1 The Aon approach to reform May 2007 Nigel Roberts.

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The Aon approach to reform

May 2007

Nigel Roberts

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London Market Reform

3 Year Vision

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• Must make the London Market more attractive to our clients

• Remove ‘Londonisms’ but Supports the unique subscription market

• Must deliver a more efficient market

• Technology solutions must be based on ACORD Standards

• Internationally compliant processes, procedures systems

• Allow firms to implement at own speed but minimum platform all firms must achieve.

Underlying Principles

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• Multiple providers• All submissions electronic using ACORD standards• Extent negotiation vary by risk and leader and followers

Ur

Br

Ur

Br

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Fully Electronic

Electronic Submission

Remote Discussion

Electronic Submission

Face to Face

Placing and Endorsements

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Simple

Complex

Electronic submission

Face-to-face

Electronic submissionRemote discussion

Fully electronic

Straight through processing

Subscription

Segmentation

Placing and Endorsements

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• All claims advised and agreed electronically

• All claims will be processed via Electronic Claims File (ECF)

• ACORD standards

• Brokers role limited to advocacy where adds value

Claims

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• SLA – maximum 5 day turnaround for broker to pay premium on receipt of money from client and underwriter to pay claim after agreement of claim

• Brokers continue to account and settle premiums and claims in subscription market

• A & S Repository and or eLpan2• ACORD standards• Support bureau or direct to trading parties• Central settlement to continue

Accounting and Settlement

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• One version of evidence of cover (EoC)

• Brokers and Underwriters responsible for timely and accurate policy production and issuance

• Broker to issue evidence of cover to client

• Eliminations of “Stage 2” process at 1st July

Documentation

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The Aon Vision is to connect electronically to every one of its trading partners for all aspects of the insurance process. We will deliver all data for marketing, placement, contract confirmation, accounting & settlement, and claims using either ACORD messages or secure web portal, according to the preferences of our trading partners.

Aon have built the ‘Aon Broking Connections’ applications which electronically support all of the re / insurance back office processes.

Aon Broking Connections

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Drivers, for electronic support of the placement process

• Client and Market desire for transparency ,

– Support for their regulatory and operational requirements– Ability to track progress of placements– Ability to aggregate the overall position– Ability to measure service– Greater / earlier clarity surrounding written / signed lines

• Aon’s current regulatory environment

– Clear audit trail of who did / was shown what and when– Transparency of process, who was offered what– Complete audit and Contract Certainty– Reduce E&O exposure

• Aon / Market desire to offer their Clients a world class service

– Completion of the ABC full electronic process– Process efficiency, service enhancement

Faster claims agreement and settlement Attractive market for insurance business

• Mutual reduction of frictional costs

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• Risk submission, quotes, messages, contracts and endorsements all in one permanently available folder (incl. all versions of all documents)

• Comprehensive workflow of all processes (incl. second signature)

• Subjectivities and line stamps supported including their status

• Management tools to share/supervise co-workers

• Signed lines distributed to carriers as soon as lines signed down

• Efficiencies and compliance improved through electronic endorsements and cancellations

• All records held on servers for download via DRI or immediate process integration

• “Plug and play” access to a community of brokers with volume expected to grow in 2007

• Absolutely supporting face-to-face negotiation where relationships add value, reducing frictional costs for less complex business.

• Access to Xchanging wordings checking facility to support CC during placement

• Ability to standardise and manage wordings centrally

Benefits (Carrier) for £50 per transaction

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Post Placement support

The post placement process support the main post placement transaction based actions.

– Premiums, Claims and Treaty Closing.• Provide electronic closing function and the relevant supporting documents.

– Negotiation• Provide an electronic platform to negotiate claims.

– Settlement• Provide support documents and accounting function.

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Post Placement options

• Option 1. – appropriate for non bureau partners with messaging infrastructure

– ACORD messaging, using the Technical Account, Claim Movement and Settlement messages

• Option 2. – appropriate for non bureau members with no messaging infrastructure

– Use of Aon’s web applications,• ABC Claims for claims negotiation and agreement• eClosings for notification of Premium, Treaties & Claims

• Option 3. – appropriate for bureau partners

– Use of Xchanging systems• Aon ABC eLPAN premium solution• Use of ECF for 100% of claims• Central settlement

Trading partners have three different options with which to trade electronically with Aon: