Transcript eAccounts and Co-lead Binders Market Spend on Market Reform

Associations’ Administration Committee
‘Finish What We’ve Started’
Market Briefing
by Mark Chapman
Group CIO, Global Aerospace
27th October 2009
This Presentation
What is it we started and need to finish?
What benefits will these the changes bring?
How much will the programme cost, when will it be
delivered and how will it be funded?
How was the procurement done and does the programme
deliver fair value for money?
Have we got the right governance in place to successfully
deliver the programme?
How does this position the London Market for the future?
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What do We Need to Finish?
All accounting submissions within the scope of IMR
As close to full usage of ECF for all claims as is
practicable
A significantly better user experience for ECF/CLASS
Support the move to use of structured ACORD standard
data for accounting
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Why finish?
Reap the full benefit from the investment thus far:
 ECF quicker than paper but not all claims in scope
 A&S via the repository is quicker than paper but
structured data will be quicker still
 Structured data will help reduce queries and rejections for
accounting submissions
 Transfer of accounting splits work from broker to insurer
brings London into line with international markets
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Stakes in the Ground
Why continue to invest in “old” London Bureaux systems?
 Current systems landscape will be with us for at least
four years
 It is unrealistic to expect to have moved off legacy bureau
systems to a new strategic solution until after 2012
 Finishing What We’ve Started can not be achieved
without systems investment
 To protect our investment, wherever possible change is
focused on newer systems, such as IMR and ECF, and
uses ACORD standards for data exchange
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IMR Security Model
What needs to be added to the IMR?
 Mid-term Broker and Market Changes
 3rd Party Access
 Conflict of Interest
 Confidential terms
What does it deliver?
 All accounting submissions within the scope of IMR
 Increases in-scope claims for ECF by circa 7%
 Brings in scope Vertical Placements (e.g. Aviation)
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What needs to be changed in ECF?
ECF delivered a basic, functioning system
Two years live experience has unearthed significant
usability improvements that would aid processing and
encourage further take-up:
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Convince some players that are yet to be convinced
Address weaknesses in ECF’s usability identified by crossmarket user group
Simplify current system where some still have to use up to
three versions of CLASS
Hide CLASS, including Company Market CLASS – a 20 yearold green-screen museum piece
What does ECF2 deliver?
Fast on-line viewing of IMR documents
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An electronic claim file containing all documents for a claim
Ability to text search within this file
Removal of CLASS from the carriers’ business processes
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Allow claims handlers to respond to all claims via browser screen
without the need to use CLASS
One common approach/system for Lloyd’s & Companies
Claims Workflow Management
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Provides transparency about the status of each claim
Puts claims handlers in control of their work
Allows managers to balance workload within their teams
Data Warehouse to provide service performance information,
data exploration capability and audit trail
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What needs to be changed with A&S?
A&S via the IMR was always viewed as a stepping stone
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Removed “van time” but still involved the exchange of
scanned documents
eAccounts moves to use of ACORD standard structured
data in line with other markets (e.g. continental
reinsurers)
Transfer of calculation on non-fundamental accounting
splits from broker to insurer brings London into line with
other markets
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Benefits of eAccounts
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Elimination of re-keying, fewer errors and less rework by both
the broker and XIS in the premium process, leading to the
potential to improve cash flow to carriers
Delays in current process cost insurers circa £3.5m pa in lost
investment income (based on 2% interest rate) [source JMD]
An accounting interface (eBOT) that is in line with international
markets (e.g. Europe)
Easier electronic access to the London Market for Brokers in
remote locations
Leverages market’s existing investment in IMR and DRI
No systems disruption for Carriers
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Cost to Finish What We Started
Build Estimate
IMR Security Model
£1.3 m
ECF2
£4.4 m
e-Accounts
£3.1 m
Total Build Estimate
£8.8 m
Operating costs (2010-12)
IMR Security Model
ECF2
e-Accounts
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No additional cost
£4.9 m
No additional cost
Total Operating Costs
£4.9 m
Total
£13.7m
These figures
exclude a 20%
contingency
budget held by
AAC and LMG
Contract and Funding
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Contract will between XIS, LMA and the IUA
Funding:
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The costs will be split 62.5% to LMA and 37.5% to IUA,
consistent with previous build projects
LMA Board has formally requested that the Corporation of
Lloyd’s provides the money to fund its share of the build costs
IUA Board has confirmed that it will meet its commitment
without further recourse to its members
Operating costs to be met by transactions charges to be agreed
by the respective Associations
Procurement Process
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Using Xchanging, as the incumbent supplier, to make
changes to their systems reduces the risk of failure
Challenge was how to reduce the risk of uncompetitive
pricing for the work
Two stage process:
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Engaged third party (DMW Group) to audit XIS’s costs, work
estimates and technology proposal to assure appropriate
technical price
Deployed a market-led commercial negotiation team
(Shirine Khoury-Haq, Catlin; Chris Smith, LMA and
John Hobbs, IUA – supported by Lewis Love III, Aon)
Negotiation
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Unprecedented access given to DMW Group and the
commercial team
Costs reflects a substantial discount on XIS’s “card rate”
Cost estimates believed to be accurate to +/- 20%
While XIS is delivering this programme close to “cost”,
the Xchanging group will be making a modest profit
Overall we have established this is a fair price
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Delivery Timescale
Programme
Implementation date
IMR Security Model
November 2009
eAccounts - Release 1
November 2009
Support for ACORD messaging
ECF 2
June 2010
eAccounts - Release 2
July 2010
Support for non-fundamental splits
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Programme Governance
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London Market Group
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LMG
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Associations Admin Committee
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AAC
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IMR
security
model
Project
Manager
eAccounts
Project
Manager
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Management of programme delivery
Resolution of conflicts between projects
Primary point of contact for Xchanging
senior management
Client-side Project Managers
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ECF2
Project
Manager
Budget holder for each project
Oversight of programme delivery
Market communications
Programme Manager
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Programme manager
Overall responsibility for programme
Strategy and budget setting
Management of project delivery
Monitoring cost, scope, quality and
timescale
Key contact for XIS project managers
Management of market input to projects
What is not currently in scope
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Solution for claims for binders – proposal to be made to
LMG in early 2010
Replacement of current EDI messages to insurers with
ACORD messages
Changes to support Lloyd’s claims transformation
project pilot
Future improvements to IMR, ECF and eAccounts
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The Future
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FWWS programme moves the market forward, delivering
real and important benefits in the short term
Gives the market 3-year breathing space to plan and
implement future systems, allowing freedom to exercise
choice in its selection of technology and service providers
Use of ACORD standards reduces our reliance on
Xchanging and protects the carrier and broker
communities in their technology investment
So while FWWS isn’t the future, it reduces the barriers to
moving to a new generation of market systems and
infrastructure
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‘Finish What We’ve Started’
Market Briefing
Questions and
Answers
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