"The overriding goal is to make the lives of our MGA partners easier," he said, explaining that U.S. MGAs underwriting business in the United States on behalf of Lloyd's, known as U.S. coverholders, will be encouraged--but not required--to use new standards already in the works and set to be completed by the end of the year.

Mr. Stafford will be providing an update on current efforts to adopt ACORD data standards during a special presentation titled, "London Technology Update--Standardizing Data Transfer across the Pond." During today's 1 p.m. update, he will also discuss efforts to simplify and modernize the data transfer process through the use of a single messaging hub.

PROGRESS TO DATE
Updating NAPSLO Daily on progress of the London technology initiative during an August interview, Mr. Stafford explained that data sought by London underwriters from U.S. distribution partners falls into three categories--risk information, premium information and claims information.

A property-catastrophe risk standard has already been developed. "That is now live, he said, stressing that this standard, as well as the others in the works, are ACORD standards.

"Lloyd's needs to speak the same language as other markets. We're not good at that at the moment. We offer a lot of 'bespoke' information," he said, using a British term meaning custom-made to a buyer's specification. "We need to be speaking in a standard language. In the insurance world [that means] conforming with ACORD," he said.

Mr. Stafford said the next step for the property-catastrophe risk standard (ER3001) will be the move to an XML format, which "will allow us to extract the data directly from MGAs' agency management systems." He noted that the XML standard is expected to be ready before year's end.

London market brokers and MGAs (syndicates) have also agreed on a premium standard for accounting and regulatory information that currently sits on premium bordereaux. The premium standard is slated to be published by mid-October.

"Beyond property, we're not quite sure there's an appetite to standardize a lot of the risk information because much of the core risk information is actually captured on the premium standard" for other types of risks, Mr. Stafford said.

VALUED PARTNERS
Explaining why U.S. coverholders won't be required to use the new standards, but simply encouraged to do so, Mr. Stafford said that this reflects the value of the coverholder partners and the intent to make their lives easier.

"We're not going to mandate it right now because there are coverholders out there who have older systems, or maybe they don't have systems at all, which would make it quite onerous for them" to move forward quickly, he said. "We need to work with them on their time-scales so we don't burden them with something that ultimately costs them too much money."

"What we are really saying [to U.S. coverholders] is 'here is a standard that London will support.' All the [London] brokers are endorsing it, and if it's where you want to move to, then we will encourage you," he said.

For those who want to forge ahead this year, support from London will come not just in the development of standards. Lloyd's representatives will meet and work with all of the key agency management suppliers to ensure they can capture the needed data in their systems. As a result, data can be sent to London "at the push of a button," and coverholders no longer have to rekey information, he said.

Lloyd's is looking to coverholders as a way to tap into more small-to-medium enterprise business. This will help to balance a Lloyd's portfolio dominated by high-end risks and property-catastrophe business, Mr. Stafford told NAPSLO members during a July 13 webinar.

Emphasizing the strategic importance of 2,500 coverholders globally--including 1,100 in the United States--he noted that they wrote one-third of Lloyd's premiums in 2009, up from 25 percent in 2008 and 21 percent in 2001.

"They understand the local pricing, local requirements and what will sell locally, and therefore have far greater knowledge than our underwriters in London of what's needed on the ground," he said.

"A lot of business that we place in London is big complex business, which requires face-to-face negotiations. But for the slightly smaller business--the higher-volume business--we need people in the various territories in which we operate to represent the market" with local expertise.

"Coverholders are exactly that," Mr. Stafford told NAPSLO Daily.

He also said coverholders are part of a plan to further modernize the delivery of risk information over the next two-to-five years. A technology road map envisions electronic data transfer through a single messaging hub, known as the Exchange, instead of via multiple messages to different parties in the London market.

Right now, only open market endorsements are being routed through the Exchange. Open market business for U.S. risks is sent by U.S. wholesalers to Lloyd's brokers who underwrite the business in London.

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