ECF Binding Authorities

John Ticehurst8 May 2009

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Introduction

• Work conducted at request of ECF User Group and in conjunction with them

• Project initiation reviewed by AAC, MRG and ECF user group

• Group of binder brokers and carriers involved in fact finding

• AAC, MRG and ECF user group reviewed findings and now with you to review

• Background to co-lead problem

• General binders ECF usability

• Summary of findings

• Outline solution proposal

• Dependencies

• Prototype approach

• Outline timetable

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Background to Co-Lead Problem

• Binders represent approximately 20% of Lloyd’s claim volumes

• Could be 60-80% of binder contracts impacted by co-lead

• A Claim on a certificate bound off more than one binder

• Each binder has a different leader

• Claim may have more than one carrier with lead role

• Results in requirement to identify & co-ordinate responses

• Currently results in such claims not being supported by ECF

• Can be same London broker or different London brokers on same claim

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General Binders Usability

• Amounts cannot be held on individual entries

• Bordereau and individual claims cannot be viewed together

• Cash losses require transaction on bordereau and individual entries

• Cash losses require agreement to both transactions at the same time

• Limited flexibility for differing agreement roles (e.g. exclude XCS or lead)

• Relationship between individual and bordereau not established

• Loss funds difficult to manage

• Net accounting is not currently supported

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Summary of Findings

• This is predominantly a Lloyd’s issue

• Small volume of London Market company participations – not handled via central systems (verify at each stage)

• Co-leads through different brokers – seems no reason to exclude

• Through same broker – need to associate claim file to multiple covers and record agreement rules

• Viable solutions dependent upon resolving general ECF binder handling

• To resolve via CLASS would be costly and time consuming

• Options to avoid significant CLASS development (aim to be cross market)

• Strategic option exists for binders as a whole

• Need to prototype binders to prove design

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Proposal

• A solution for all binders, not just co-lead binders and not just Lloyd’s

• Prototype – Initially develop using storyboards

– Develop working application

– Process extensive variety of binder cases via prototype

– Review outcome of prototyping

• Prototyping has no dependency on other development plans for 2009

• If prototype successful implement ECF binders

• Final solution does have some dependency on other elements being delivered

• Full set of binder modules (premium and claim) envisaged in future – in recognition of market demand (not included in prototyping)

• ECF binders functions will be complementary to full binder modules

• Prototyping will not begin until documentation and firm proposal for prototyping to ECF User Group and MRG – end May

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• Establish the contract & rules for handling

• Differentiate the following; – Claims

– Bordereaux

– Cash Losses

– Loss Funds

• Identify and coordinate co-lead claims

• Present bordereaux alongside corresponding claims

• Agreement to cash losses in one place

• Hold financials against individual claims – without duplicating reserve on bordereaux

• We will assess appetite and approach for net accounting (this will not be included in initial prototyping)

Description of Outline Process

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ECF Binders Dependencies

• Critical dependencies (must be delivered prior to or as part of binders solution)– Broker claim entry – new user interface

– Claims workflow triggers (CWT) &/or new carrier user interface including writeback

– Claims database – available as full operational datastore

– Access control database – supporting inputs from sources other than CLASS

– New version of LIMCLM for binder brokers only (minor change & not mandatory)

• Non critical dependencies – preferably implemented but not essential– Document file viewer (although significant impact on usability if not included)

– ACORD broker input and response

– Translation from LIMCLM to ACORD

• There may be other potential dependencies which emerge during prototype stage

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Indicative Timeline

Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11

Start Prototype

Prototype Findings

(Sep 09)

(Dec 09)

(Jul 10)

Implement First Release

Subsequent Releases and Full Binders Module

Tentative Dates

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Conclusions

What we need you to do;

• Provide feedback to the presentation

• Support the concept

• Participate in prototyping and research

We will provide regular updates

Contact Details;

Laura Bramble

Direct Tel: +44 (0) 20 7015 0877

Email: laura.bramble@catlin.com