Control Framework Breakfast Group Presentation

Report
A warm Welcome
to
the December
market Breakfast Group
Control Framework
Breakfast Group agenda
9:00
Arrival, breakfast & networking
All
9:15
Festive welcome!
Ali Dove
9:20
Canopius Coverholder Framework
Jane Zonnenberg
9:40
Phase II project update
Approach to Phase III
Jaana Rouvari
Ali Dove
10:00
Trading advice and compliance tools:
Christmas update
Giles Taylor
10:15
Q&A
All
10:30
Close
Control Framework
Celebrating Success
Ark Syndicate Management Ltd
Beaufort Underwriting Agency Ltd
Marketform Managing Agency Limited
R&Q Managing Agency Limited
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© Lloyd’s
Canopius Coverholder Framework 2014
www.canopius.com
Canopius Coverholder Framework 2014
 The
Canopius Journey, so far…
 Where Are We Currently?
 What’s Next?
The Canopius Journey, so far…
Steep learning
curve
 Breaking the
project down into
bite-sized chunks

Bite-Sized Chunks









Identify risk factors
Coverholder data iro the
risk factors
Application of the risk
factors
Overall rating mechanism
for inherent risk
Approach for assessing risk
Audit results template
Bordereaux gap analysis
Update DA Audit Policy
Design BAU process
Risk Factors





Number of territories in which
the coverholder writes business
Principal regional complexity
(i.e. business written in
Australia, Canada, Greece,
Ireland, Italy or USA
Multiple classes of business
(specifically cargo or
bloodstock)
Method of introducing business
(prior submit, coverholder
discretion over pre-determined
rates, no coverholder referral)
Route of business (direct, via
broker, via master coverholder)
Overall rating mechanism for inherent risk



C
o
v
e
r
h
o
l
d
e
r
N
a
m
e
Excel spreadsheet
High/Medium/Low per risk factor
Assign values to H/M/L per risk factor
R
a
t
i
n
g
Comments
Located/
Domiciled
Class of
Underwriting
Business/
Authority
Sub Class
Route of
Business
L
o
w
M
e
d
i
u
m
H
i
g
h
Complexity of
Complexity of Complexity of
business written business written - business written NEW
Risk rating:
Risk rating:
Risk rating:
Method of
Binding
Principal
Lines of Business introducing
Authority Regional
NEW: Class of
business Single or
Complexity
Business
Risk rating:
multiple
Prior Submit
territories
NEW
Route of
business Risk rating:
Direct/Broker/S
ub-delegated
Coverholder writes
Coverholder writes
business in one
Coverholder writes
business in a single
All risks are prior
territory only. This is
only reinsurance
country which is not:
submit or rates are
also the
business or only one
Australia, Canada,
set and coverholder Direct to underwriter
coverholders
line of business excl.
Greece, Ireland, Italy
discretion is not
physical/ domiciled
cargo and bloodstock
or US
permitted
location
Coverholder writes
Coverholder has
Pre-determined rates
business in one of Coverholder writes
offices in multiple
exist but Coverholder
the following
multiple lines of
locations and writes
has authority to
countries: Australia, business excl. cargo
risks only in these
exercise discretion
Canada, Greece,
and bloodstock
territories
within agreed
Ireland, Italy or US
parameters
Coverholder writes
business across
borders and/or
globally
Coverholder writes
business worldwide
Coverholder writes
multiple lines of
Coverholder has full
business including
authority to set rates
cargo and/or
without referral
bloodstock
Complexity of
Complexity of Complexity of
business written business written - business written NEW
Risk rating:
Risk rating:
Risk rating:
Method of
Binding
Principal
Lines of Business introducing
Authority Regional
NEW: Class of
business Single or
Complexity
Business
Risk rating:
multiple
Prior Submit
territories
NEW
Route of
business Risk rating:
Direct/Broker/S
ub-delegated
Total Score
Rating
7
10
7
2
4
30
Low
Via Broker
14
20
14
4
8
60
Medium
Via Master
Coverholder(take
from lead/follow)
21
30
21
6
12
90
High
Approach for assessing risk



Audit results template
Bordereaux gap analysis
Desktop review
Audit results template


Lloyd’s 2014 audit scope converted to a template to grade
audit reports
Converting the results of the audits into an assessed risk
rating:
• New reports received after template introduced
• Retrospectively applied to reports received earlier in 2014
TOTALS & AUDIT SCORE
Y
N
N/A
1
1.11.1.
0
0
0
0
0
No score
EXECUTIVE SUMMARY
The auditor is expected to provide an executive summary to the managing
agent. These should provide details of the main findings and issues, an
indication of the coverholder's general suitability, culture and openness
and a review of any previous recommendations.
Appendix
0
0
0
0
Covered in the Audit?
Issue - Y,
N or N/A
Section
Score
Bordereaux gap analysis






Bordereau template prepared based on data coverholder
typically expected to provide
Gap analysis performed on each bordereau per BA
Simple yes/no answers on whether/not specific data is
regularly provided
Values assigned to each data field according to
significance
Total rating applied per binder
Desktop review - used for adhoc performance monitoring
or where rating is marginal
Where Are We Currently?



Delegated Authority Audit
Policy has been updated
Currently embedding the
process of ongoing rating
of a fluid coverholder
population
Scoping out Control
Framework recording and
reporting mechanisms on
BDX
What’s Next?




Review of the audit scope – removing possible
duplications, or questions that we (as the Managing
Agent) can answer
Identification of those cases where brokers are involved
in the coverholders’ data
Identifying any possible areas of overlap with Conduct
Risk questionnaire
Test and refine practical application of audit frequency
decision process against backdrop of topical regulatory
focus
Control Framework
Control framework Phase II
Project Update
Jaana rouvari
15
© Lloyd’s
Control Framework
Today…
1. 2014 round up
2. Market progress
3. Broker questionnaire
4. Lloyd’s support for Control Framework in 2015
5. Approach to Phase III – Open Market
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© Lloyd’s
Control Framework
The 2014 Christmas Breakfast Group Quiz
Q1: What cuts of pork make bacon? (Hint: two answers!)
Q2: What is the traditional casing for a pork sausage?
Q3: To the nearest 10 – How many bacon and sausage sarnies have we gone
through in 2014?
Q4: The history of the mince pie can be traced to the 13th century, what were the
three key traditional fillings for this original pie?
Q5: How many market breakfast meetings have we had in 2014?
Q6: To the nearest 10 – How many people in total have attended the market
breakfast group meetings?
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© Lloyd’s
Control Framework
Achievements and progress…
on a more serious note
• Lloyd’s market support through nearly 300 managing agent
and broker meetings
• Celebrating a few more sign-offs today, with rest progressing
well
• Some delays experienced due to renewals, changes in staff,
other regulatory initiatives
Managing agent sign-off outlook
Q4 2014
30%
Q1 2015
50%
Q2 2015
80%
Q3 2015
90%
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Q4 2015
100%
© Lloyd’s
Control Framework
Broker questionnaire
• Developed by LMA’s Delegated Authorities Operations Committee
• Looks to make the processing an intermediary undertakes transparent
• Acts as a conversation opener between managing agents and those
brokers who undertake processing of tax and regulatory information
• Lloyd’s role is to facilitate the process of requesting and disseminating
information
• Lloyd’s will not take a view on the information provided by brokers
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© Lloyd’s
Control Framework
…to avoid
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© Lloyd’s
Control Framework
Control Framework Support in 2015
For managing agents yet to sign off
Your normal Lloyd’s Delegated
Authorities contact
Queries
Track progress through
6-monthly review meetings
and additional catch ups
Communications
For brokers
Queries
Martin Baker
Broker questionnaire
Communications
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© Lloyd’s
Control Framework
What about Phase III- Open Market?
• Analysis and market consultation carried out over the past 6 months
• Control Framework evaluated in light of a number of existing initiatives
• Consideration given to ongoing market modernisation initiatives
changing open market process and controls
• Everything in the context of taking a pragmatic approach
• Further mitigation of the Control Framework risks addressed through
building robust central services
• Addressed at the same time as LMG market modernisation initiatives
• Negates the need for a separate managing agent sign-off
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© Lloyd’s
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Crystal/RLT update
Control Framework Breakfast, 9th December
Giles Taylor, Lloyd’s
© Lloyd’s
Key items
► Service standards and usage
► New content
► LITA vision & 2015
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© Lloyd’s
Service standards & usage
The headlines…
• 12,000 Crystal pages
• 15,000 Crystal users
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• c. 55,000 Crystal reports pcm
• Still only 25% of users log in
• c. 500 RLT reports
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© Lloyd’s
Service standards & usage
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© Lloyd’s
Non-US consumer information
Subjects
►
►
General
Australia

Canada*

France

Germany
Pre-contractual notification and
disclosure

Italy
Insurance documents

New Zealand

South Africa

Spain
Definition of ‘consumer’

Consumer protection legislation
Insurance documentation

►



Jurisdictions
Processing and servicing of risks

Cancellation and non-renewal

Tacit renewal

Claims handling

Definition of ‘complaint’

Complaints handling (internal
procedures)

Details of ombudsman (external
procedures)
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* At provincial level, Alberta, British
Columbia, Manitoba, Ontario, Quebec
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© Lloyd’s
US consumer information
Consumer complaints
Posted: California, Florida, Illinois, Louisiana,
Maryland, New Jersey, New York, North Carolina,
South Carolina, Texas
By y.e. 2014: Connecticut, Delaware, Kentucky,
Pennsylvania, USVI
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2015: All remaining states
Homeowners Cancellation &
Non-renewal
Posted: California, Connecticut, Delaware, Florida,
Georgia, Illinois, Louisiana, Maryland, New Jersey,
New York, North Carolina, Pennsylvania, South
Carolina, Texas
Q1 2015: Massachusetts, Oklahoma, Virginia,
Washington, Colorado, Tennessee, Ohio, Alabama,
Missouri, Minnesota
2015: All remaining states
Claims handling
California, Florida, New York, Texas
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© Lloyd’s
Quick search
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© Lloyd’s
Intermediary licensing

Completed for licensed territories

Drafts prepared for following priority countries, but not ‘live’

•
Argentina
•
Indonesia
•
Azerbaijan
•
Malaysia
•
Brazil
•
Mexico
•
Chile
•
Nigeria
•
China
•
Panama
•
Colombia
•
Paraguay
•
Czech Republic
•
Saudi Arabia
•
Ecuador
•
South Korea
•
Finland
•
Turkey
•
India
•
Vietnam
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Remaining unlicensed territories drafted up to ‘U’, but not live
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© Lloyd’s
LITA vision and 2015
Key topics to address…

Risk Location Guidance – separate from coverholder approvals (Y4125)

US Law & Jurisdiction – reaffirm guidance (Y3406)
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Renewal of online offering

Review current robustness of Crystal IT infrastructure

Consult with the market

Develop business case to overhaul Crystal, Risk Locator
LITA offering

Expanded provision of advice

Regulatory thought leadership

Above all, forward looking
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© Lloyd’s
© Lloyd’s
Control Framework
Q&A
33
© Lloyd’s
Control Framework
AND THE WINNER
IS…
34
© Lloyd’s
Control Framework
Further information on Control Framework
[email protected]
www.lloyds.com/controlframework
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© Lloyd’s

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