-mail or e-message
Reply with electronicSignature or signed Endorsement (scanned)
Deliver by e-mail or e-message
Reply with electronic Signature or signed Endorsement (scanned)
Send Work Pack to IMR Using ‘direct load’, DRI.Delink if premium involved
If 'decline’ then counter-proposal
If 'decline’ then counter-proposal
Reply with electronicSignature or signed Endorsement (scanned)
This step is usually via the broker
Deliver by e-mail or e-message
14
e-MRCE
Project Approach
● Primary target audience - the vast number of easy (non-complex) endorsements
● As many as possible as quickly as possible
● Attaching an MRCE to an e-mail or message for agreement and return to the broker
● Formal adoption criteria to join initiative
● Measurement
● E-mail being used as an interim stage (minimum entry requirement)
15
Adoption
• Assign a Project Champion
• Actively promote the change in culture and behaviour
• Determine which technology (if in doubt start with e-mail)
• Start in an easy place
• Single agreement endorsements
• Contracts with ‘regular’ endorsements
• Know the process e.g., dealing with “Urgent’s” and slow responses
• Workflow considerations
• Changing roles and responsibilities in the organisation
• Simple measurement – collated by MRO
16
Benefits
Clients
• Align the relative low value that clients place on brokers and insurers
handling easy (non-complex) Contract Endorsements with the actual
expense to the Market
• This means embedding a more cost effective and efficient
process for all
• Clients should benefit from quicker turnaround of agreement process
and therefore receive Contract documentation earlier – supports
achieving Contract Certainty
Regulator
• Code of practice states “Contract Changes need to be certain and
documented promptly”
17
Benefits
Insurers
• Allows insurers to apply “triage” to incoming endorsements
• Free up box time for more important , significant, productive and
valuable business
• Free up “line” underwriters time by matching materiality and value with
appropriate level of insurer personnel and personnel location
• “Following” markets see full audit trail and could be much more easily
notified when not an Agreement Party
• Much easier to get “agreed” endorsements into insurer’s systems
• Use the consistency of presentation and data to integrate into insurer’s
systems
18
Benefits
Brokers
• Reduce time spent on delivering endorsements to insurers
• Provides more control and clearer accountability
• Reduces hand-off between “Account Handlers” and “Market Brokers”
• Simplifies onward confirmation of agreement to the Contract
Change(s) to the client
• Allows for parallel insurer agreement process which will speed up
endorsement agreement
• Affords the technology opportunity from the use of consistent
presentation/data to integrate into broker’s systems
• Encourages confidence in electronic trading in the London Market
and its growth and development
e-mail template
From: Dean, Stuart Sent: 30 July 2007 10:48To: 123 underwriting
Subject: ABC Insurance Ltd / B123412345678 / End001/lead
Effective Date: 1 August 2007
Your Ref: ASDF1234
Please find attached an endorsement request from ABC Insurance Ltd. As Slip Leader you are being requested for a formal response to this endorsement. Response request:
Agree Decline Request negotiation
If your response is "Agree", please send us by e-mail your agreed response and Leader response to the GUA details below:
GUA Details: GUA present on slip: Yes Leader Response: Part One: Y/N Part Two: Y/N Part Three: Y/N
If you have any questions, please contact the undersigned.
ACORD Standards
Mark
et
Refo
rme-MRCE Summary
• Email : a quick win and a step towards ACORD messaging
• Benefits
– Improves efficiency, lowers the costs and speeds the processing
– Promotes early, contemporaneous visibility of endorsements for followers
• Non-complex – “endorsements suited to email”
• Existing technology, existing business practices
• Cultural + process change
– workflow, central email addresses
• Measurement
– Base line + Monthly / Broker + Insurer
• Commercial and legal issues
• Technology choices
– Email, print+scan
– Optional supporting technology
From: Dean, Stuart Sent: 30 July 2007 10:48To: 123 underwriting
Subject: ABC Insurance Ltd / B123412345678 / End001/lead
Effective Date: 1 August 2007
Your Ref: ASDF1234
Please find attached an endorsement request from ABC Insurance Ltd. As Slip Leader you are being requested for a formal response to this endorsement. Response request:
AgreeDeclineRequest negotiation
If your response is "Agree", please send us by e-mail your agreed response and Leader response to the GUA details below:
GUA Details: GUA present on slip: YesLeader Response:Part One: Y/NPart Two: Y/NPart Three: Y/N
If you have any questions, please contact the undersigned.
MRCE attached to a standardised emailMRCE attached to a standardised email
Benefits Matrix for MRCE and Remote Agreements
Benefits Accumulation
Face to Face
MRCE
E-mail delivery
E-mail agreement
Application/Platform
Data Integration
Implementation phase
Benefit increments not to scale!!
Benefits Accumulation
What are the risks and issues?
• Requires commitment from each organisation to adopt and adhere to new practices and procedures
• Introduce the MRCE
• Being mitigated by Implementation Pack guidance and the work of the Electronic Placing Steering Group
• Standards and common processes from usage scenarios. Service Providers are already building Endorsement solutions
• Simple measurement approach for now; count what is sent “remotely” and what is agreed “remotely”
• Requires commitment from each organisation to adopt and adhere to new practices and procedures
• Introduce the MRCE
• Being mitigated by Implementation Pack guidance and the work of the Electronic Placing Steering Group
• Standards and common processes from usage scenarios. Service Providers are already building Endorsement solutions
• Simple measurement approach for now; count what is sent “remotely” and what is agreed “remotely”
• Have to change the Culture and Behaviour
• No formal written guidance for Endorsements other than Contract Certainty code of Practice statement
• Varying views from Brokers/Insurers on method of deploying electronic endorsements can act as barrier to take-up
• No common infrastructure or (placing) systems platform that facilitates endorsement agreements
• Endorsement numbers are not currently officially monitored. For proper and accurate measurement of the penetration and success of the initiative, market-wide endorsement statistics will be required and centrally monitored
• Have to change the Culture and Behaviour
• No formal written guidance for Endorsements other than Contract Certainty code of Practice statement
• Varying views from Brokers/Insurers on method of deploying electronic endorsements can act as barrier to take-up
• No common infrastructure or (placing) systems platform that facilitates endorsement agreements
• Endorsement numbers are not currently officially monitored. For proper and accurate measurement of the penetration and success of the initiative, market-wide endorsement statistics will be required and centrally monitored
Key Risks and issues Resolution/mitigation
Next Steps
• December 2007, January and February 2008
• Finalise “starter” pack Definitive e-mail guidance Overview of remote agreement processes Adoption and implementation considerations Measurement
• Market guidance and presentations early 2008 Insurer Briefings Broker Briefings
• Build-up market endorsement framework via cross-market representation for:
Usage scenarios – Practitioners
Messaging standards – Associations/ACORD
Build systems around market framework – Technology providers
MRG Endorsements Initiatives
Rob Campbell (for Stuart Dean), 23 January 2008