Control Framework
Breakfast Group
agenda
9:00
Arrival, Breakfast & networking
9:20
Welcome and The “gold star awards”
9:25
Hardy – control framework in a “business as usual” environment – post implementation – Kirsten Charlton
9:45
Phase II roadmap – Jaana Rouvari
9:55
Survey responses – Jaana rouvari
10:05
HCC – A managing agents approach to phase II – Caroline Stanley
10:20
Q&A
10:30
Close
- Ali Dove
Control Framework
Lloyd’s market
gold star awards…
ALTERRA
ASCOT
LIBERTY
MARKEL
SERVICE COMPANY CONTROL
FRAMEWORK
Kirsten Charlton, April 2013
3
The Challenge
Goal: Implement and provide evidence for Service Company Control Framework
compliance for Board sign-off by 30 Jun 2013
Guiding Principles
• Simple
• Repeatable
• Embed into business
as usual operations
Challenges
• Limited resources and other
critical projects on going
• Backlog of premium and claim
transactions
• No single view of the Service
Company world
4
How We Tackled It
Underwriting
Finance
Claims
1.
Eliminate premium backlog
2.
Redefine premium process
3.
Jointly train Underwriting,
Finance, and Delegated
Underwriting
4.
Eliminate claim backlog
5.
Redefine claims process
6.
Jointly train Claim, Finance,
and Delegated Underwriting
Delegated Underwriting
Cross-functional Steering Group:
Claims, Compliance, Delegated Underwriting, Finance, Internal Audit,
International Operations, IT, Operations, Risk Management,
5
Aspirational Evidence Diagram
6
Evidence Diagram – Underwriting
• Focus on Risk Entry
• Developed risk entry
indicators on
scorecard
• Review of scorecard
built into process
• Connections with
Compliance, Risk
Management, and
Internal Audit
7
Evidence Diagram – Claims
• Very similar to
Underwriting controls,
but in development
• Focus on process
• Developing claims
quality indicators
• Same connections
with Compliance, Risk
Management, and
Internal Audit
8
Evidence Diagram – Finance
• Focus on separation
of duties and
enhanced reports
• Better understanding
of Underwriting and
Claims processes
• Connections with
Compliance, Risk
Management, and
Internal Audit
9
Critical Success Factors
•
Hardy management recognised importance of this project and dedicated
resource to it
•
Early decision to capture all data requirements into Subscribe
– All data in one spot
– Importance of getting the data right from the start at the source
– Long-term view: pre-requisite for Direct Reporting
•
Risk entry refresher training
– Small, defined, internal group of underwriters, underwriting assistants,
and finance
– New measurements of risk entry quality
– Provided context for why the changes were being made
– Made a case for benefits of the new process and details
10
LONDON
1st
Floor
Fitzwilliam House
10 St Mary Axe
London, EC3A 8BF
GUERNSEY
BERMUDA
SINGAPORE
PO Box 155
Mill Court, La Charroterie St
Peter Port
Guernsey GY1 4ET
T: +44 (0)1481 719 292
4th Floor,
Park Place
55 Par-la-Ville Road
Hamilton, HM11
Bermuda
T: +1 441 295 0382
F: +1 441 295 7926
8 Marina View
#15-01 Asia Square
Tower 1
Singapore 018960
T: +65 6303 6700
F: +65 6535 8274
www.hardygroup.co.uk
www.hardygroup.bm
www.hardygroup.com.sg
T: +44 (0)20 7626 0382
F: +44 (0)20 7283 4677
www.hardygroup.co.uk
11
V6 Oct 12
Control Framework
Phase II
Managing agent
working Group
April
March
Breakfast
Group
Feedback
&
Volunteers
Challenge &
provide
alternative
solution
BIG
changes
DUM
DUC
Lloyd’s
Control Framework
Managing agent working group
Managing agent
Representative
ACE
Sue Burn
Argenta
Stuart Taylor
Barbican
Steven Green
Brit
Leena Ekman
Alex Smith
Catlin
Charles Rowley
Chaucer
Chris Rees
HCC
Caroline Stanley
Hiscox
Steve Burns
James Chaplin
Kiln
Charlotte Boardman
Markel
Martyn Lucas
Talbot
Richard Faulkner
Andrew Howse
XL
Vicky Draper
Control Framework
Phase II Roadmap 2013
Q3
Q2
Pre-project
consultation
Develop
Lloyd's project
tool kit
Phase II kick off
Understand
Phase II
requirements
and apply risk
matrix to
coverholder
data
Q4
Design and
plan
implementation
Lloyd’s and managing agents joint broker engagement
Carry out audits and review findings
Control Framework
Phase II Roadmap 2014
Q2
Q1
Assess
risk,
identify
controls &
gaps
Q3
Develop /
Implement
controls
Develop /
Implement/
test
controls
Q4
Review
and
monitor
Sign off
Lloyd’s and managing agents joint broker engagement
Carry out audits and review findings
Control Framework
Survey Feedback
It was suggested that a conference be held by Lloyd’s and
managing agents for brokers. Do you support this suggestion?
•
•
83% - Yes
17% - No
•
Lloyd’s are investigating feasibility of a Launch event in July.
Control Framework
Survey Feedback
How can Lloyd’s assist with your broker engagement dialogue?
•
•
•
•
•
•
Lloyd’s to drive all Phase 2 communication
Centralised/standardised messages
Provide materials to managing agents to reinforce message
Ali Dove, Andrew Gurney and Mark Edwards to speak at a forum for
brokers
Representation at various market broker meetings
Managing agents to liaise with the brokers, with guidance and steer from
Lloyd’s
Control Framework
Survey Feedback
What are the foreseeable issues from brokers relative to managing
agents achieving sign-off for Phase 2?
•
•
•
•
•
Too many managing agents providing a different message to each broker
Brokers avoiding doing business with managing agents who are out in front
with regards to compliance – more work, additional costs
As agents of coverholders, no incentive to engage with managing agents to
achieve sign-off
Lack of understanding of the requirements
Smaller brokers will not maintain adequate data records
Control Framework
Survey Feedback
Would you support Lloyds coordinating the audit activity?
• 81% - Yes
• 19% - No
Comments:
•
•
•
•
Yes: Avoid duplication of effort and cost
No: Managing agents should retain control over selection of auditors and
timing of audits
Should be on an optional basis
Delegated Authorities team at Lloyd’s running a pilot with 6 managing
agents
Control Framework
Survey Feedback
What are the obstacles for delivering Phase 2?
•
•
•
•
•
•
Distortion of “the message” from individual managing agents.
Broker engagement. The key is to identify several key people from each
broking firm.
Resistance to change from coverholders without a clear Lloyd’s mandate.
Managing the audit process – responsibilities of lead vs. follow.
Coverholders having inadequate systems.
Time.
Control Framework
Survey Feedback
Suggested future topics:
•
•
•
•
•
•
Managing agent presentations on both process for Phase 1 and approaches
to Phase 2
How to create the right message for Phase 2
How to manage/control the audit process
Re-development of ATLAS – what can we expect?
General view on market progress/readiness
Overview of Crystal
Control Framework
A managing agents approach to phase II
Caroline Stanley
Control Framework
HCC - A managing agent’s approach to Phase II
• Clarification on the number of Coverholders
• Confirmation of data elements
• Collaborative approach with other Managing Agents who have same
Coverholders
• Communication strategy
• Internally
• Externally with brokers and coverholders
– Mixed messages
– Duplication
– Loss of reputation
– Loss of business
Control Framework
HCC - A managing agent’s approach to Phase II
• Gap analysis
– How can we avoid duplication work within Managing Agents
– Where should the information be stored to enable Managing Agents to access
• Risk Assessment Approach
– Is it a one size fits all approach or do we split them into the ‘Good, The Bad and
the Ugly’
– Can scope of existing audits be expanded to provide the additional information
required?
• What are the consequences if the 2014 deadline is not met?
Control Framework
Q & A session
&
Close