Control Framework Breakfast Group Presentation July 2013

Report
Control Framework
Breakfast Group agenda
9:00
Arrival, Breakfast & networking
All
9:20
Welcome
Ali Dove
9:25
Direct Reporting Demonstration
Sharmi Bakrania
9:50
Phase 2 Control Framework Update
Jaana Rouvari & John Hibbert
10:20
Q&A
All
10:30
Close
Ali Dove
DIRECT REPORTING
Direct reporting RECAP
What is it ?
 A process that enables Managing Agents to report regulatory & tax
information directly to Lloyd’s for Service Company business
 Data is at a transactional level as opposed to reporting information
being derived from the bureau accounting process
 Breaks the link between accounting and reporting (on cash)
DIRECT REPORTING
CLARITY OF SCOPE
In Scope
• 100% business – where an insurer underwrites the whole risk.
• ‘Separate’ subscription business - where an insurer underwrites
part of a risk using a separate insurance document to other insurers
which underwrite that risk.
Out of Scope
• ‘Conventional’ subscription business - where all underwriters
underwriting part of a risk use the same market reform contract for
subscription.
DIRECT REPORTING
CURRENT STATUS
•
•
•
•
Solution is now complete in final stages of testing
Met with all bar one Managing Agent – 3 should be live by year
end
Confirming with those interested to go live on 1/1/14
Meeting with IT suppliers
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DIRECT REPORTING
KEY ELEMENTS - REMINDER




Service Company business
Include all Territories
ACORD standard XML message
Offer reporting service to all managing agents
via Core Market Return route
DIRECT REPORTING
What Do I need TO DIRECT REPORT?
www.lloyds.com/directreporting
•
•
•
•
Direct Reporting Data Requirements
Direct Reporting Gap Analysis Spreadsheet
Direct Reporting Data Model
Direct Reporting Roadmap
DIRECT REPORTING
DIRECT REPORTING
Direct Reporting Demo
DIRECT REPORTING
Control Framework
Control framework phase II
 Why it’s important
 What is it and who does it affect?
 How is it implemented?
 The risk model and how it applies
 Coverholder audit
 Delivery roadmap 2013 & 2014
 Board sign off…
 For more information…
 Questions?
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Control Framework
WHY it’s important
 Increasing regulatory and tax authority scrutiny around the
information that Lloyd’s returns are based upon.
 Increasing sophistication of the business being written (cross
border) through coverholders resulting in regulatory risk
increasing.
 Confidence in data quality is not currently based on evidence
and so is difficult to demonstrate.
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Control Framework
What is it?
 Identifies for the first time explicit minimum information
requirements covering tax and regulatory reporting.
 A structured, documented process that allows managing agents
to demonstrate they have adequate controls in place.
 Nothing new!
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Control Framework
WHO does it affect?
Control Framework is the managing agents’ responsibility
Phase I
Service Companies – Completed
Phase II
Coverholders – Deadline 31st December 2014
Phase III
Open Market - TBA
Phase I – Completed
39 managing agents successfully signed off on time!
Phase II – Commences in July 2013

Framework does not change, it simply extends the scope to include coverholder
business.

Key stakeholders- 55 managing agents, approx. 200 brokers and 5000
coverholders

Presentations at Market Forums to raise awareness on “raising the bar” around
quality of information.

Our own page on Lloyds.com.

Monthly Breakfast Group for managing agents and brokers.
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Control Framework
How it’s implemented
Process for continuous improvement to “raise the bar”
Information
Requirements
Confidence
gained
Risks
Evidence
gathered
How the risks
apply
Controls
described or
defined
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Control Framework
The risk model
RISK
1
Requirements are not
understood
2
Data capture is
inadequate
3
Data is processed
incorrectly
4
HOW IT MAY TRANSPIRE
There are many reasons why this risk may crystallise. It could be that the person interpreting
the requirements does not have the requisite skills or experience, human error, or the
requirements being unclear or ambiguous
This may relate to data not being captured, being captured more than once (duplicate) or that the
data captured is erroneous. It may also be that data is not refreshed at the appropriate point (if
relevant).
Between capture and reporting data will undergo some form of processing. In some cases this
will be about using different elements of data to compute other information, but it also relates to
things such as erroneous report definitions. Typically, this risk can also be used to cover
security and continuity risks, but given the specific focus in the Operating Principles these have
been broken out.
Data may be corrupted accidentally or on purpose. Typically this involved inadvertent or
erroneous changes to data when it is being adapted outside of core processing systems.
Data is corrupted
5
Data is lost and cannot
be recovered
This is most likely to crystallise where historic information is not contained in core processing
systems that are subject to a robust backup regime, but in end user computing facilities such as
spreadsheets or user maintained databases.
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Control Framework
How the risks apply
 How these risks might apply to your organisation or any
associated third party undertaking information capture or
processing on your behalf.
 Understand how these risks could be addressed
 What existing controls are in place?
 How are these risks currently mitigated and managed?
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Control Framework
Coverholder audit
Coverholder audit scope extended to include questions
addressing the Control Framework
Proposed questions address:

Location of risk
 How this is determined for system entry
 What considerations are taken when business is transacted across border

How tax liability is determined

Collation/ creation of the bordereaux

Whether Lloyd’s tools are used in the process of determining risk location and
tax liability (Crystal, Risk Locator Tool, etc).
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Control Framework
Delivery road map - 2013
• Pre project consultation
• Development of Lloyd’s project tool kit
Q2 2013
6 month analysis phase
Q3 & Q4
2013
• Review and confirm coverholders in phase II
• Coverholder risk rating exercise completed and
returned to Lloyd’s
• Audit schedule in place
• Governance and resources in place to see through
implementation of phase II
• Confirmation of project delivery timescale
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Control Framework
Delivery road map - 2014
Q1 2014
Q2 & Q3
2014
Q4 2014
• Assess risks
• Identify controls and gaps
• Review audit findings (continually as audits are
performed)
• Develop remediating controls
• Implement controls
• Review audit findings (continually as audits are
performed)
•
•
•
•
Agree assurances to be shared with Lloyd’s
Test controls and procedures in operations
Confirm evidence for sign off
Formal SIGN OFF!
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Control Framework
Board Sign-off…
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Control Framework
Lloyd’s project structure
Executive Sponsor
Luke Savage
Project Board
Mark Edwards- Tax
Andrew Gurney- International Regulatory Affairs
Peter Montanaro- Delegated Authorities
Rob Humphreys- Market Operations
Ali Dove- Market Operations
Programme Manager
Ali Dove
Project Team
Jaana Rouvari- Project Manager
John Hibbert- Stakeholder Manager
Laura Fletcher- Business Analyst
Lucy Evans- PMO
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Control Framework
For more information
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Control Framework
Or
[email protected]
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Control Framework
Questions?
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Control Framework
Update on broker engagement
John Hibbert
Control Framework
Who have we seen?








Millers
CSWH
Intergro
Decus
AJG
Willis
Tysers
Aon
Julian Sawyer
Les Doel
Dan Lott
John Harris
Phil Branch
John Higgs
David Green
Simon Archer/
Tony Rhoades








Endeavour
Towers Watson
Cooper Gay
THB
Bell & Clements
CSP
AonBenfield
Lockton
Robert Campbell
Geoff Davies
Rod Joyce
Catherine Nicoll
Graham Lindus
Stephen Bryant
Emma Syrett
Ian Derry
Control Framework
Questions that were raised
Q. Why is the DA not involving this in Coverholders audits?
 This is happening. New CF-specific audit questions are being introduced into the
Coverholder audit scope.
Q. Coverholders will be audited anyway over the next couple of years – is this not enough?
 This covers part of it, but we need to look at the controls in place through out the
information chain.
Q. Are MAs “starting again” with third party coverholders? The distribution model is the same
as with service companies- won’t the systems already be there?
 Many are confident that the data is there, it is just the case of evidencing this.
Q. Have the responsibilities of leads and follows been considered?
 Yes this has certainly come into the mix. However as far as the regulators are
concerned, there is no difference between them.
Q. Are TPAs part of this initiative?
 Yes TPAs are considered within the CF.
Control Framework
In summary
•
A common issue is that Managing Agents ask
for data even though it has already been
provided by the Broker. The first option has to
be to look internally rather than going straight
to the Broker. Lloyd’s needs to give guidance
so that is a consistent approach from
Managing Agents.
•
It is essential for Managing Agents and
Brokers to work together towards an agreed
approach.
•
This project should be very helpful for
Brokers in that it will address data
consistency.
CONSISTENCY IS THE KEY
Control Framework
Q&A
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Control Framework
Close
Further information on Direct Reporting – [email protected]
Further information on Control Framework – [email protected]
Next Breakfast Meeting – Tuesday 27th August 2013
Control Framework Broker Conference Event – 17th September 2013
Control Framework Phase I end of project celebration – end of September
date TBC
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