Electronic Market Reform Contract Endorsements Market Briefing

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Electronic Market Reform Contract
EndorsementsMarket Briefing

• 14th 18th March 2008

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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

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MRCE e-MRCE John Muir, WillisMarket wide
project sponsor
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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

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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

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MRCE e-MRCE Detail Stuart Dean, WillisMarket
Wide Project Manager
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Endorsements Past
Honeycomb
Cover Note Addendum

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Endorsements Present The MRCE
Future starts now End March deadline
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Endorsements Present The MRCE
Risk Identification and Endorsement Details
section (Additional details may be included)
Contract Change(s) Section using MRC format and
headings
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Endorsements Present The MRCE
Contract Administration and Advisory Section
Settlement Due Date default
Agreement Section (Non-GUA Example)
Agreement Boxes (sig, date and name)
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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)

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Endorsements Past
Honeycomb
Cover Note Addendum

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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

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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

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Simple steps using email
Broker
Slip Leader
Agreement Parties
Notification Parties
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Broker requests Slip Leader agreement
References- Subject line- Insurer reference
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
Agreementresponse
GUA category details
Settlement Due Date details
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Slip Leader agrees MRCE within attachment to
email
Response within a scanned and attached copy of
agreed MRCE
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Broker requests Agreement Party agreement
Agree
Response request
Slip leader evidence of agreement attached to
email
MRCE attached to email
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Broker notifies Notification Parties
Notify
MRCE attached to email
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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 dont 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

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Broker perspective Trevor Maddison, Marsh
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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

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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

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Insurer perspective Ian Fantozzi, Beazley
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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

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Actions for brokers and insurers

• Use email
• Assign sponsor and primary contact
• Measure
• Make it happen

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Questions and discussion
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Panel discussion

• John Muir, Willis (Project Sponsor)
• Jane Warren, ACE Global Markets
• Trevor Maddison, Marsh
• Ian Fantozzi, Beazley