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 RouvariAli Dove

10:00 Trading advice and compliance tools: Christmas update

Giles Taylor

10:15 Q & A All

10:30 Close  

© Lloyd’s 3

Control Framework

Celebrating Success

Ark Syndicate Management Ltd

Beaufort Underwriting Agency Ltd

Marketform Managing Agency Limited

R&Q Managing Agency Limited

www.canopius.com

Canopius Coverholder Framework 2014

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

Excel spreadsheet High/Medium/Low per risk factor Assign values to H/M/L per risk factor

Rating

Complexity of business written -

Risk rating: Binding

Authority - Single or multiple

territories

Complexity of business written -

Risk rating: Principal Regional

Complexity

Complexity of business written -

Risk rating: Lines of Business

NEW: Class of Business

NEWMethod of introducing business -

Risk rating:Prior Submit

NEWRoute of business -

Risk rating:Direct/Broker/S

ub-delegated

Complexity of business written -

Risk rating: Binding

Authority - Single or multiple

territories

Complexity of business written -

Risk rating: Principal Regional

Complexity

Complexity of business written -

Risk rating: Lines of Business

NEW: Class of Business

NEWMethod of introducing business -

Risk rating:Prior Submit

NEWRoute of business -

Risk rating:Direct/Broker/S

ub-delegated

Total Score Rating

Located/ Domiciled

Class of Business/ Sub Class

Underwriting Authority

Route of Business

Low

Coverholder writes bus iness in one

terri tory only. This i s a lso the

coverholders phys ica l/ domici led

location

Coverholder writes bus iness in a s ingle country which is not: Austral ia , Canada,

Greece, Ireland, Ita ly or US

Coverholder writes only reinsurance

bus iness or only one l ine of bus iness excl . cargo and bloodstock

Al l ri sks are prior submit or rates are set and coverholder

discretion is not permitted

Direct to underwriter 7 10 7 2 4 30 Low

Medium

Coverholder has offi ces in multiple

locations and writes risks only in these

terri tories

Coverholder writes bus iness in one of

the fol lowing countries : Austral ia ,

Canada, Greece, Ireland, Ita ly or US

Coverholder writes multiple l ines of

bus iness excl . cargo and bloodstock

Pre-determined rates exist but Coverholder

has authori ty to exercise discretion

within agreed parameters

Via Broker 14 20 14 4 8 60 Medium

High

Coverholder writes bus iness across borders and/or

global ly

Coverholder writes bus iness worldwide

Coverholder writes multiple l ines of

bus iness including cargo and/or bloodstock

Coverholder has ful l authori ty to set rates

without referral

Via Master Coverholder(take from lead/fol low)

21 30 21 6 12 90 High

Comments

Coverholder Name

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

Appendix0

Y 0 0 0

N 0 0 0

N/A 0 No score 0

1 EXECUTIVE SUMMARY Covered in the Audit?Issue - Y, N or N/A

Section Score

1.11.1. 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.

TOTALS & AUDIT 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

© Lloyd’s

Control framework Phase II

Project Update Jaana rouvari

15

Control Framework

© Lloyd’s 16

Control Framework

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

Today…

© Lloyd’s 17

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?

© Lloyd’s 18

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%

Q4 2015

100%

© Lloyd’s 19

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

© Lloyd’s 20

Control Framework

…to avoid

© Lloyd’s 21

Control Framework

Control Framework Support in 2015For managing agents yet to sign off

Your normal Lloyd’s Delegated Authorities contact

For brokers

Martin Baker

Queries

Track progress through 6-monthly review meetings and additional catch ups

Communications

Queries

Broker questionnaire

Communications

© Lloyd’s 22

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

© Lloyd’s

< Picture to go here >

Crystal/RLT updateControl Framework Breakfast, 9th December

Giles Taylor, Lloyd’s

© Lloyd’s

< Picture

to go here

>

Key items

► Service standards and usage

► New content

► LITA vision & 2015

24

© Lloyd’s

< Picture

to go here

>

Service standards & usage

25

The headlines…

• 12,000 Crystal pages

• 15,000 Crystal users

• c. 55,000 Crystal reports pcm

• Still only 25% of users log in

• c. 500 RLT reports

© Lloyd’s

< Picture

to go here

>

Service standards & usage

26

© Lloyd’s

< Picture

to go here

>

Non-US consumer information

Subjects

► General

Definition of ‘consumer’

Consumer protection legislation

► Insurance documentation

Pre-contractual notification and disclosure

Insurance documents

► 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)

Jurisdictions

Australia

Canada*

France

Germany

Italy

New Zealand

South Africa

Spain

27

* At provincial level, Alberta, British Columbia, Manitoba, Ontario, Quebec

© Lloyd’s

< Picture

to go here

>

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

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

28

© Lloyd’s

< Picture

to go here

>

Quick search

29

© Lloyd’s

< Picture

to go here

>

Intermediary licensing

Completed for licensed territories

Drafts prepared for following priority countries, but not ‘live’

• Argentina

• Azerbaijan

• Brazil

• Chile

• China

• Colombia

• Czech Republic

• Ecuador

• Finland

• India

Remaining unlicensed territories drafted up to ‘U’, but not live

30

• Indonesia

• Malaysia

• Mexico

• Nigeria

• Panama

• Paraguay

• Saudi Arabia

• South Korea

• Turkey

• Vietnam

© Lloyd’s

< Picture

to go here

>

LITA vision and 2015

Key topics to address…

Risk Location Guidance – separate from coverholder approvals (Y4125)

US Law & Jurisdiction – reaffirm guidance (Y3406)

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

31

© Lloyd’s

© Lloyd’s

Q & A

33

Control Framework

© Lloyd’s

AND THE WINNER IS…

34

Control Framework

© Lloyd’s 35

Control Framework

Further information on Control Framework controlframework@lloyds.com

www.lloyds.com/controlframework