Transcript MRCE - Willis Internal pres

The Market Reform Contract Endorsement
and where are we going to take it and us?
Let’s start with a brief history lesson
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Market Reform Contract Endorsement (MRCE)
● Why Guidance?

No prior definitive guide to Endorsements

Formal launch of new style documentation

Aids training and implementation
● Benefits
 Assists in meeting code of practice, “Contract changes need to be
certain and documented properly”

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Reduces the time and effort handling Contract Changes
Key Elements
● Eliminates use of the “honeycomb” endorsement condensing
the long established two document (and sometimes three)
process into one
● Allows for the MRCE to be used as an Insurer Authorised
Document or as a Broker Insurance Document (BID)
● Follows MRC approach and section layout
● Provides an unambiguous Settlement Due Date default position
● The MRCE may be used immediately; formally adopted as the
Market Standard after 31 March 2008
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‘Old’ Honeycomb style
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Cover Note Addendum
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MRCE Standard Structure
STRUCTURE
MRCE Structure
Page header
RISK and ENDORSEMENT
IDENTIFICATION DETAILS
CONTRACT CHANGE(S)
Primary
sections
INFORMATION (where required)
Secondary
sections –
order of
sections is
reversible
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CONTRACT ADMINISTRATION AND
ADVISORY
(mandatory, where applicable)
AGREEMENT
New style layout
Risk Identification and
Endorsement Details section
- Additional details may be
included
Contract Change(s) Section
using MRC format and
headings
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New style layout
Contract Administration
and Advisory Section
(mandatory where
applicable)
Settlement Due Date
default position (always
include on APs)
Agreement Section –
GUA Example
Agreement Boxes –
ensure date of
agreement is captured
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Evidencing Contract Changes
● The MRCE may be used irrespective of the form of the original
contract documentation
●MRCE approach to evidencing Contract Changes
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
A copy of the MRCE

A copy of the MRCE with the Contract Administration and
Advisory and Agreements sections in the contract
documentation being omitted

Brokers may also evidence agreements of change(s) to
contract(s) by means of a Broker Insurance Document

A formal policy endorsement document which is produced
and authorised in accordance with the Insurer Contract
Documentation heading of the MRC
e-MRCE
e-MRCE
Project Approach
● Primary target audience - the vast number of easy (noncomplex) endorsements
● As many as possible as quickly as possible
● Attaching an MRCE to an e-mail or message for agreement
and return to the broker
● Formal adoption criteria to join initiative
● Measurement
● E-mail being used as an interim stage (minimum entry
requirement)
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Benefits Accumulation
Data
Integration
Benefits
Accumulation
Application/
Platform
E-mail
agreement
E-mail
delivery
Technology phase
MRCE
Face to Face
Implementation phase
Benefit increments not to scale
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Benefits
Clients
● Align the relative low value that clients place on brokers and
insurers handling easy (non-complex) Contract Endorsements
with the actual expense to the Market
 This means embedding a more cost effective and efficient process
for all
● Clients should benefit from quicker turnaround of agreement
process and therefore receive Contract documentation earlier –
supports achieving Contract Certainty
Regulator
● Code of practice states “Contract Changes need to be certain
and documented promptly”
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Benefits
Insurers
● Allows insurers to apply “triage” to incoming endorsements
● Free up box time for more important , significant, productive and
valuable business
● Free up “line” underwriters time by matching materiality and value
with appropriate level of insurer personnel and personnel location
● “Following” markets see full audit trail and could be much more
easily notified when not an Agreement Party
● Much easier to get “agreed” endorsements into insurer’s systems
● Use the consistency of presentation and data to integrate into
insurer’s systems
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Benefits
Brokers
● Reduce time spent on delivering endorsements to insurers
● Provides more control and clearer accountability
● Reduces hand-off between “Account Handlers” and “Market
Brokers”
● Simplifies onward confirmation of agreement to the Contract
Change(s) to the client
● Allows for parallel insurer agreement process which will speed
up endorsement agreement
● Affords the technology opportunity from the use of consistent
presentation/data to integrate into broker’s systems
● Encourages confidence in electronic trading in the London
Market and its growth and development
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Adoption
● Assign a Project Champion
● Actively promote the change in culture and behaviour
● Determine which technology (if in doubt start with e-mail)
● Start in an easy place
 Single agreement endorsements
 Contracts with ‘regular’ endorsements
● Know the process e.g., dealing with “Urgent’s” and slow
responses
● Workflow considerations
● Changing roles and responsibilities in the organisation
● Simple measurement – collated by MRO
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Remote Agreements – Technology overview
● E-mail – use with authentication software
● Document Repositories such as Lloyd’s Wordings Repository and ECF
Repository are also available for automatic download of documents.
● Electronic Forms. This is the simplest option, involving the use of electronic
forms for capturing or presenting information and using ACORD messages to
transport the information between trading parties.
● Direct Messaging refers to the ability to received and send (ACORD standard)
messages through your own gateway and integrate the documents and data
directly onto your own core systems.
● Messaging Hub. This is a web-based application offering users the ability to
route electronic messages between trading partners. It is used primarily to
outsource the connectivity configuration where there are multiple destinations for
sending/ receiving messages and keeping/maintaining live connections . Note:
some technology vendors sell messaging hubs that have electronic forms
integrated with them.
● Trading Platform. This is a web-based application offering users secure access
to a trading environment which provides placement workflow and data
management functionality via the internet. Risks may be bound on-line within the
trading platform.
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What are the risks and issues?
Key Risks and issues
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Resolution/mitigation
● Have to change the Culture and
Behaviour
● Requires commitment from each
organisation to adopt and adhere
to new practices and procedures
● Varying views from Brokers/Insurers
on method of deploying electronic
endorsements can act as barrier to
take-up
● being mitigated by Implementation
Pack guidance and the work of the
Electronic Placing Steering Group
● No common infrastructure or
(placing) systems platform that
facilitates endorsement agreements
● Standards and common processes
from usage scenarios. ACORD
working on standards. Service
Providers are already building
Endorsement solutions
● Endorsement numbers are not
currently officially monitored. For
proper and accurate measurement
of the penetration and success of
the initiative, Market-wide
endorsement statistics will be
required and centrally monitored
● Simple measurement approach for
now; count what is sent “remotely”
and what is agreed “remotely”.
Brokers and Insurers submit highlevel data
Next Steps
● December 2007, January and February 2008
● Finalise “starter” pack




Definitive e-mail guidance
Overview of remote agreement processes
Adoption and implementation considerations
Measurement
● Market guidance and presentations early 2008
 Insurer Briefings
 Broker Briefings
● Build-up market endorsement framework via cross-market
representation for:
 Usage scenarios – Practitioners
 Messaging standards – Associations/ACORD
 Build systems around market framework – Technology providers
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