Transcript Market Reform Group Electronic Market Reform Contract Endorsements Market Briefing

Market Reform
Group
Electronic Market Reform Contract Endorsements
Market Briefing
14th & 18th March 2008
With
Agenda
Market Reform
• Introduction
Page 1
Andy Brookes, MRO
• MRCE – The new document standard for
endorsements
• e-MRCE – Submission and agreement of
John Muir/Stuart Dean,
Willis
endorsements electronically
• e-MRCE – Broker perspective
Trevor Maddison, Marsh
• e-MRCE – Insurer perspective
Ian Fantozzi, Beazley
• Questions and discussion
Market Reform
Page 2
MRCE & e-MRCE
John Muir, Willis
Market wide project sponsor
MRCE – The new document standard for endorsements
Market Reform
• Previously no explicit standard and no guidance
Page 3
• Benefits
– Supports Contract Certainty
– Enables contract change documentation to client promptly
– Reduces the effort required to handle contract endorsements
– Document format consistent with original contract (MRC)
– Mapped to ACORD standard – paves the way for structured electronic
messaging
– Unambiguous Settlement Due Date
Reforming endorsements: a big prize
Market Reform
• Approx ½ million endorsements p.a.
• High admin cost relative to low value that clients attach to noncomplex endorsement
• Faster agreement process
• Save broker queuing and underwriter consultation time
• Frees brokers and underwriters for more productive use of time
• Agreed endorsement forms basis of contract change sent to client
– Improved contract certainty
– Saves broker rework
– Documentation to client quicker
Page 4
• Bridgehead into electronic trading
Market Reform
Page 5
MRCE & e-MRCE Detail
Stuart Dean, Willis
Market Wide Project Manager
Endorsements – Past
Market Reform
“Honeycomb”
Page 6
Cover Note Addendum
+
Market Reform
Endorsements – Present: The MRCE
Page 7
Future starts now: End March deadline
Market Reform
Endorsements – Present: The MRCE
Page 8
Risk Identification
and Endorsement
Details section
(Additional details
may be included)
Contract Change(s)
Section using MRC
format and headings
Market Reform
Endorsements – Present: The MRCE
Contract
Administration and
Advisory Section
Settlement Due Date
default
Agreement Section
(Non-GUA Example)
Agreement Boxes
(sig, date and name)
Page 9
MRCE Summary
• Logical extension to MRC – consistent format, basis of client
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documentation
• In line with Contract Certainty – speeds up contract change documentation
to client
• Reduces the effort required to handle contract endorsements
• London Market standard from end of March 2008 (for new endorsements)
+
Page 10
Endorsements – Past
Market Reform
“Honeycomb”
Page 11
Cover Note Addendum
+
e-MRCE – Submission and agreement of endorsements
electronically
Market Reform
• What is it?
Page 12
• How does it work?
• Broker perspective – Trevor Maddison, Marsh
• Insurer perspective – Ian Fantozzi, Beazley
What is e-MRCE?
Market Reform
• Email or other forms of electronic processing
Page 13
• London based brokers are currently using email to agree
endorsements for business outside the London Market … do this
for London Market business as well!
• The email process:
– Broker assesses the suitability of endorsement for email
– Basic agreement process then as per existing practice
• Simple email template
Simple steps using email
Market Reform
Broker
Request agreement + GUA category
Response + GUA category
Request agreement
Agreement
Parties
Response
Notify
Page 14
Slip Leader
Notification
Parties
Broker requests Slip Leader agreement
Market Reform
References:
- Subject line
- Insurer reference
Page 15
Response
request
GUA
category
request
Settlement
Due Date
request
MRCE
attached to
emaIl
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Slip Leader agrees MRCE – within the email reply
Page 16
Agreement
response
GUA
category
details
Settlement
Due Date
details
Market Reform
Slip Leader agrees MRCE – within attachment to email
Response within a
scanned and attached
copy of agreed MRCE
Page 17
Broker requests Agreement Party agreement
Market Reform
Agree
Response
request
Page 18
Slip leader
evidence of
agreement attached
to email
MRCE
attached to
email
Broker notifies Notification Parties
Market Reform
Notify
Page 19
MRCE
attached to
email
e-MRCE summary: focus is email
Market Reform
• “Keep it simple”
Page 20
– Email is sufficient – new technology is not a pre-requisite
– Use structured data messaging when you have it
– Certainly non-complex, but don’t be afraid to go further
• “Just do it”
– Email widely used for non-London Market business already
– Brokers: extend use of email to your London Market business particularly
for non-complex endorsements
– Insurers: respond using email
Market Reform
Page 21
Broker perspective
Trevor Maddison, Marsh
Broker perspective
• Reduces time spent on submitting non-complex endorsements to
Market Reform
insurers for their agreement
• Frees up valuable broker time to concentrate on our client needs
• Provides more control, clearer accountability and transparency
• Brokers are accustomed to using email for endorsements
• Reduces hand-off between “Account Handlers” and “Market
Brokers”
• Simplifies task of preparing contract change documents for client
• Faster endorsement agreement using parallel insurer agreement
Page 22
• Importantly, encourages confidence in electronic trading in the
London Market
Some Marsh facts
Market Reform
• We changed our internal document template for MRCE overnight
Page 23
• Commenced use of new endorsement format in Dec 2007
• We will commence eMRCE from April 1st
• 60,000 endorsements traded per year, approx 5 per risk
• Marsh involved in the eMRCE endorsement pilot
– 2,000 endorsements traded successfully with major markets
Market Reform
Page 24
Insurer perspective
Ian Fantozzi, Beazley
Insurer perspective
• Reduced face-to-face consultation time for non-complex
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endorsements
• Spend underwriting time with broker more productively
• Reduced scanning volumes through receipt of electronic
documentation
• Easier transcription into insurer systems
• Earlier visibility of endorsements for follower agreement parties
• Use of email allows for quick adoption:
– A format that is well understood and readily used
– Minimal cost (including training cost)
Page 25
• Allows insurers to apply “triage” to incoming endorsements
Actions for brokers and insurers
Market Reform
• Use email
Page 26
• Assign sponsor and primary contact
• Measure
• Make it happen
Market Reform
Page 27
Questions and discussion
Panel discussion
Market Reform
• John Muir, Willis (Project Sponsor)
Page 28
• Jane Warren, ACE Global Markets
• Trevor Maddison, Marsh
• Ian Fantozzi, Beazley