mid2 policy supply: recommendations for best practice...miic has a report (fr07) which lists the...

MID2 Policy Supply:

Recommendations for

Best Practice

1. Background and purpose of thisdocument

In 2004 Professor Greenaway made a range of

recommendations for improving the data quality of the Motor

Insurance Database (MID) in order to meet the requirements

of improved enforcement of the motor insurance obligation.

A subsequent report by PA Consulting on behalf of the

industry concluded that the enforcement regime would be

served most cost-effectively if the time-to-supply targets for

MID1 (individual) policies were reduced to 95% of records

within 7 days, and MID2 (‘fleet’) targets remained the same,

i.e. policy updates within 14 days and vehicles within 21

days.

The MIIC responded to the PA report by proposing a ‘Fitness

for Purpose’ programme which would aim to meet the

proposed revised MID1 targets (95% within 7 days) and the

existing MID2 targets (which have yet to be met), and would

address other data quality requirements which would make

the data ‘fit for purpose’. This document sets out a number

of recommendations relating to the fitness of MID2 policy

data and outlines action also being taken by MIIC in these

areas.

There are three factors which go to make up ‘fitness for

purpose’ (and which are referenced in the MIB Article 76):

• Completeness

• Accuracy

• Timeliness

Each of these is addressed in turn.

2. Completeness

In MID2 a policy cannot be accessed by MID stakeholders

unless it also has the associated vehicles loaded. The issues

surrounding MID2 vehicle supply are addressed within the

MID2 Vehicle Supply Best Practice Guide.

It should be noted that the vehicle information cannot be

loaded until the policy is present on MID2 and therefore

completeness of vehicles is impacted by the completeness

of policies.

The more information that can be populated in the MID2

policy record the better, for more effective and efficient

enforcement. However, it is MIIC's belief that ‘Class of Use’

and ‘Permitted Driver Codes’ are rarely populated on MID2

policy records and in most cases the police are informed

that they should refer to the insurance certificate.

Unfortunately, the certificate of insurance (particularly if it's a

motor trade one) is often not easy to understand and this

can potentially lead to vehicles being incorrectly impounded

or unnecessary calls from the police to insurers.

However, it is recognised that a Motor Fleet policy will very

often cover a variety of vehicles with different ‘Class of Use’

and ‘Permitted Driver Codes’. Whilst these codes are of

some value at vehicle level, at policy level the value is limited

because of the large variations typical within a fleet. For

motor trade, the complexity of class of use and permitted

drivers is even greater and this is the reason why a ‘refer to

certificate’ instruction is commonly applied.

2.1 Management Information

Report 45 (MIIC Full Data Extract Report) provides

MIIC with the capability to estimate what percentage of

MID2 policy records have the optional data fields

populated. MIIC will start the planning stage of MID2

audits during the second half of 2006, with insurer

audits likely to begin in 2007.

2.2 Insurer information

Insurers are currently sending all the MID2 relevant

information, with the possible exception of the ‘Class

of Use’ and ’Permitted Driver Codes’. None of the

insurers/DAs involved in the MID2 ‘Policy Barriers

Workshop’ believed that they submitted the ‘Class of

Use’ or ‘Permitted Driver Codes’. Therefore, MIIC

believe it is reasonable to assume that the majority of

insurers/DAs do not submit this information to MID2.

2.3 Recommendations for insurer action

To assist enforcement agencies in carrying out their

role more efficiently and effectively:

(1) Insurers should populate the ‘Class of Use’ and

‘Permitted Driver Codes’ if that information exists

within their policy management systems. If this

information is not held at policy level but exists at

vehicle level, then the insurer should only send it

if they submit vehicle information on behalf of

their policyholders.

(2) Insurers should work towards making blanket

policy insurance certificates, particularly those

relative to the motor trade, easier to understand.

However, this will first require

clarification/guidance from the police as to the

exact nature of the perceived problem. (See MIIC

action in section 2.4).

2.4 MIIC action

To assist enforcement agencies carry out their role

more efficiently:

• MIIC is aware that some police officers appear to

have difficulty interpreting fleet/motor trade policy

certificates. MIIC, with assistance from some

insurers, will provide the police with information that

could be used for training purposes.

3. Data accuracy

MID2 policy data can be inaccurate in two key ways (in

addition to the fact that it is simply not present). It may

show the wrong policy period, e.g. because the information

was incorrectly keyed in either by the insurer or the broker. It

may also have had the policyholder details entered

incorrectly. Inaccurate data can also adversely affect ‘Time

to Supply’ (TTS) figures if the correction is not detected and

applied to the MID quickly enough.


Report 45 (MIIC Full Data Extract Report) provides

MIIC with the capability to compare insurer MID2 data

with that held on the MID and thus check the accuracy

of the data submitted to the MID. MIIC will start the

planning stage of MID2 audits during the second half

of 2006, with insurer audits likely to begin in 2007.


Insurers tend to know, from internal MI, who within

their organisation entered data onto their policy system

and therefore, should be able to identify those

individuals whose attention to data accuracy could be

improved.


To help improve the quality of policy data submission

to MID2:

(3) Insurers should calculate the ratio of ‘Amend to

New’ records submitted and if it averages out

high (>2:1) establish whether this is down to a

data accuracy problem or the submission of

unnecessary amendments (i.e. the submission of

policy amendment records to policies that do not

change the existing information). The root cause

of the problem should then be investigated and

resolved.

(4) Insurers should retrain staff if necessary and

emphasise the need for accurate data entry. In

general, insurers' systems record which member

of staff updated the records on their internal

systems therefore, consideration should be given

to linking data accuracy into staff appraisals or

performance reviews.

MID2 Policy Supply: Recommendations for Best Practice

3.4 MIIC action

To help improve the quality of policy data submission

to MID2:

• The MIIC aims to support insurers in addressing

data quality by providing information on the

accuracy of data. Where this information is

deficient, MIIC will seek to improve the usefulness.

However, at this stage no improvements to the MI

have been identified that will have a benefit on data

accuracy for MID2 policies.

4. Time to supply

The Time to Supply target for MID2 policy data is 95% of

records to be submitted within 14 days; the market average

as measured at December 2005 is approx 90%. It should be

noted that late submissions of new policies or policy

renewals can affect the timeliness of MID2 vehicle

submissions resulting in reduced effectiveness of MID for

enforcement purposes.

The following barriers to hitting the TTS target have been

identified:

• Problems within insurers' own systems, such as

submitting unnecessary amendments with effective dates

more than 14 days late. 'Unnecessary amendments' are

the submission of policy amendment records to MID2

policies that do not change the existing information.

• Error/reject handling processing is not efficient or

effective.

• Submitting non-critical backdated corrections (e.g.

incorrect spelling of names and addresses) more than 14

days after the event.

• If there is any delay on the part of the policyholder or

broker in the notification of MID relevant changes to the

insurer - in particular Amends, Cancellations and Lapses.

• Amends/Cancellations/Lapses may take lower priority

than new business - new business typically generates

income, whilst cancellations may create bad debts.

• Some organisations (including some insurer branches and

brokers) do not currently recognise the benefits,

advantages, urgency or importance of supplying MID2

data in a timely manner. This is likely to be due to a lack

of awareness.

• Wholesale broking can adversely affect TTS due to the

multiple links in the broking chain, e.g. if there are 3

brokers involved each taking 7 days to pass the

information up the chain, it would clearly exceed the 14

day TTS target.

• Lack of electronic data transfer within the fleet/motor

trade policy market and a heavy reliance on cover notes.

• There can be delays in getting supporting documentation

from the policyholder to the broker and hence to the

insurer. This can hold up the entire policy notice to the

insurer and hence to the MID.

• Ineffective communications throughout the insurance

industry (and the public, including MID2 policyholders) on

the benefits of MID and the systems it supports.


MIIC MID Management Information (MI) is supplied to

insurers either directly from Experian or from MIIC. This

information provides a good overview, but in some

cases it can be too generic to help insurers identify

their specific issues, which can be system or process

specific.

There is a belief that there is sometimes inconsistency

between MIIC generated MI and insurer MI. It is

believed that this is probably down to a

misunderstanding of what the MIIC MI is showing and

therefore guidelines explaining the MIIC MI should help

address any such misunderstanding.

Report 15 provides MIIC with the policy ‘Time to

Supply’ (TTS) figures for MID2 insurers; MIIC use the

information within this report to track insurers TTS

performance. This report is for MIIC use only and

cannot be issued to insurers as it contains information

that is insurer-specific.

MIIC has a report (FR07) which lists the number of

records submitted for each supplier. This report is

broken down in to the number of New, Amend, Cancel,

Lapse, Reinstatement, Renewal and Delete records.

From FR07 it is possible for MIIC to calculate the ratio

of Amend to New records submitted each month for

each insurer; the higher the ratio the more likely that

corrections or unnecessary amendments are being

applied to policy records. This report is for MIIC use

only and cannot be issued to insurers as it contains

information that is insurer-specific.



Insurers have error messages returned to them and

therefore know which records have been rejected and

for what reasons. They are, therefore, able to identify

which records require to be corrected and resent to

MID, as a priority, in order to minimise the impact on

their TTS figures.

Insurers also know which policies reside with which

brokers and are able to identify which brokers are the

poorer performers.

Insurers know how many ‘New’ and ‘Amend’ records

they submit to MID2, since they are the ones who send

the data. They also have any errors returned to them

over their batch link; insurers therefore have some

additional information about the likely accuracy of

MID2 policy data. They can calculate the ratio of ‘New’

to ‘Amend’ records and if it is high they have the

information to investigate whether or not this is related

to corrections or unnecessary amendments; both of

which can have an adverse effect on TTS figures.


Recommendations to help prevent the submission of

unnecessary amendments:

(5) Insurers should educate their own staff and

brokers as to what data items are required for

MID2 and what isn't relevant data. Distribute the

MIIC guide that provides examples of changes to

the policy that are and aren't relevant to MID2.

(6) Insurers should investigate their policy

management systems to identify unnecessary

amendments and prevent them being sent, e.g.

ensure that amendments have the appropriate

effective date and not always the policy inception

date, also ensure that changes to non-MID

elements don't trigger an amendment to be sent

to the MID. It is possible to calculate the ratio of

‘Amend’ to ‘New’ records submitted and if it

averages out high (>2:1), insurers should then

establish whether this is down to a data accuracy

problem or the submission of unnecessary

amendments. It is important to identify and

address the root cause of the problem.

(7) Insurers who submit vehicle data on behalf of

their policyholders should check their systems to

ensure that a vehicle amendment doesn't trigger

an unnecessary policy amendment.

Insurer/DA systems-related recommendations:

(8) Pre-validate data before sending it to MID2 to

help minimise the errors generated. Some

insurers have found that using a separate system

from their policy management system to sort and

submit MID2 data is an effective way of

addressing this.

(9) Don't delay sending updates to MID2 whilst

waiting on non-MID2 related data, as only

minimal data is required to set up a MID2 policy.

(10) Industry-level TTS figures available to MIIC

indicate that insurers should, when tackling the

reduction on TTS, give priority to the submission

of New records, followed by Amend followed by

Cancellations submissions to have the largest

impact on TTS. However, it should be stressed

that is based on industry-level statistics and will

not be appropriate for every insurer. Therefore

each insurer should focus priority based on the

findings of their own management information

and investigations. It should also be noted that

for a number of insurers the number of Amend

messages may be higher than the number of

New records submitted.

Recommendations on Error/Reject handling:

(11) Insurers should use/develop appropriate internal

MI to identify errors and carry out a full

investigation to identify the root cause of the

problem. It is important to use appropriately

skilled resources to carry out these activities.

(12) Insurers should ensure that errors are corrected

and resubmitted promptly, so as to minimise the

effect on TTS.

Recommendations on updating backdated corrections:

(13) Non-critical backdated changes need only be

applied from the notification date not the actual

effective date. It should be stressed that non-

critical changes are the correction of a misspelt

name or address, but not the wrong name or

address or the incorrect cover period. As an

example, ‘Stephenson's Bakers’ being changed

to ‘Stevenson's Bakers’ is a non-critical change,

but changing it to ‘Johnston's Bakers’ is a critical

change and should be submitted with the actual

effective date, so that the correct information is

returned for the whole cover period.

Recommendations to improve Broker timeliness

(14) Insurers should send a clear message to brokers

to explain what is required of them to meet MID

TTS targets. This message will be a standard

guide that all insurers can use within their broker

correspondence. The notice will be provided by

MIIC and sent to all brokers.

(15) Insurers should work closely with their brokers to

ensure TTS targets are met. Where a broker

shows a consistent record of late submissions

the insurer will need to consider what action it is

appropriate to take given the overall relationship

that exists between the insurer and broker.

(16) The aim should be to move to electronic data

transfer in the fleet/motor trade broking market,

ultimately reduce number of cover books and

issue the policy immediately. However, the move

to electronic data transfer is a longer term

solution.

(17) In wholesale broking there can be several links

(brokers) in the chain before the data reaches the

insurer. Therefore insurers should look at the

number of links and reduce the time each link

(broker) has to pass the data on, ensuring that

the total end to end time is less than 14 days. If

the insurer is not aware of the number of links in

the broking chain then this message needs to be

disseminated through the chain by the broker the

insurer interfaces with. Where there is evidence

that the chain of activity can not be reduced to

permit MID data to be provided within the

relevant TTS targets the insurer will have to

consider what other action may need to be taken.

(18) Getting supporting documentation from the

policyholder to the broker and hence to the

insurer can take a while. Therefore, insurers

should encourage brokers to focus on the

information that is required for MID2 population,

i.e. the broker should not allow non-MID related

data to prevent the sending of MID2 updates to

the insurer.

(19) Brokers should ensure that sufficient numbers of

staff are aware of the importance of submitting

accurate data for MID in a timely manner. MID

updates should be built into business

processes/procedures. Specific MID related

training should be considered.

Recommendations to insurers to address timeliness

issues

(20) Insurers sometimes receive batches of updates

from brokers. In such cases they should give

priority to incoming communications that are MID

related.

(21) Insurers should inform their MIIC account

manager if they know they're going to have poor

a TTS performance for a particular month. They

should explain the issue/problem and what action

is being taken to resolve the matter.

(22) In order to be proactive in meeting the 14 day

TTS target, insurers should develop appropriate

internal Management Information (MI) rather than

relying solely on that provided by MIIC, as the

issues faced can be specific to the insurer's

organisation/systems. It will also enable particular

problem sources to be identified.


4.4 MIIC action

To help prevent the submission of unnecessary

amendments:

• The MIIC will produce guidelines that can be used

to educate the market as to what information is

required to be submitted for MID2. The guidelines

will cover what data is and isn't relevant, and also

include what constitutes an amendment on a MID2

policy, (e.g. change of address as opposed to

renewals). The guidelines should also link to, or

incorporate, the MI guidelines as appropriate.

• The MIIC will look at the ratio of ‘Amend to New’

records and approach those organisations that have

a high ratio (>2:1) with an aim to understanding why

it is high. Ensure any corrective activities are built

into the insurer's action plan.

To help improve MID awareness:

• The MIIC will approach the Government to promote

the advertisement of the MID to raise awareness

amongst the general public and MID2 policyholders.

However, there is no guarantee that the Government

will agree to undertake such a campaign.

• The MIIC will produce focused and specific MID2

communications to raise awareness within the

broker community, getting the message across on a

regular ongoing basis regarding the importance of

accurate and timely updates to the insurer.

• The MIIC will provide effective MID-related

communications to the general public and MID2

policyholders e.g. the new offence of being the

keeper of an uninsured vehicle, communication on

how MID is being used to support Automatic

Number Plate Recognition (ANPR) and the DVLA

Electronic Vehicle Licensing (EVL).

To provide clarification on MIIC generated MI:

• MIIC will provide a guide to MIIC-generated MI; it

will also describe how insurer TTS is calculated and

provide an explanation of the different update types

associated with MID2.

MID2 Policy Supply:

Recommendations for Best Practice

For further information, please contactMotor Insurers’ Bureau, Linford Wood House,

6-12 Capital Drive, Milton Keynes MK14 6XT. Tel: 01908 830001 Email: [email protected] [email protected]

www.mib.org.uk www.miic.org.uk

mid2 policy supply: recommendations for best practice...miic has a report (fr07) which lists the...

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