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Insurance
Adding value, inspiring innovation
8 November 2011
Jane Tutoki
Highlights
Capabilities
• End-to-end insurance services,
onshore and offshore
• Technology bundled with complex
business processing
Market opportunities
• Trend towards commoditisation
• Untapped global market especially US
Future direction
• Leverage UK footprint
• Add new capabilities
1 CONFIDENTIAL © Xchanging 2011, No part of this document may be circulated quoted orreproduced without prior approval of Xchanging
Capabilities
2
Support
critical
operations
from both UK
& India
CONFIDENTIAL © Xchanging 2011, No part of this document may be circulated quoted orreproduced without prior approval of Xchanging
Capabilities
• FSA authorised & Sarbanes Oxley compliant
• 700 staff in 5 centres in UK and 900 staff in 3 centres in India
• Our Insurers’ Market Repository receives 22,000 documents a day and
now stores over 16 million documents
• c. £52 billion transactions cleared
• £11 billion net settlements in 14 different currencies
• Serve: 50+ managing agents, 100+ company market carriers, 100+
brokers
3 CONFIDENTIAL © Xchanging 2011, No part of this document may be circulated quoted orreproduced without prior approval of Xchanging
Capabilities C
lien
t / C
lien
t R
ep
rese
nta
tive
Bro
ker
Xch
ang
ing B
roki
ng
Se
rvic
es
(XB
S)
Bu
rea
u C
arr
ier
Xch
ang
ing
No
n-B
ure
au C
arr
ier
FS
A
Quote Placing Signing down Closing and Settlement Policy Claims & Treaty
Risk to
insure
Review and
capture details
Create quote
documentation
Market
submission
Select
Market
Review
documentsQuote?
Capture brief
details
Yes
Provide
quote to
broker
Accept
quote?
Decline
quote
No
Notify broker
Yes
Create firm order
documentation
Place with
Leader
Write line
Data capture
Place with
following
market
Write line
Data capture
Broker
completes
placing
Capture final
detailsSign down
Produce Cover
note and Debit
note
Stop
Create
signing
documents
Review and
capture details
Errors?
Return
paper docs
File
Output messages
to W/S broker and
underwriter
May be negotiation
on coverage
U/wtr
not
notified
Inform client
placing complete
Paper / e
documents
Resolve
queries
Check
complete
Pays
premium
LIDS/PoSH
LIDS/
PoSH
Tracker
Lloyd's
regulatory
reporting
Review
Review
Create
policy
Submit to
Underwriter
Review
policy Queries
Submit to
XIS
No
Review /
Create
policy
Communica
te to Broker
No
ReviewProposal and
supporting info
SLIP incl
Proposal and
supporting info
3 to 4 quotes
per slip
Create own
files
Note as NTU
Advise
U/Wtr
Stop
Queries
Resolve
queries
Yes
Sign and
seal
No
Return to
broker
Leader may retain
agreed copy
Delays whilst U/wtr
checks policy
May be created by Client,
Broker, XIS or Carrier
Data
W/house
Resolve
queries
Yes
156,400 Lloyd's and 105,000
Company Original Premium
entries in 2007
(new and renewals)
Update files Update files
Broker
captures all
data required
Underwriter
captures
minimal data
All
Underwriters
captures all
data
required
Error rate Front
office to back
office up to 60%
error rate
XIS capture all
data required
Load data
to system
UK "As-Is" London Market Insurance Industry Process Map
Rework to
resolve
XIS
queries
Signed lines
output
to Underwriters
Policy with
client
XIS produce 5,200
policies in 2007
(Lloyd's only)
Financial
reconciliation
File
Reports to Lloyd's used to
report to UK and Overseas
regulators
Broker supply
of information
to FSA
regarding
various stages
of the process
INCEPTION
DATE
Broker
places
elsewhere
Output messages to broker
and underwriter
Problems of
unallocated
cash
Contract
Certainty
achieved
Priority of
legacy Vs live
policies
(250,000 legacy
policies O/S)
LIDS/PoSH
Carrier
system
Process
settlement
Average 15 days
5 day Service level
5 days Service level
"Contract certainty is achieved by the complete
and final agreement of all terms (including
signed lines)
between the insured and insurers before
inception" (Interim definition)
35 days processing cycle
Average 60 days
5 days cycle
Average 3 days
Average 10 days
Average 25 days
10 days (if
error free)
Average 10 days (if error free)
Inception date may be within this range
1st
confirmation to
underwriter of
signed lines
and premium
Broker's
Authority
to process
Settlement
of premium
Settlement
of Premium
Approx 100 fields
to complete
KEY
Data capture
point
Decision pointKey
observation
Xchanging
system
New documentProcess step
UMR
Allocated
Risk
Registration
Not being populated
by all underwriters
Leader
registers
electronically
Record based
on UMR
SLIP
SLIP
Copy Slip
SLIP &
LPAN
43,600 items
registered on
average per annum
since 2004
93,400 Lloyd's and
50,000 Company
policies
signed in 2007
538,000 Lloyd's and
286,000 Company all
Premium entries in 2007
(OPs and APs) 1,900,000 Syndicate
advices output per
annum
Broker
system
Carrier
system
Reconcile to
risk records
Agree?
Book to
debtor
ledger
Yes
Xchanging
process?
Yes
Submit to
carrier
No
Load
settlement to
ledgers
Claims
notification/
Treaty account
Technical
validation of
claim or
advice
Claims
negotiation
& agreement
Request
payment
via
Xchanging
Request
payment
Client payment &
LORS mess'
Reconcile
payment
Unmatched
cash
Client paid
Match?No
Management and
authorisation of
payments
Reciept /
Allocate
Review and
agree claims
for follow
market Process claim
and collect from
Carriers
Review and
agree claims
Process
claim and
pay Broker
Capture details of
claim in systems
CLASS
Management &
authorisation of
payments
Render to
U/W
Management of
receipts to debtor
ledgers
Resolve
queries
Settlement
Present to
carrier
Issues to
resolve?
No
Bureau
Market?
Yes
No
Lloyd's
No
Yes
Issues with
claim?
No
Resolve
issues
Yes
Trigger
settlement to
Broker via
CA
Pay
premium
London Market
policy?
Yes
Send policy
to client
No
Match?
Yes
Match to
Ledgers
Resolve
issues
Authorise
claims
payment
Paper and electronic
processing
5 days Service level
500,000 Lloyd's
claims submissions
per annum to XCS
100,000 company
claims submissions
per annum
Broker supply
of information
to FSA
regarding
various stages
of the process
Broker supply
of information
to FSA
regarding
various stages
of the process
Broker supply
of information
to FSA
regarding
various stages
of the process
Multiple
markets may
be involved in
the process
Rework
loop
Broker to
Xchanging
Rework loop
Broker to
Xchanging
21
Rework loop to reconcile
Reconciliati
on to ledgers
Match?
Yes
Resolve
issues
No
Reconcile?
Yes
No
Errors?No
Query with
Broker
Yes
Resolve
queries
May result in
resubmission
RI or
specialty?
Re Insurance
Check &
analyse
(systems /
coverage)
Check &
Analyse
(Coverage)
Specialty
Check and
analyse
(Systems)
Settle
ment?
No
Create A/C
entry
Yes
RI or
Specialty
Re Insurance
Technical
validation of
claim or
advice
Present to
carrier
Specialty
Query?
No
Resolve
Issues
Resolve
Issues
Request payment
of premium
Queries
with
payment
No
Resolve
query with
client or
pass to AON
Resolve
Query
Resolve
Query
Yes
Bureau
No
Delinked?
Aviation?
Yes
YesNo
Sectornet?
No
Credit control
Yes
XISXCS
Live or Run
Off?
Live
Smart Process:
Prioritise bases on £ /
Client / Age /
Complexity etc
Run-Off
Depending on Priority discontinued items may take up to 31 days to process . Priority items will move through as quickly as 1 day
Live or
Discontinued
Live
Discontinued
Yes Can it be
resolved with
Client?
Yes
No
Can it be
resolved in
XBS?
Resolve is sue
Yes
Yes
RI or
specialty?
Re Insurance
Specialty
Issue
resolution
process
No
Request payment
of premium
Sectornet
Yes
No
Delinked?Yes
Wait for
premium to
be paid
No
Premium Paid
Release
delinked
item
Release
delinked
item
Yes
Non delinked items
USM
RI Xl,
Treaty, or
Other Non
IBIS?
Create
signing
documents
Send to XIS
File
Paper
documents
Resolve
queries
Check
complete
Average 10 days (if error free)
SLIP &
LPAN
Xchanging
process?
Yes
Submit to
carrier
No
Resolve
queries
Delinked?Yes
No
Premium PaidWait for
premium to
be paid
Yes
Produce Cover
note / Debit note
Broker or
XBS?
Broker
No
XBS
Broker or
XBS?
Broker
Yes
XBS
Broker or
XBS?
XBSBroker
Broker or
XBS?
Broker
No
XBS
Initial Check
& analyse
Deferred
Commute
© Xchanging 2008, no part of this document may be circulated, quot ed or reproduced without prior written approval of Xchanging.
Review History
Created By Martin Lancaster
Updated By Rashid Ejaz
Last Updated 24/01/08
Pre-Bind
Xpress
Check?
No
Pre-Bind
Xpress
Check
Yes
Post-Bind
Xpress
Check
Post-Bind
Xpress
Check
Post-Bind
Xpress
Check?
No
Yes
Copy Slip
Post-Bind
Xpress
Check?
No
Yes
540 items
in 2007
Submit
Electronic?
Create Work
Order
Load to
Market
Repository
Yes
No
Market
Repository
Market
Repository
Pega Electronic?No
Yes
Load to
Market
Repository
Create Work
Order
Submit
Electronic?
Yes
No
Market
Repository
Market
Repository
PegaElectronic?
No
Electronicall
y sign and
seal
Yes
Load to
Market
Repository
Email Broker
PPS1980 items
in 2007
BSM
Submit
Electronic?
Load to
Market
Repository
Create Work
Order
Send to XIS
Market
Repository
Yes
No
No
Yes
No
Reducing
demand for
checks
More coming
in electronically
Lighter (40)
checks
QuartsApprox. 35% electronic.
Broker must edit Work
Package wihin 48 hrs to
prevent rejection.
20% don't get
automatched
20% don't get
automatched
Monthly Average of 34% of
items delinked in 2007
No
We do all
these steps
on behalf of
this client
…and run them efficiently and effectively
Xchanging is one of the few processors that can take entire complex processes…
4 CONFIDENTIAL © Xchanging 2011, No part of this document may be circulated quoted orreproduced without prior approval of Xchanging
Unrivalled domain expertise
Powerful combination differentiates
Xchanging
End-to-end services
Bundled insurance technology
On and offshore
Insurers’ Market Repository
‐ Unique data bank
Differentiators
5 CONFIDENTIAL © Xchanging 2011, No part of this document may be circulated quoted orreproduced without prior approval of Xchanging
Market
Drivers and Themes
• Commercial Insurance Premium
decline
• Pressure to reduce costs
• Commoditisation
Commercial insurance revenues (2010)
Source: Everest, Nelson Hall, PA Analysis
GLOBAL
UK
Xchanging
US
£2.6 billion
£1.1 billion
£800 million
£155 million
6 CONFIDENTIAL © Xchanging 2011, No part of this document may be circulated quoted orreproduced without prior approval of Xchanging
Market
Market Forecast CAGR
(2010-14) Xchanging
market share Comments
UK 6.6% 21%
• The most mature geography in terms of insurance BPO adoption
• The average deal value is larger than US although the number of contracts signed is less
North America 6.2% 0% • Insurance BPO market size is 130% of that in UK, while the
insurance industry is 350% - indicating untapped BPO potential
Rest of World 9.2% 4% • Overall adoption of BPO in Asia Pac has been low
• Australia, India, Japan and China are starting to gain traction
Rest of Europe 5.1% 0% • The European market outside UK is fragmented
• Adoption of insurance BPO has been low
7
Source: Everest, Nelson Hall, PA analysis
Commercial Insurance BPO revenues
CONFIDENTIAL © Xchanging 2011, No part of this document may be circulated quoted orreproduced without prior approval of Xchanging
Competitive landscape
8 CONFIDENTIAL © Xchanging 2011, No part of this document may be circulated quoted orreproduced without prior approval of Xchanging
Opportunities
9
• Current market est. £1.1bn with
6.2% CAGR
Commercial P&C
Insurance Industry
UK market
North American market
“One Sector” integrated
approach to market
• Current market est. £0.8bn with
6.6% CAGR
• Xchanging - 21% share
• Strong foundation to build from
Company Market
Insurers, reinsurers
Brokers
Existing Software Clients
Other Insurance Companies
Xchanging Insurance believes
focusing on specific areas will
be a key to growth
Focus growth on the UK and
North America1
Focus on UK Companies Market
and North American Insurers
Focus growth on the UK and US markets
1 Throughout the slides, reference to ‘North America’ includes US, Canada, Bermuda and Caribbean Source: Everest, Nelson Hall, PA Analysis
CONFIDENTIAL © Xchanging 2011, No part of this document may be circulated quoted orreproduced without prior approval of Xchanging
Challenges
10
Develop services to meet ever
changing global demands
Leverage off existing platforms
Provide new categories of service
BPO Platform
Remove dependence on the
Lloyd’s market
Mirror Lloyd’s domain expertise into the rest of the
UK Insurance Market
Use offshore services to scale globally
Position Xchanging as best
provider of services to the
insurance industry
Develop profile with Third Party Advisors and
Aggregator channels to market
Exploit offshore, low cost, processing services
Play in different space to Global ITO service
providers
CONFIDENTIAL © Xchanging 2011, No part of this document may be circulated quoted orreproduced without prior approval of Xchanging
Future direction
• Leverage UK footprint
• New capabilities
• Go-to-market plan: integrated approach
11 CONFIDENTIAL © Xchanging 2011, No part of this document may be circulated quoted orreproduced without prior approval of Xchanging