Transcript Control Framework Breakfast Group Presentation October 2013

Control Framework
A warm Welcome
to
the October
market Breakfast Group
Control Framework
Breakfast Group agenda
9:00
Arrival, breakfast & networking
All
9:15
Welcome
Ali Dove
9:20
Hiscox - Coverholder
risk assessment
Stephen Burns
James Chaplin
9:35
Coverholder audit scope
Charles Rowley- Catlin
9:50
Phase II update
Jaana Rouvari
10:00
Xchanging – Binder management
services
Steve Reid
Andrew Austen
10:20
Q&A
All
10:30
Close
Ali Dove
CF2: Hiscox Coverholder Risk Assessment
Stephen Burns - Delegated Underwriting Manager and
James Chaplin - Business Analyst
Hiscox Group
Scope
•
CF2 presents significant challenges for Hiscox
•
Engaging with multiple stakeholders:– c.300 (Lloyd’s business) coverholders worldwide
– c.400 (Lloyd’s business) binding authorities across multiple classes
– c.50 (Lloyd’s business) TPAs worldwide
– c.60 Lloyd’s placing binder brokers
•
We need to:
– Keep work to a manageable level and avoid duplication
– Strike the right balance between pragmatism and rigor
4
Guiding Principles
• Location of risk is deemed pivotal
• Where risks are moving across jurisdictions complexity is suspected
• Risk assessment factors will be considered in combination
• Binders are deemed either lower or higher risk as the factors elicit binary data
• L/M/H categories are attributed through a weighted total score per binder
5
Hiscox Risk Assessment Factors
Coverholder Risk Assessment Factors
Lloyd’s
Hiscox
1
Single or Multiple Territories
Single or Multiple Territories
2
Principal Regional Complexity
Principal Regional Complexity
3
Lines of Business
Lines of Business
4
Coverholder resources/information provided
Coverholder information provided
5
Premium Written
Territorial Hotspots
6
Use of Lloyd's Tools
Prior submit
7
Historic Issues
8
Use of Lloyd’s coverholder reporting standards
No.
6
Slip Wordings
• Wordings vary greatly within the Lloyd’s standard slip format.
• The concern is that this variation will lead to data errors and confusion.
Simple?
7
Slip Wordings
• Wordings vary greatly within the Lloyd’s standard slip format.
• The concern is that this variation will lead to data errors and confusion.
Complex?
8
Slip Wordings
• Wordings vary greatly within the Lloyd’s standard slip format.
• The concern is that this variation will lead to data errors and confusion.
???
9
Analysis & Assessment
• We are currently finalising our base data set for all binders/coverholders
• Analysis will be data driven, with the findings for each factor being scored.
• Factor scores will be weighted to reflect the relative risk impact of each factor
• An overall score for each binder will determine L/M/H status
• ‘Terms of Reference’ paper captures thought process and rationale for scoring
10
Next Steps
• Overall findings of the risk assessment will be:
- Fed into the audit planning for 2014 to ensure alignment to priorities
- Used to estimate feasibility of Dec 2014 deadline
- Submitted to Lloyd’s CF2 Programme Team mailbox by 20/12/2013
11
Hiscox Coverholder Risk Assessment
ANY QUESTIONS?
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Coverholder Audit Scope Review
An update from the Audit Scope Review Steering
Group
22 October 2013
© Lloyd’s 2012
Introduction
► LMA Survey indicated “strong interest from the
respondents to review and update the scope
and to improve the way in which audits are
conducted.”
Key suggestions were:
– Split between Core Modules and Appendices
– Split between General and Contract Specific
– Updates to Underwriting Claims and
Compliance sections
– Add guidance on ‘risk rating’
recommendations possibly using RAG str.
– Structure should aid audit coordination.
All 56 managing agents were surveyed, 22,
40% replied. 18% of those who replied used
the audit scope, a further 55% used a variant.
In total 73% of replies, and 29% of all managing
agents.
© Lloyd’s 2012
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Objectives of the
review
► Update the Coverholder Audit Scope to
ensure that it is used by many more
stakeholders.
► To improve the value of audits and
minimise duplication.
► To ensure the Audit Scope reflects the
changing regulatory environment and
can be adapted to address the
challenges of changes to market
systems and processes.
© Lloyd’s 2012
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The Steering Group
Member
Organisation
Group
Role
Charles Rowley
Catlin
DUM
Chair
Steve Hart
Ark
DUC
Patricia Beaton
Canopius
BACG
Dan Lott
Integro
BOLT
Ian Whitehead
Bell and Clements
Technology expert
Sarah Thacker
Lloyd’s
Project Manager
© Lloyd’s 2012
The Review
► Steering group with members from DUC, DUM, BOLT, BACG and
Lloyd’s undertook initial review of scope.
► Working groups of subject matter experts from around the market
met to review different sections.
► Lloyd’s local representatives consulted with local coverholders
and auditors, comments received from auditors in Australia and
Italy and from Lloyd’s offices in Australia, Hong Kong, Italy and
Spain.
► UK MGAA and US AAMGA associations consulted.
► With thanks to AAMGA, AON, Ark, Atrium, Axiom, Barbican,
Beazley, Bell and Clements, Bowood, Brit, Canopius, Catlin,
Chaucer, Cranmore Australia, C&N Insurance, Decus, Gold
Seal, Hiscox, Integro, Kiln, Lloyd’s local representatives,
Lloyd’s Delegated Authorities Team, Markel, MGAA, Miller,
Mitsui, R&Q, Self Assured Limited, THB, Torus, Towers
Watson, Tyser and Willis
© Lloyd’s 2012
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Draft Structure – Modular for a Risk Based Approach
Executive summary
On site Audit
-
General / All Binders
Company
Accounts
E&O
IT
Licences and taxes, financial crime
etc.
Financial controls etc.
-
Contract specific
Underwriting
Claims
Transactional accounting
Reporting etc.
-
Self - Certification
On-line
Underwriting
management
Claims / Underwriting
Underwriting file
review
No authority
Claims / Underwriting
Authority
-
Note: Each section could
be split between what
could be covered by
different types of audit
Note: Each section
could be broken down
into basic, medium
and advanced, for
example for claims
Appendices
UK Consumer
Internet Trading
Control Framework (Higher Risk)
© Lloyd’s 2012
Structure – Examples A and B
Simple Commercial 1 country
Complex Consumer UK and EEA
Executive summary
Executive summary
-
General / All Binders
Company
Accounts
E&O
IT
Licences and taxes, financial crime
etc.
Financial controls etc.
-
General / All Binders
Company
Accounts
E&O
IT
Licences and taxes, financial crime
etc.
Financial controls etc.
-
Contract specific
Underwriting
Claims
Transactional accounting
Reporting etc.
-
Contract specific
Underwriting
Claims
Transactional accounting
Reporting etc.
-
Appendices
UK Consumer
Internet Trading
Control Framework (Higher Risk)
-
Appendices
UK Consumer
Internet Trading
Control Framework (Higher Risk)
-
-
© Lloyd’s 2012
New version of audit scope
 Significant updates to underwriting, claims, reporting and
compliance sections
 Inclusion of requirements for UK consumer business,
TPAs, Internet trading, Data Quality (Control Framework
2) and Financial Crime
 Full details of changes will be advised with new draft
 Guidance notes will also be provided
► Out of scope for this delivery: – Online audit templates
– Self certification templates (to be considered alongside
annual review process.)
© Lloyd’s 2012
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Next Steps
► Currently being drafted; draft to be made available late October/November
► Consultation on draft during November
► Final version end of the year or early 2014
► Develop guidance document
► Consult with regulators.
► Develop a communications plan to all relevant stakeholders.
► Work with coordination group to finalise a ‘Co-ordination sheet’ to support
this process.
Next year
► Review and consider the need for a self certification module.
► Review and consider the need for an on-line audit module.
► Set up a regular review process.
© Lloyd’s 2012
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Summary - New version of audit scope
The review process
►
Cross market steering group:- Chair - Charles Rowley (DUM/Catlin); Steve Hart
(DUC/Ark); Patricia Beaton (BACG/Canopius); Dan Lott (BOLT/Integro); Ian
Whitehead (Bell and Clements) and Sarah Thacker (Lloyd’s)
►
Working Groups of experts focused on specific topics; and comments were also
received from managing agents, brokers, coverholders, auditors and Lloyd’s country
reps
►
With thanks to AAMGA, AON, Ark, Atrium, Axiom, Barbican, Beazley, Bell and
Clements, Bowood, Brit, Canopius, Catlin, Chaucer, Cranmore Australia, C&N
Insurance, Decus, Gold Seal, Hiscox, Integro, Kiln, Lloyd’s local representatives,
Lloyd’s Delegated Authorities Team, Markel, MGAA, Miller, Mitsui, R&Q, Self
Assured Limited, THB, Torus, Towers Watson, Tyser and Willis
Current proposed changes




Current plan
Significant updates to underwriting, claims, reporting ► Currently being drafted
and compliance sections
► Draft to be made available
late October/November
Inclusion of requirements for UK consumer business,
TPAs, Internet trading, Data Control Framework and ► Consultation on draft
during November
Financial Crime
Full details of changes will be advised with new draft ► Final version end of the
year or early 2014
Guidance notes under development
© Lloyd’s 2012
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Control Framework
Control framework Phase II
update by Jaana Rouvari
23
© Lloyd’s
Control Framework
Where are we as a market?
August
September
October
November
December
2013
2013
2013
2013
2013
Initial meetings with
managing agents
% Completion
100% Complete
Managing agent has
project resources in place
65% Confirmed resources
Rest are progressing well
Coverholder risk rating
exercise
10% Completed, 50% shared
early cuts
Risk ratings reflected in
audit schedules
10% Complete Confirm delivery
timeline to Lloyd’s
24
© Lloyd’s
Control Framework
The challenge
• 9 weeks until Christmas!
• Inform Lloyd’s project team early if there are issues
New stuff
Phase I
• Ownership of Control Framework for new service company
applications is transitioning from Lloyd’s Market Operations to
Lloyd’s Delegated Authorities
Phase II
• Changes to gap analysis template on lloyds.com
• New team member at Lloyd’s – Hannah Warrilow
25
© Lloyd’s
Control Framework
What happens next?
• Lloyd’s engaging with LIIBA on how we collaborate with brokers
• BOLT on 12th November
• Following BOLT - Calling on the managing agent working group
• Broker Engagement
• In September we met with 23 brokers,10 of these are in the top 40
by GWP
• Lineage and Control Framework
26
© Lloyd’s
BINDER MANAGEMENT
SERVICES
Presentation to Control Framework
Breakfast Group
22nd October 2013
KEY MESSAGES
01
02
A number of issues with the reporting of
data from cover holders (via brokers),
make it difficult for insurers to manage
the underlying exposures on their
binding authority contracts. Focus is
increasing in this area
03
04
Xchanging already plays a pivotal role in
the processing of premium and claim
bordereaux for the market and has a
track record of providing shared service
solutions
28
While many of the issues are shared, the
available binder management solutions
are currently being procured on an
individual basis
BINDER MANAGEMENT SERVICES – SUPPORT TO MANAGING AGENTS AND BROKERS
In partnership with a third party software
provider, Xchanging plans to launch two
new elective service offerings in January
2014, to address the priority issues. The
cost and operation of these services will
be shared between subscribing insurers.
06/07/2015
© 2013 Xchanging plc
AGENDA FOR TODAY
1
Binders in context
Context
Current issues and Control Framework objectives
Current high level process flow
2
Solution components
The Xchanging Solution
Elective offerings
Revised Process Map
3
Benefits
4
Roadmap and Timeline
29
BINDER MANAGEMENT SERVICES – SUPPORT TO MANAGING AGENTS AND BROKERS
06/07/2015
© 2013 Xchanging plc
BINDERS IN CONTEXT
Binder share of the Lloyd’s Market:
XOL
8%
Split between subscription and
singleton binders:
Lineslip
5%
Binding
Authority
29%
Treaty
4%
Open
market
54%
Number of participants per
subscription binder:
7
6%
6
7%
8
5%
9
3%
10
3%
11+
7%
2
32%
5
9%
4
12%
30
3
16%
BINDER MANAGEMENT SERVICES – SUPPORT TO MANAGING AGENTS AND BROKERS
06/07/2015
© 2013 Xchanging plc
CURRENT ISSUES AND CONTROL FRAMEWORK OBJECTIVES
Current market issues
Control framework objectives
Technology Services
 “Raise the bar” on quality across the
market
 Inconsistent timing of bordereau delivery
 Inconsistent and non-standard data
 Protect managing agents from direct
regulatory investigations and penalties
for non-compliance
 Lack of granular level data for Lloyd’s
reporting
 Maintain and enhance the Lloyd’s
brand and reputation
 Insurers are spending large sums of
money on manual validation & rekeying
of data
 Minimise the risk to the overall Lloyd’s
licences
 No centralised query management
process
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Technology Services
 A lack of visibility of bordereau for
following market participants
BINDER MANAGEMENT SERVICES – SUPPORT TO MANAGING AGENTS AND BROKERS
 Protect and potentially improve the
competitive position of the platform.
06/07/2015
© 2013 Xchanging plc
CURRENT PROCESS MAP
Multiple
systems +
levels of
sophistication
Multiple
queries from
multiple MA’s
Non standard.
Incorrect /
missing data
BSM / USM
sent
Broker part
cleanses
Bdx
Cover
holder
Managing
Agent(s)
Broker
Non
Standard
Bdx
Additional
query loop
Cover
holder
XIS/XCS
Submission
to Bureau
Missing Bdx
as followers
Review /
check /
adjust Bdx
BINDER MANAGEMENT SERVICES – SUPPORT TO MANAGING AGENTS AND BROKERS
Market
Process Bdx
on an
aggregate
level
Time consuming
Query resolution
Time
consuming
Query
resolution
32
Broker
06/07/2015
© 2013 Xchanging plc
COMPONENTS OF THE XCHANGING SOLUTION
Central administration
Availability
Service delivery via a
dedicated Xchanging
team
MI
Provision of strategic MI for all
parties to drive decision making
and support regulatory reporting
requirements
Central storage and availability of Risk
Bordereaux for all binder participants
(Broker, Leader, Followers)
Components
of The
Xchanging
solution
Central storage
BINDER MANAGEMENT SERVICES – SUPPORT TO MANAGING AGENTS AND BROKERS
Conversion of non standard Risk,
Premium and Claim Bordereaux into
standard format options with a level of
automated validation
Validation
Central storage of standard format
bordereaux, available to Brokers,
Leaders and Followers
33
Conversion
Enhanced bordereaux validation including
query management and resolution to
reduce the burden on brokers and
managing agents
06/07/2015
© 2013 Xchanging plc
1
2a
Risk Bordereaux for
the following
market
Bordereaux
Conversion
 Xchanging will receive
the risk bordereau from
the Lead Insurer and/or
broker in a format
preferred by the sender
 The bordereau will be
saved in the IMR in a new
Risk Bordereaux folder*
 A link will then be sent to
the following market
which will provide Insurers
direct access to view the
bordereaux.
 Xchanging will receive the
risk, premium or claim
bordereaux from the insurer
 On first receipt the
bordereaux will be mapped
to the required standard
 All subsequent bordereaux
for the same binder will be
processed against the
mapping
Bordereaux
Transformation
TWO NEW ELECTIVE SERVICE OFFERINGS
2b
Validation extra
 As an extension to the
Bordereaux Conversion
service, Xchanging will
apply additional
validation to each
bordereaux
 Any processing
exceptions will be
resolved in conjunction
with the insurer and/or
broker as required
 Converted bordereaux will
be stored centrally and
provided to subscribing
customers
* Subject to AAC approval
34
BINDER MANAGEMENT SERVICES – SUPPORT TO MANAGING AGENTS AND BROKERS
06/07/2015
© 2013 Xchanging plc
FUTURE PROCESS MAP
Single query
line for all
MA’s
Non
standard
Bdx
Non
standard
Bdx
Cover
holder
Broker /
Lead MA
BSM / USM
sent
Submission
to Bureau
Xchanging BTS
Broker
Mapped &
transformed
standard Bdx
including Bdx
for Followers
Query
Response
XIS / XCS
Market
Process
standard Bdx on
an aggregate
level
Managing
Agent
35
BINDER MANAGEMENT SERVICES – SUPPORT TO MANAGING AGENTS AND BROKERS
06/07/2015
© 2013 Xchanging plc
CUSTOMER BENEFITS INCLUDE
Reduced cost of bordereaux conversion
Removed requirement to map bordereaux
Reduced administration of bordereaux exceptions
More effective query management
Improved Data Quality
Efficient processing
Improved MI and Reporting capabilities
Both lead and follower data processed
No set up charges and transaction based pricing
36
BINDER MANAGEMENT SERVICES – SUPPORT TO MANAGING AGENTS AND BROKERS
06/07/2015
© 2013 Xchanging plc
ROADMAP AND TIMELINE
February
2014
January
2014
December
2013
November
2013
October
2013
Announce
selected vendor
for bordereaux
transformation
37
Commence trial
for Risk
Bordereaux to
followers
Configure
bordereaux
transformation
service
Complete Risk
Bordereaux trial
and decide on
full roll out
Launch new
services
Load, map,
validate &
distribute first
Bordereaux
Test and mobilise
bordereaux
transformation
service
BINDER MANAGEMENT SERVICES – SUPPORT TO MANAGING AGENTS AND BROKERS
06/07/2015
© 2013 Xchanging plc
KEY MESSAGES
01
02
A number of issues with the reporting of
data from cover holders (via brokers),
make it difficult for insurers to manage
the underlying exposures on their
binding authority contracts. Focus is
increasing in this area
03
04
Xchanging already plays a pivotal role in
the processing of premium and claim
bordereaux for the market and has a
track record of providing shared service
solutions
38
While many of the issues are shared, the
available binder management solutions
are currently being procured on an
individual basis
BINDER MANAGEMENT SERVICES – SUPPORT TO MANAGING AGENTS AND BROKERS
In partnership with a third party software
provider, Xchanging plans to launch two
new elective service offerings in January
2014, to address the priority issues. The
cost and operation of these services will
be shared between subscribing insurers.
06/07/2015
© 2013 Xchanging plc
THANK YOU
For further information please contact:
Steven Tucker – Product Manager
[email protected]
D +44 (0)20 3604 3236
M + 44 (0)7554 112 617
Control Framework
Q&A
40
© Lloyd’s
Control Framework
Close
Further information on Control Framework – [email protected]
Lloyd’s Modernisation – Directors Briefing 29th October
Next Breakfast Meeting – TBC, in early December
www.lloyds.com/controlframework
41
© Lloyd’s