Simon Sperryn reviews a series of electronic initiatives designed to give the Lloyd's market a competitive edge

Claims indemnity is the single largest expense on an insurer's profit and loss account. If claims are not handled quickly, efficiently and satisfactorily, the client will place his business elsewhere. The Lloyd's market is currently addressing its claims performance head-on through a series of bold initiatives designed to put London in the lead.

Paper files and disparate systems are being superseded by higher standards of claims management, reliable claims agreement for followers and Financial Services Authority compliant contracts with the Xchanging Services bureau. This will lead to an integrated and efficient settlement system in Lloyd's and opens up new potential for complete efficiency across the whole London market.

The Lloyd's Market Association (LMA), along with our partners in the London Market Insurance Brokers' Committee (LMBC), Lloyd's and the International Underwriting Association (IUA), is taking the lead in these reforms, which are at the heart of our objectives for 2005.

This article outlines the progress achieved in this area including the development and implementation of the electronic claim files (ECF) initiative, where much work and significant progress has already been achieved. The importance of the ECF initiative should not be underestimated. The £3m project will deliver the infrastructure to handle all claims electronically in the Lloyd's market and, once fully operational, will become the predominant means of handling claims at Lloyd's. It will be delivered in five separate phases and will be fully developed and in use by Lloyd's managing agents from April 2006.

What is ECF?

Electronic claim files are collections of electronic insurance documents - referenced and indexed to provide ease of access - held in document management systems (repositories).

An insurer's market repository - provided by Xchanging and linked to CLASS (claim loss advice and settlement system), which holds financial data - will be used to hold electronic claim files for insurers. This repository will operate to the international ACORD (Association for Co-operative Operations Research and Development) document repository interoperability (DRI) standard which allows documents to be moved electronically between different repositories.

What are the benefits?

For insurers, electronic document management systems (repositories) allow all underwriters to view the claims information at the same time. This will speed up the claims handling process by eliminating the need for brokers to see each underwriter in turn. This offers insurers more control over the workflow and management of claims files whilst supporting improvements to market claims payments standards. In addition, claim files will always be available to insurers for their own review, record keeping and as an aid to improving management of their outward reinsurance recoveries.

Such improvements ultimately lead to earlier resolution of claims, meaning clients benefit from a more efficient service and faster advising under the ECF procedure.

Lloyd's has targeted achieving 10% of electronic processing of new claims by the end of 2005 and estimates all new claims could be processed electronically by mid-2006.

Project scope

Two components are necessary to deliver the ECF project: enhancements to the insurer's market repository - provided by Xchanging - making ECF accessible by claims practitioners, and enhancements to CLASS at Lloyd's so that managing agents can use it.

The ECF project implements CLASS at Lloyd's to support the market's claims scheme, bringing it into line with the company market which started using CLASS in support of its claims agreement rules in 1987.

Under the contract negotiated by Lloyd's managing agents, Xchanging will deliver the enhanced insurer's market repository and an integrated interactive web browser based CLASS at Lloyd's, which also caters for the eventual implementation of the LMP (London Market Principles) Claims Protocol, ie a London market claims scheme. Currently, there are no plans to provide a similar integration between the company market versions of CLASS and the Xchanging insurer's market repository.

Xchanging will also implement the ACORD standards for the transfer of electronic documents using the "push" and "pull" mechanisms between the insurer's market repository and those repositories run by brokers, insurers and third parties such as loss adjusters and attorneys. "Push" is the equivalent of sending a document; "pull" is the equivalent of making a document available for collection.


The enhancements to CLASS and the insurer's market repository will be delivered by Xchanging in five phases, to be completed in the first quarter of 2006.

The first phase of the project, successfully delivered by the LMA and Xchanging Ins-Sure Services (XIS) in February 2005, delivers the ability to categorise documents and view the whole claim file chronologically. The enhancements to be introduced in phase 2, recently delivered in April 2005, make the repository easier to use and provide enhanced functionality. An index of all claim documents is shown on a single view and other functions, including filter and search options, were introduced.

The next key phase is the delivery of the DRI (document repository interoperability) capability. This is scheduled for August 2005, when we expect the major brokers who have their own repositories to be fully connected and able to operate the electronic process. At this point, the ability to move documents electronically between repositories, as mentioned above, will be introduced.

The final two phases will provide a fully integrated, online system for claims processing at Lloyd's. Phase 4 will deliver enhancements to CLASS for Lloyd's including the display of CLASS data and repository documents through a new GUI (graphical user interface). Phase 5 delivers the final components resulting in an improved repository, enhanced CLASS for Lloyd's including the ability to update CLASS data and the repository through the new GUI.


The project is directed by the Market Reform Implementation Board (MRIB) through its claims project board. The MRIB includes representatives from the broking, managing agent, Lloyd's and company market communities.

In parallel, the LMA has established a governance structure to manage the contractual delivery by Xchanging of the repository, its enhancements, interoperability, and CLASS for Lloyd's.

Implementation of ECF will be by trading partnerships of brokers, insurers and Xchanging by major class of business. Implementations will be broker driven, with the LMP programme office ensuring readiness of all parties and monitoring progress.

In parallel with these procedures established for Lloyd's agents to use the electronic claims infrastructure, company carriers will continue to use CLASS and will take up use of the insurer's market repository as their contractual arrangements are made.


Practitioners in the Lloyd's market have seized the opportunity to drive through a radical overhaul of the claims management process. They understand that with the introduction of efficient, end-to-end electronic systems, the market will maintain its leading position as a buoyant and attractive place to conduct profitable business whilst continuing to attract and maintain satisfied clients. Taken separately, each of the initiatives described above is significant; taken together they amount to a silent revolution in the claims processing arena.

- Simon Sperryn is chief executive at Lloyd's Market Association.


- February 2005 - The ability to categorise documents and view the whole claim file.

- April 2005 - An index of claim documents is shown in a single view while filter and search options have been introduced.

- August 2005 - Moving documents between repositories.

- Enhancements to CLASS for Lloyd's including the display of CLASS data and repository documents through a new GUI (graphical user interface).

- April 2006 (system due to be completed and in use) - Delivering the final components including the ability to update CLASS data and the repository through the new GUI.