Market Reform in the London Company Community

John HobbsDirector of Market Services

International Underwriting Association

March 2008

Contents

• London Company Characteristics

• Market Reform Governance in the IUA

• Current Activities and Status

• Future Considerations

London Company Characteristics

• Regulation by FSA or Home State Regulator• Usually UK subsidiary or branch (rarely parent, rarely

stand alone)• International / multinational players• Individual operating licences• Limited mutuality of interest (e.g. no ‘central fund’) • Limited / no assumption or delegation • Significant (varied) business outside the bureau• Not all IUA members

Company MarketReform Considerations

• Bottom Line Impact– Increase revenue?– Reduce costs?

• Group Operational / Proportional Impact– London business only?– Transferable?

• Bureau Specific?

IUA Market Reform Governance

• IUA Board (12 Member Companies)– Ace, AIG, Allianz, Chubb, Global Aerospace,

Markel, Munich Re, Royal & Sun Alliance, Scor, Swiss Re, Tokio Marine Global, XL Re

MRG Representatives• Swiss Re, Global Aerospace (IUA Chair), IUA

CEO

LMRB Representatives• Global Aerospace (IUA Chair), IUA CEO

IUA Market Reform Governance

• Market Reform Implementation Steering Group (MRISG) (11 Member Companies)– Ace, AIG, Allianz, Aspen Re, Lancashire, Liberty,

Markel, QBE, Swiss Re, Transatlantic Re, XL Re

EPSG Representatives• Aspen Re, Liberty, XL Re (IUA in attendance)

ESG Representatives• Ace, AIG, IUA

IUA Market Reform Governance

• Market Reform Contact Network (MRCN) (26 Member Companies) – Ace, AIG, Allianz, Arch, Aspen Re, Axa, Chubb,

Endurance, Faraday, Generali, Great Lakes, Hannover Re, Houston Casualty, Liberty, Munich Re, Markel, New India, QBE, Royal & Sun Alliance, Scor, Sirius, Swiss Re, Trans Re, Tokio Marine, XL Re, Zurich.

IUA Market Reform Governance

• ECF Implementation Group (ECFIG)– ECF User Group

• A & S Group

• Class Application User Group (CAUG)

• Policy Services User Group (PSUG)

Current Status – A & S

• De-Linking– 76% January ’08 (Peak)

– 68% February ’08

• PPWP Recommendations– De-Linking as the default

– Re-working the deferred scheme

Current Status – A & S

• e-Accounting– Sponsored by LMBC, led by Guy Carpenter– Promote e-Accounting using ACORD standards– For non-bureau

• e-closings for premiums, treaty accounts and claims with e-settlement for all transaction types

– For bureau• E-LPAN for premiums

– IUA about to engage

Current status - ECF

• Active– Arch, Aspen Re, Axis, Brit, Catlin, Ecclesiastical,

Endurance, Houston Casualty, Lancashire, Liberty, Mapfre, Markel, New India, QBE, Scor, Transatlantic Re

• Limited activity (awaiting IMR contract)– Everest Re, Munich Re, Swiss Re, XL Re, Zurich

Current Status - ECF

• Transition to Active– AIG, Allianz, Faraday, Royal & Sun Alliance

• Start Up– Axa, Sirius, Tokio Marine Europe

• Status Updates: www.marketreform.co.uk

Current Status – Electronic Placing

• Engaged with EPSG– 3 company market representatives– Support LMA facilitative activity

• Implementation and Investigation– Engaged with Implementation Group (EPIG)– 1 company ‘live’– 7 piloting / developing

Current Status – MRCE / eMRCE

• Engaged with Endorsements Steering Group (ESG)– 3 company market representatives– Low pilot exposure but support concept– Active role in MRCE / eMRCE development– Expect high level of implementation engagement

Future Reform Considerations

• Claims– A London Market Strategy?

• London Market Claims Strategy Group (LMCSG)

• Lloyd’s Strategic Claims Review• One Claims Platform?• The Future of Company CLASS• Where next with IMR?

Future Reform Considerations

• Electronic Placing– How do we improve traction?

• ‘Model Office’?• Promotion via ACORD?• More publications?• Will eMRCE provide the spark?

Market Reform in the London Company Community

John HobbsDirector of Market Services

International Underwriting Association

March 2008