Market Processes newsletter
November and December 2012
In this issue…
Before taking a look at recent news, I'd like to thank all the market process practitioners who have been involved this year in both the regular LMA groups and ad hoc work. While those of us at the association can co-ordinate the market's process activity, we depend on support from the managing agency community to ensure the business as usual process run effectively while seeking process improvements for the benefit of the market. On behalf of the market processes team, I'd like to wish you a happy Christmas and peaceful New Year.
2013 prices for XIS services
As noted in the recent letter to members, reference LTM12-019-RG (log on required), agreement has been reached with Xchanging on 2013 charges for services covering:
Prices for core services provided by XIS under the ‘LPSO Agreement’
Premium and policy processing and other core services are provided to managing agents under the ‘LPSO Agreement’, with the pricing of these services subject to annual review. XIS and the LMA’s Xchanging Review Board (XRB) have reached an agreement that there will be no increase in service prices for 2013. As a similar agreement was arrived at last year, this effectively carries 2011 pricing into 2013. XRB continues to work with XIS to increase XRB’s understanding of XIS’s cost base which underpins service pricing.
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Prices for the IMR service including its related applications E-Accounts and ECF provided by XIS under the 'IMR Agreement'
XIS charges for running the IMR increased significantly for 2012 over 2011, mainly as a consequence of the implementation of ECF2 and E-Accounts (Release 1) as new applications. In addition, collections were made to establish a formal enhancements budget for the first time to be controlled by the Associations' Administration Committee (AAC). A full explanation of these matters was contained in our Letter to Members LTM11-033-RG of 21 December 2011 (log on required). This letter also confirmed that the four year term of the original IMR Agreement would expire in September 2012, reverting to an annual rolling contract and providing the opportunity to re-negotiate terms and prices.
That re-negotiation resulted in a five year extension to the IMR Agreement, effective from 1 January 2013. ‘Price for Service’ is the primary feature of the new agreement, based on an ‘all-inclusive’ transaction price which represents a reduction on 2012 prices for managing agents.
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Collection of enhancements budgets relating to E-Accounts and ECF
The Associations' Administration Committee (AAC) manages a budget to provide for changes expected to arise from the implementation of E-Accounts (Release 1) and ECF2 and to meet further market demands and opportunities to exploit the services.
The 2013 budget requirement has been set at £3m and recognises the impending implementation of E-Accounts Release 2 and continuation of these user experiences and opportunities.
This is not a charge levied by XIS but a budget created by the AAC for deployment on enhancements to the E-Accounts and ECF processes as assessed by and governed through the aforementioned user groups and the AAC. As such it is discretionary spend by IMR customers exercised through the established market governance.
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XRB looks to 2013
A separate article in this newsletter sets out the detail of 2013 charges. XRB were pleased that the agreement reached with Xchanging will see processing charges for next year maintained at 2011 pricing.
Following the success of the premium management proof of concept run over the summer, Q1 2013 will see a "live pilot". This will build on this year's proof of concept for a larger scale exploration of a number of issues that aim to speed-up premium cash flow through earlier risk capture and smarter query and reject management, XRB is working with Xchanging to identify other opportunities to provide managing agents with additional benefits under the existing service agreement.
While the Darwin project aims to provide the market with a more agile processing capability for the future, XRB and Xchanging are keen to explore short to medium term opportunities, aligned with Darwin, which can provide more immediate benefit. Based on the success of learning generated from this year's proof of concept, XRB and Xchanging are defining a number of further proofs of concept during 2013 with the goal of making improvements to market processing.
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Focus on claims technology - enhancements to Electronic Claims File (ECF)
As you will have read in a separate newsletter article on 2013 pricing, the ECF User Group, a sub-group of Associations' Administration Committee (AAC) is responsible for identifying and prioritising changes to the ECF systems. In recent weeks there have been a number of significant enhancements to ECF.
The Document File Viewer (DFV), which provides the opportunity to "stitch" various claims documents together in chronological order, has been further enhanced by the introduction of the ability to combine both the current and previous four transactions, removing a significant burden of stitching the whole file together on request. In turn this enhancement has also improved overall stability.
The ability to convert documents embedded within an email into separate documents in their own right in the IMR, and into a readable format to the DFV, has been introduced.
Additional filters have been added to the "Claims Awaiting Action" and "Claims Responded To" views in the Claims Workflow System (CWS). The "Claims Awaiting Action" window has also been expanded to show more rows on the results screen.
The ability to print the contents of the Claims Administration Screen in a structured document has now been provided.
These changes, together with several other minor improvements, has improved the usability of ECF and at the same time improved system performance.
Further changes are planned for March 2013 including enhancements to the "Follow Me" functionality and changes to the hierarchy structure in CWS..
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Contract certainty code of practice
In accordance with previous practice, a cross-market group has recently carried out the annual review of MRC guidance, which resulted in a new version (MRC 1.5) of the “Open Market” Guidance being published during October 2012. As part of the project, the same team carried out a review of the Contract Certainty Code of Practice, last published June 2007. BIBA and the ABI and have confirmed that they are happy with the revisions made and the revised version (clean and marked-up copies) of the Contract Certainty Code of Practice has been published to the London Market Group website.
The "refreshed" version reflects changes to regulatory structure and tidies up some minor inconsistencies. There are no substantive changes to the definition, guidance or the model checklist material. Members are reminded that all MRC publications can be found on the London Market Group website, including marked-up versions highlighting significant changes from the previous versions.
If you have any queries arising from these documents please feel free to contact Alison Colver via email alison.colver@lmalloyds.com or on 020 7327 8370.
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eEndorsements and ePlacing – My Christmas wish list
It is clear that we’ve already come a long way towards full electronic support for placing activity. The process has not been without challenges, and more of these lie ahead, but we can look back on some solid achievements during 2012: extension of the eEndorsements initiative to all classes; a doubling of eEndorsement volumes since the comparable period last year; and substantial work done to enhance Firm Order placing standards
Nonetheless we must be realistic and accept that we are still at the stage of laying foundations for the future. Important foundations, but by no means the end result that we are looking for. There is a long way to go on building volumes and gaining market acceptance – particularly for original placements.
Looking ahead, I am optimistic that we can make substantial progress during the year ahead. So here is my personal wish-list for 2013. I look forward to being able to confirm that, together, we have achieved these before the next Christmas Season.
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eEndorsements
That the remaining Company Market participants join their IUA colleagues, the Lloyd's Managing Agency community and the Top 25 brokers in fully committing to the new eEndorsement process for all classes thereby enabling further volume growth and achieving not less than 10,000 eEndorsements per month, on average.
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Firm Order process and data standards
That the process and data standards for Firm Order and Binder Declarations are agreed, adopted and published as the recognised standards for use in the London Market.
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Establishing the Insurance Platform Limited
That the current discussions on setting up the Insurance Platform Limited are successfully concluded and an appropriate governance structure put in place. A supplier agreement will have been made and actual usage initiated by the end of 2013. A roadmap will have been devised, priorities set and work commenced on platform development.
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The Market Exchange
That the Exchange will continue to support market developments in placing, accounting and claims settlement, delivering a robust and reliable messaging service.
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ePlacing strategyThat the Market will have revisited and, if necessary, revised its strategy, updated and communicated its vision, making sure that all current and planned initiatives move the Market towards that vision, based on actual usage rather than theory.
Happy Christmas to you all; and a successful 2013.
Tim Carroll, Project Sponsor
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Horses for courses - electronic accounting in the London market
Over the past five years the London market has worked with ACORD to adopt standards to support electronic accounting. One of the major London market process success stories of this year has been the implementation of the non-bureau accounting process. But how do the various electronic accounting initiatives support the insurance community?
Just as a variety of commercial and other factors determine whether brokers and carriers choose to operate in the Lloyd's, London or other markets, in the same way the electronic accounting initiatives provide efficient processing in support of different business needs.
Simplistically there are two differing strands - bureau processing for subscription market business and non-bureau which facilitates peer to peer placements and accounting.
The Lloyd's and companies' bureau process has evolved over many years, providing an efficient one-stop shop, including settlement, for brokers placing business in the subscription markets. Within the bureau process the majority of premium is closed electronically using the "A&S" process. While providing some benefits over the older paper-based processes (eg a faster turnaround and enhanced disaster recovery), A&S doesn't reap the benefits of electronic data messaging. E-Accounts delivers data messaging and, when fully implemented in 2013, will also enable electronic data capture into Xchanging systems.
In the non-bureau world individual brokers and carriers have historically managed the accounting process through a variety of arrangements. Over time this approach has created an increasing burden which has inhibited the settlement process. Adoption of ACORD messaging in the non-bureau project, and by global reinsurers through Ruschlikon, has provided the opportunity to significantly speed up cash flow by automating broker statements and carrier sign-off while reducing the administration burden at both ends of the process; settlements are managed between the two parties. To provide a more efficient settlement process, Xchanging's Netsett pilot takes the non-bureau process one stage further by offering a netted settlement service.
Ultimately the bureau and non-bureau electronic accounting models offer efficient processing regardless of the business models that influence which marketplaces brokers and carriers choose to operate in.
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