Electronic Market Reform Contract Endorsements Market Briefing
description
Transcript of Electronic Market Reform Contract Endorsements Market Briefing
Market Reform Group
With
Electronic Market Reform Contract Endorsements
Market Briefing
14th & 18th March 2008
Mar
ket R
efor
m
Page 2
Agenda
• Introduction
• MRCE – The new document standard for endorsements
• e-MRCE – Submission and agreement of endorsements electronically
• e-MRCE – Broker perspective
• e-MRCE – Insurer perspective
• Questions and discussion
Andy Brookes, MRO
John Muir/Stuart Dean, Willis
Trevor Maddison, Marsh
Ian Fantozzi, Beazley
Mar
ket R
efor
m
Page 3
MRCE & e-MRCE
John Muir, WillisMarket wide project sponsor
Mar
ket R
efor
m
Page 4
MRCE – The new document standard for endorsements
• Previously no explicit standard and no guidance
• 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
Mar
ket R
efor
m
Page 5
Reforming endorsements: a big prize
• Approx ½ million endorsements p.a.
• High admin cost relative to low value that clients attach to non-complex 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
• Bridgehead into electronic trading
Mar
ket R
efor
m
Page 6
MRCE & e-MRCE Detail
Stuart Dean, WillisMarket Wide Project Manager
Mar
ket R
efor
m
Page 7
Endorsements – Past
+
“Honeycomb” Cover Note Addendum
Mar
ket R
efor
m
Page 8
Endorsements – Present: The MRCE
Future starts now: End March deadline
Mar
ket R
efor
m
Page 9
Endorsements – Present: The MRCE
Risk Identification and Endorsement Details section(Additional details may be included)
Contract Change(s) Section using MRC format and headings
Mar
ket R
efor
m
Page 10
Endorsements – Present: The MRCE
Settlement Due Date default
Agreement Boxes (sig, date and name)
Contract Administration and Advisory Section
Agreement Section(Non-GUA Example)
Mar
ket R
efor
m
Page 11
MRCE Summary
• Logical extension to MRC – consistent format, basis of client 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)
Honeycomb
+Cove
r Note
AddendumMRCE
Mar
ket R
efor
m
Page 12
+
“Honeycomb” Cover Note Addendum
Endorsements – Past
Mar
ket R
efor
m
Page 13
e-MRCE – Submission and agreement of endorsements electronically
• What is it?
• How does it work?
• Broker perspective – Trevor Maddison, Marsh
• Insurer perspective – Ian Fantozzi, Beazley
Mar
ket R
efor
m
Page 14
What is e-MRCE?
• Email or other forms of electronic processing
• 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
Mar
ket R
efor
m
Page 15
Simple steps using email
Broker Slip Leader
Agreement Parties
Notification Parties
Request agreement + GUA category
Response + GUA category
Request agreement
Response
Notify
Mar
ket R
efor
m
Page 16
Broker requests Slip Leader agreement
GUA category request
Settlement Due Date request
MRCE attached to emaIl
References:- Subject line- Insurer reference
Response request
Mar
ket R
efor
m
Page 17
Slip Leader agrees MRCE – within the email reply
Agreementresponse
GUA category details
Settlement Due Date
details
Mar
ket R
efor
m
Page 18
Slip Leader agrees MRCE – within attachment to email
Response within a scanned and attached copy of agreed MRCE
Mar
ket R
efor
m
Page 19
Broker requests Agreement Party agreement
Response request
MRCE attached to email
Slip leader evidence of agreement
attached to email
Agree
Mar
ket R
efor
m
Page 20
Broker notifies Notification Parties
MRCE attached to email
Notify
Mar
ket R
efor
m
Page 21
e-MRCE summary: focus is email
• “Keep it simple”
– 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
Mar
ket R
efor
m
Page 22
Broker perspective
Trevor Maddison, Marsh
Mar
ket R
efor
m
Page 23
Broker perspective
• Reduces time spent on submitting non-complex endorsements to 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
• Importantly, encourages confidence in electronic trading in the London Market
Mar
ket R
efor
m
Page 24
Some Marsh facts
• We changed our internal document template for MRCE overnight
• 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
Mar
ket R
efor
m
Page 25
Insurer perspective
Ian Fantozzi, Beazley
Mar
ket R
efor
m
Page 26
Insurer perspective
• Reduced face-to-face consultation time for non-complex 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)
• Allows insurers to apply “triage” to incoming endorsements
Mar
ket R
efor
m
Page 27
Actions for brokers and insurers
• Use email
• Assign sponsor and primary contact
• Measure
• Make it happen
Mar
ket R
efor
m
Page 28
Questions and discussion
Mar
ket R
efor
m
Page 29
Panel discussion
• John Muir, Willis (Project Sponsor)
• Jane Warren, ACE Global Markets
• Trevor Maddison, Marsh
• Ian Fantozzi, Beazley