Update on Contract Certainty John Harvie Contract Certainty Sponsors and PMs 23 August 2006.

Market ReformProgramme Office

Update on Contract Certainty

John Harvie

Contract Certainty Sponsors and PMs

23 August 2006

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Market Reform Update

• Contract Certainty

• Contract Documentation Processes

• Back office electronic infrastructure

– Accounting and Settlement – design work

– Repository for claims and A&S – today’s special topic

www.marketreform.co.uk

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Contract Certainty – The headlines

• Market on target to achieve 2006 milestones. Currently ahead of schedule.

• FSA mid year review complete.

– See FSA website for write-up

– FSA issues: Quality of data; exceptions; legacy policies; 2007

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Key observations on the data• The overall score for Contract certainty includes on time and complete before inception, incomplete

placements and late placements. • The overall score continues to improve for Contract Certainty. • Evidence of cover score increases on average with an open market increase but certificate of insurance

decrease

Summary• Brokers’ score for open market May returns, reported in July was 81% certain, unchanged from April.• Brokers’ score for certificates of insurance May returns, reported in July was 91% certain, up from 89%

for April.• Overall, the volume of contracts that were certain in May increased to 85%, from 84% in April. • The volume of broker contracts between April and May decreased by 17% from 32,858 in April to

27,236 in May.

Broker Contract certainty Returns for May 2006

Broker Contract Certainty Returns 2006 - Contract Certainty

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Dec-05 Jan-06 Feb-06 Mar-06 Apr-06 May-06 Jun-06 Jul-06 Aug-06 Sep-06 Oct-06 Nov-06 Dec-06

Open Market Contracts Certificates of Insurance Open Market Contracts and Certificates

Target

By Inception to Mar-06, thereafter inc late placements and late orders

Broker Contract Certainty Returns 2006 - Evidenced to Client in 30 days

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Dec-05 Jan-06 Feb-06 Mar-06 Apr-06 May-06 Jun-06 Jul-06 Aug-06 Sep-06 Oct-06 Nov-06 Dec-06

Open Market Contracts - Evidenced to Client in 30 days Certificates of Insurance - Evidenced to Client in 30 days

Open Market Contracts and Certificates - Evidenced to Client in 30 days Target

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Broker Contract certainty Returns for May 2006 – breakdown for incomplete and late placements

Broker Contract Certainty Returns 2006 - Contract CertaintyOpen Market

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Apr-06 May-06 Jun-06 Jul-06 Aug-06 Sep-06 Oct-06 Nov-06 Dec-06

Order Completed by Inception Order Completed after Inception Firm Order post Inception

Target

Broker Contract Certainty Returns 2006 - Contract CertaintyCertificates of Insurance

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%



Target

Broker Contract Certainty Returns 2006 - Contract CertaintyOpen Market & Certificates of Insurance

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%



Target

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Underlying supporting statistics for Broker Contract certainty Returns

Open Market Contracts

Targets

Yes % No % Yes % No % 30%Dec-05 13156 7991 61% 5165 39% 7702 59% 5459 41%Jan-06 29949 19616 65% 10333 35% 21401 71% 8548 29%Feb-06 12693 8695 69% 3998 31% 8518 67% 4185 33%Mar-06 18212 14215 78% 3997 22% 13428 74% 4797 26%Apr-06 21299 17218 81% 4081 19% 15291 72% 6008 28%May-06 16581 13434 81% 3147 19% 12240 74% 4341 26%

Month TotalOpen Market Contracts

Open Market Contracts - Evidenced to Client in 30 days

Certificates of Insurance

Targets


MonthCertificates of Insurance - Evidenced to

Client in 30 daysTotalCertificates of Insurance

Open Market Contracts and Certificates

Targets


Month TotalOpen Market Contracts and Certificates

Open Market Contracts and Certificates - Evidenced to Client in 30 days

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Contract Certainty – The headlines

• Key meetings coming up with the FSA.

– Heads of Associations and FSA 31st Aug. Review of progress on areas of concern.

– CCSC and FSA 18th Sep. Indicative views on the market solution to date (and potential impact on Plan B) .

– CEOs and FSA 19th Sep. Broad review.

• Activity underway in response to FSA

– Market Survey

– Value measurement

– 2007 planning

– CC measurement alignment

– Binding authorities

– Legacy

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Contract Certainty Market Survey

No. of surveys completed so far

• Only 85 surveys completed

– 49 Brokers

– 23 Managing Agents

– 13 Companies

• This is only approximately ONE THIRD of the total organisations in the Market!!

• Please submit your completed surveys by CLOSE OF BUSINESS TOMORROW!!!

Purpose of Survey

• To understand Contract Certainty progress made so far in the London Market

• To reassure the FSA that Contract Certainty is here to stay!!!

Timelines

• Deadline : 28th August

• But really with the bank holiday this is tomorrow!!

• Results to the FSA : 31st August

• Results to you : Mid-to-end September

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Legacy

• Purging facility available

• Means of not adding Pilot risks to UPR agreed

• Change request to allow risks where policy not required to not appear on the UPR is being progressed

• QA session on legacy planned for September


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Contract Documentation Pilot

• Pilot (NA Property, Marine Hull and Aviation Liability) - Good number of visits recorded on the pilot QA tool site but risk volumes very low and not many brokers participating or aware (flagged with LMBC).

• Meeting held with XIS on alignment of checks with Quartz, to be implemented post October release of Pilot QA tool for all CoB’s.

• Rest of COBs due to rollout end of October. No major issues with testing so far and feedback positive.

• MR Slip addendum, which details the changes required to be made to a Market Reform slip for it to be used as the contract document in the pilot with chair of MRG.

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Accounting and Settlement

• A&S P2P Overview Design - Outstanding issue around the requirement for a placement message for risks that were not placed electronically. Resolution under review.

• A&S Detailed Premium Processes - This is currently on schedule for completion at the end of August subject to resolution of the issue above. Output to be published at the end of September.

• A&S Detailed Claims Processes - This is slightly behind schedule and is expected for delivery in mid-September subject to the resolution of the issue above. The document is currently under review by the market.

• A&S Detailed Technical Document - This document is on schedule for publication at the end of August, although there may be some changes required depending upon the resolution of the above issue.

• Franchisor Data Requirements - Required for any Lloyd's managing agent to go P2P, this is on target to be published at the end of September


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ECF and A&S repositories

• 3 weeks to live for ECF & A&S Repository

• Check Market Reform website for process for joining

• Remember this is the initial delivery - Base Camp

• More to come in the beginning of next year

• Be prepared

Market ReformProgramme Office


John Harvie

29 June 2006

Update on Contract Certainty John Harvie Contract Certainty Sponsors and PMs 23 August 2006.

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