Operating & Financial Review
Infrastructure – enhancing capability and delivery
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As Amlin operates in a subscription market, it is necessary for us to help drive change in infrastructure and processes across the market as well as to continue to invest in our own capabilities. We have therefore been working closely with five other Lloyd’s businesses, known in the market as G6, so that a critical mass of support exists for key developments. Major projects initiated in 2006 by G6 have included the design of a market wordings repository and the piloting of electronic trading with brokers on a peer to peer basis. These projects have been integrated within our own programme in 2006.
Aggregate exposure control
During 2006 we have used our data warehousing capability to enhance our recording and reporting of geographic aggregate insurance and reinsurance exposures. We are now capturing data at a greater level of detail, providing increased accuracy, which in turn provides greater scope to efficiently use the Group’s balance sheet while staying within risk appetite. As well as enhancing Amlin’s underwriting capability, our progress also means that we can more accurately assess potential losses post event. This will be an ongoing piece of work for the Group in terms of continually enhancing our capability.
Data warehouse
In 2006 we successfully rolled out further enhancements and moved more data into our warehouse. We also integrated Amlin Bermuda into the consolidated Group warehouse whilst providing our new company with its own functionality. This technology has had a very positive impact in terms of providing data which can be easily tailored to meet each user’s needs, and for the more sophisticated user, there is capability to drill down through the data.
In recognition of the value added by this implementation Amlin won the Microstrategy award for “Most Innovative Business Intelligence Implementation”.
2007 will be a year of delivering additional process improvements in our financial reporting using the sophisticated capability that is now available to us.
Monthly data warehouse – reports delivered
Policy issuance and contract certainty
For the past three years we have been investing in people, process and technology to provide evidential contract certainty to our customers and broking partners, thereby improving service and reducing risk. In 2006 we integrated the necessary contract certainty checks into our underwriting workflow system to ensure that checks are completed ahead of binding a risk and that there is an audit trail of the checks being completed and by whom. This technology drives our monitoring of compliance with our goals.
We have been working with Lloyd’s and G6 to enable tax and regulatory checks to be carried out before the inception of risks, as well as the contract certainty checks. Historically, a number of these checks have been carried out some time after inception thus creating inefficiency in the process as well as delaying delivery of policies to customers. Changing longstanding procedures is always a challenge but we are confident that new methodology, which is currently being piloted, is the right process and will help deliver better service to customers as well as reduce cost. The feedback from our broking partners is that this is a much needed step and being at the forefront of driving this change is another opportunity for Amlin to differentiate itself positively.
Amlin and G6 also designed a new electronic wordings repository to assist in the agreement of a full wording at the time of risk placement. Having reviewed our work the Lloyd’s Market Association agreed to take over the building of the repository so that it could become available to all market participants. It is now operational, is available to all our underwriters and wording specialists and is fully integrated into our workflow process.
Electronic trading
“Peer to Peer” is an electronic messaging approachdesigned to streamline the risk placement process. It aims to support the existing underwriting process and confine the need for broker queuing to essential face to face negotiations.
Peer to Peer is made possible by the use of agreed standards which create a “common ground” for electronic messages to travel between brokers’ and underwriters’ different electronic gateways. The standards have been agreed with ACORD, a non-profit organisation that promotes standardisation in the insurance industry, which means that they are open and available for use by all market members.
Electronic Placement – Peer to Peer
Amlin, working with the other members of G6 and a number of major brokers, developed the implementation rules for placing business using ACORD RLC messages. These are a standard method of sending and receiving risk data electronically in a secure and structured manner between participants in the insurance market under the auspices of ACORD. This is a major piece of work for the market and has recently been endorsed by the Lloyd’s Market Association.
Essentially it means that one standard can be used across the market in terms of providing slips and supporting documents through an electronic messaging approach.
During 2006 we have proven our technological capability to accept risks from three major broking houses and also from an independent messaging hub all driven by these standards. Whilst it is still early days, this will enable us to receive risk data into our systems in a secure fashion and at an earlier stage.
Genus
Testing of Genus, a flexible web-based system being developed by our UK commercial division, identified a number of issues that need remedying before roll out. While the delay is disappointing, when complete the new system is expected to enhance client interface and enablethe division to capture significantly more risk information.
Claims
Our claims team have been involved in a two year change programme. From an infrastructure point of view this has involved building specific systems programmes and designing and implementing a workflow package to support the technical adjusting.
Also, during 2006, the London market Electronic Claims File (ECF) became a reality. A market initiative, it essentially means that claims documentation is filed electronically so that all underwriting firms on a risk can access it. As well as significantly speeding up the claims process, this reduces the need for claims files to be walked around the market and should remove cost for brokers. It also means that our claims adjusters will be able to see key documentation on cases where Amlin is a following underwriter on a risk as well as on those where it leads. Leaders’ decisions will also be documented. Amlin has been involved in steering this project from concept through to its first live use. We have also built links between our own claims system and the ECF so that documents can be transmitted to and from our systems using international messaging standards.
Workflow and processing
Building on our existing capability in the workflow arena we have put in place a new expense management system and specified the development of a purchasing workflow approach which we expect to be implemented early in 2007. This provides us with complete transparency in the process with the audit trail we need as well as increased efficiency and accuracy of our expense process.
We have specified the system requirements for a treasury workflow system and are currently negotiating with suppliers to develop it for delivery in 2007. This system will enhance our cash management capability removing the reliance on largely manual reporting processes.
Value for money
Amlin’s approach to project development has generally been to take small meaningful steps towards an ultimate goal, in the belief that more can be achieved at a sensible cost than in attempting to implement large infrastructure projects which carry a higher risk of failure and have a tendency to cost far more than initially planned.
Amlin has achieved a great deal in this way over the past three years. Our total expenditure on infrastructure development and systems maintenance has been £42.3million, split as follows:
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