Control Framework
Breakfast Group agenda
9:00 Arrival, Breakfast & networking
9:20 Welcome and The “gold star awards”
9:25
9:45
Delegated authorities update
Phase II: risk assessment, data flow and next steps to launch
10:05 Broker engagement
10:15 Q & A
10:30 Close
- Ali Dove
- Sarah Thacker
- Jaana rouvari
- John Hibbert
- All

Control Framework
Lloyd’s market gold star awards…

< Picture to go here >
Should Lloyd’s Mandate the CH reporting standards?
Sarah Thacker, Lloyd’s Delegated Authorities
21 May 2013
© Lloyd’s

The consultation
► Representatives from DUC, BACG, BOLT,
DUM, Lloyd’s country managers and
Xchanging were consulted
► Stakeholders were told that there had been a request to mandate the reporting standards in a response to the proposed roll-out of the control framework to coverholders
► Stakeholders were asked if they thought the reporting standards should be mandated on coverholders because of the control framework
► They were also asked for general comments around mandating the reporting standards on coverholders
© Lloyd’s 4

Issues with mandating,
London
► Changes only typically take place annually at renewal
► Underwriters are largely not aware of the standards, their usefulness and importance
► Many London stakeholders still do not have systems to put this data into
5 © Lloyd’s

Issues with mandating, coverholders
► Domestic carriers typically collect this sort of data as a bi-product of processes, this is asking for something extra
► Customised versions of off-the-shelf systems mean charges for implementing standards
► Over time, as coverholders change systems so these issues are likely to be reduced
► Retail agents at the start of the chain need to collect the data
► Coverholders want to be asked for the same thing by all syndicates; but this is not what was proposed
6 © Lloyd’s

The reporting standards and the DATA control framework
1. Information Requirements
The reporting standards ≠ the data items in the control framework
Control framework is what to capture and the controls, reporting standards is what to send into London
The red fields in the standards are not all in the control framework
The control framework includes Lloyd’s data which a coverholder would not know
The control framework includes data which London already knows
Examples – risk codes, year of account
Examples – Currency if always $; state if always Florida, Contract Type
7 © Lloyd’s

The reporting standards and the DATA control framework
2. Risk model
Risk 1 – requirements are not understood
Risk 2 – data capture is inadequate
Will mandating help?
The reporting standards ≠ control framework so may confuse
Risk 5 – data is lost and cannot be recovered
Would help to explain, but see above may confuse and would not give the full picture
Risk 3 – data is processed incorrectly No
Risk 4 – data is corrupt No
No
8 © Lloyd’s

The reporting standards and the control framework
Control Framework continued
Summary Will mandating help?
3. Apply risk model
4. Identify and document key controls
Each data item to be risk assessed and prioritised
Identify and document the controls mitigating the risks
No
Might be an example of a control…
5. Gather evidence Gather evidence of controls No
6. Provide assurance This is about assuring
Lloyd’s that controls are in place
No
9 © Lloyd’s

Lloyd’s should not mandate the coverholder reporting standards at this time
► Limited understanding of standards amongst London stakeholders, and insufficient current take-up for this to be accepted in London
► Costs for coverholders seen as prohibitive
► Information to be mandated is unclear
– reporting standards ≠ data control framework
► Will not deliver the requirements of the
Data Control Framework
<
Picture to go here
>
10 © Lloyd’s

What next?
► The proposal to mandate the reporting standards on coverholders has been rejected.
► But
► There are still other activities separate to the Control Framework project which can be pursued.
<
Picture to go here
>
11 © Lloyd’s

Audit Scope review
► Market project with reps from DUC,
DUM, BACG, BOLT and Lloyd’s:-
Charles Rowley, Steve Hart, Patricia
Beaton, Dan Lott, Ian Whitehead and
Sarah Thacker
► Scope is currently being reviewed
► Plan for draft in summer and final version in autumn
► This will be followed by training/education for auditors
<
Picture to go here
>
12 © Lloyd’s

Audit Scope Review
Initial recommendation for questions RE control
Framework
► How do you determine where the risk is located for entry onto your system?
► How would you risk locate for a policyholder in your country insuring a property in another country?
► How would you determine the location of risk for a policy holder outside your country but insuring property in your country?
► How do you determine what is the tax liability for the insured or insurer?
► Does this entry drive the bordereaux or is this entered manually onto a spreadsheet?
► Are you aware and use Crystal/Risk locator
Tool?
► Note, these are draft only……
<
Picture to go here
>
13 © Lloyd’s

Data and technology
► BAU work with market promoting and educating on data and reporting standards
► Reporting standards are mandatory for new coverholders
► Brokers to be encouraged to provide all data to leads and followers via IMR or similar in a spread-sheet or other useable format
► Conversations with Xchanging around how they can help
► Working with market stakeholders to promote use of technology, automation and XML
14 © Lloyd’s

Education
► Application process could be amended, for example, coverholders could be asked to complete Crystal Assist
► Coverholder Toolkit includes information about data and reporting which can be enhanced when next updated
► Information can be put in Delegated
Authorities Area on Lloyd’s web pages
► Promote use of Crystal and Risk Locator Tool at coverholder events
15 © Lloyd’s

Control Framework phase ii Update
 Coverholder risk assessment
 Data flow and controls
 Next steps to launch
 Future meetings

Control Framework
Coverholder risk assessment
Complexity of business written
Binding Authority -
Single or multiple territories
Principal Regional
Complexity
Nature of operations
Coverholder
Resources and information provided
Use of Lloyd’s
Tools
Lines of Business Premium written
Historic Issues
Use of Lloyd’s coverholder reporting standards

Control Framework
Coverholder Premium
TPA Claims
Broker
Lloyd’s
Coverholder reporting standards
Purpose:
To ensure required information is provided for premium and claims processing purposes
Managing agent
Lloyd’s
Control
Framework
‘Green Book’
Purpose:
To ensure tax and regulatory information at source meets the minimum requirements and is of good quality
A/S
ECF
XIS
XCS
Premium
Claims
Lloyd’s
Control Framework
Information
Data is captured/ manipulated/ held

Control Framework
Next steps to launch of phase ii
Lessons learnt
Tool kit & market group consultation
Phase II communications approach
Delegated
Authorities engaged

Control Framework
Next steps to launch of phase ii
Finalise Lloyd’s tool kit:
 Phase II road map
 Coverholder risk assessment guidance notes
 Data items spreadsheet adapted for phase II
 Broker/ coverholder leaflet
 Control Framework Standard presentation for phase II
 ‘Board’ sign-off wording
 Phase II FAQs
 Guidance on what good looks like
Look for these @ lloyds.com/controlframework in July

Control Framework
Next step to launch of phase ii
 Your contacts for phase II
 Scheduled meetings for phase II
 Initial 1-2-1 meetings within the first 3 months
 Follow up meetings on request
 Regular status reports from managing agents
 The LAUNCH event

Control Framework
Future meetings
From July..
 Project update
 Delegated Authorities update
 Broker engagement update
 Managing agent/ broker/ other presentation

Control Framework
Update on broker engagement
John Hibbert

Control Framework
Progress so far
 LIIBA endorsement of project framework
 Individual broker meetings undertaken
• Millers
• Towers Watson
• Willis
• Cooper Gay
• Crispin Speers
• Integro
• Decus
• THB
• Bell and Clements

Control Framework
Next steps
 Establish broker working group
• LIIBA and BIBA members
 Present to BOLT meeting 2 nd July
 Communicate to the wider broking community through Phase II Launch in
July
 Individual Managing Agent/broker meetings