with lmg secretariat future processing model working group introduction simon collins 18 th march...
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With
LMG Secretariat
Future Processing Model Working Group Introduction
Simon Collins18th March 2010
With
London Market Group
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Agenda
• Background
• What has been proposed?
• Project Governance
• Project Deliverables
• Timescales
• How will the Working Groups work?
• Questions
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Project business drivers
• Close to finishing latest round of reform
• Xchanging provides:
–Economies of scale
–Single point of audit for regulators
–Consistent process, standards & SLAs
–Pool of resource; reduced insurer overheads
–Common infrastructure for the market
• Still have legacy issues
• Still have too many Londonisms
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Why do we want further change?
• Information is rekeyed numerous times throughout the process – leading to significant query and error rates
• A growing number of Lloyd’s market organisations want the same choice as Companies and the option to either outsource some processes to a different supplier, or perform them in-house
• There is a perception that overseas brokers are placing certain types of business elsewhere as result of London’s complex operating environment
• Initiatives such as Finish What We Started are improving processing, but still based on legacy systems and inherent Londonisms
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Background
• Current processes mapped to a detailed level
• Future models proposed, featuring mandatory and optional central services
• Workshops held with Heads of Associations and Lloyd’s
• 2009 Future Process Working Group established.
– Agreed a set of principles that should underpin any future model
– Recommended to the LMG that the proposed future process is workable and warrants much more detailed design
• An LMG-sponsored project has been initiated to deliver:
– A robust London Market process model, expressed in sufficient detail that it can be adopted and implemented by the market.
– A recommended transition/implementation plan; likely to identify a two stage approach, with a new model for 100% written business as the first implementation, followed by subscription business
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What has been proposed?
• Move to electronic “straight through processing” and re-use of information throughout the value chain (i.e. without any need for re-keying)
• Adoption of ACORD standard messages throughout the risk lifecycle
• Provide insurers with central core services and the option to select from a suite of supporting services, or to undertake processes themselves
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The expected benefits
• Throughout 2010 the project will seek to validate the below benefits and ensure that they are built into any future model design
• Insurer benefits:
– Choice - perform services in-house or outsource to another party
– Cost reduction - processing costs will be reduced by reusing data and decreasing transactional query costs
– Reduced operational risk - access to risk data earlier in the process, allowing for improved exposure management
– Opportunities to automate various processes
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The expected benefits
• Broker benefits:
– Consistent processes - working in accordance with global (ACORD) processing standards; leading to a consistent process across many markets using the same process and data
– Direct interface to insurers - ability to interface directly with insurers using standard data; vastly reducing re-keying and query rates throughout the risk lifecycle
– Opportunities to automate various processes
– Easier to access London market – allows small/medium overseas brokers to access the market directly and provides more efficient process for global brokers => more choice for clients (and potentially lower cost)
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Project Governance
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Project Deliverables
• Detailed process maps: for the entire risk lifecycle; i.e. placing, accounting, settlement, claims and reporting. Differences and variations to the process should also be documented, for example for different classes of business.
• Rule book: The process maps must be supported by a rule book providing narrative for processing all types of business via the future processes.
• Referencing structure: A signed-off document detailing the referencing structure and associated rules for future risks and claims.
• Data maps: Data maps that show where specific data items are captured in the process, where they are reused and their optionality.
• Definition of central services: A definition of the central services that will support the Future Processing Model, whether they are mandatory or optional and whether the service will be offered by a single supplier or possible multiple suppliers.
• Implementation plan: A plan that details the key tasks and timescales for implementation, including options available for transition.
• Cost Benefit Analysis: A breakdown of the costs and benefits associated with implementing the future model.
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Timescales
• LMG have set the following deadlines:
– Accounting & Settlement December 2010
– Claims December 2010
– Placing Early Q1 in 2011
– Facilities & Binders Early Q1 in 2011
• A detailed project plan is currently in draft format and is due to be considered by the Steering Group at its March meeting
• Working Groups will be free to alter their own plans, provided that the signed-off milestones are not affected
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How will the Working Groups work?
• Up to the Working Groups! But:
– Within the scope of the project
• Draft plan will be presented to the group for consideration
• Analysis by project team, review by groups
• Review process maps, messaging, referencing, supporting narrative, definitions of services, etc
• NOT starting from scratch – 2009 work forms the basis going forward
– Principles and assumptions
– Process maps
– Items for further consideration
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Example of 2009 work
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IDEF0 Process Maps
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Further information
• For further information regarding the Future Processing Model project please visit the LMG website:
www.londonmarketgroup.co.uk
• Here you will find, amongst other things:
– The Project Initiation Document (scope, deliverables, success criteria, etc)
– Terms of reference for all project groups
– Proposal to MRG (now LMG), including 2009 process maps and the principles & assumptions underpinning the project
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Questions?