To: Lloyd s Managing Agents Date: 16 January 2009 market communication Reference: 2009/012 Enquiries to: Anthony Croydon, Senior Service Manager Tel: +44 (0)20 7780 5312 Email: anthony.croydon@xchanging.com RE: INS-SURE SERVICES PRICES FOR 2009 Discussions concerning the price indexation for 2009 have now been concluded with the LMA s Xchanging Review Board (XRB) and Market Processes Committee (MPC). The calculation of the index following an established methodology returned a figure of 4.73%, however in the context of the extraordinary economic conditions facing customers, we have mutually agreed an increase of 3.5%. This represents a positive move in mitigating cost pressures for customers in 2009. Transaction Prices The variable transaction prices will increase by 3.5%. The 2009 price list is shown in Attachment 1. Annual Subscription The annual subscription is an important part of the financing of Ins-sure Services and reflects the significant fixed cost base of operating services and infrastructure for the market. The annual subscription for 2009 will be 56,347 ( 53,716 for 2008). The increase in the subscription is calculated by adding 3.5% to the subscription income due for 2008 and dividing by the number of syndicates that will pay the subscription in 2009. The increased charge is the result of a decrease in the number of syndicates that are eligible to pay the subscription for 2009. Offset The XRB has negotiated with Lloyd s a continuation for a further year of the arrangement to provide funds to offset the annual subscription charge. This is in recognition of Lloyd s receipt of a dividend as a shareholder of Ins-sure Services. The total offset is 843,000 for the year. The offset per syndicate for 2009 will be 11,392 ( 11,240 for 2008) based on the method defined by the LMA whereby each syndicate due to pay a subscription in January of each year shares equally in the aggregate offset. Continued Xchanging Limited Registered Office 34 Leadenhall Street London EC3A 1AX UK Registered in England and Wales No. 3616858
Page 2 Operational Costs for A&S and ECF Insurers Market Repository (IMR) On 1 October 2008 the IMR became subject to a new Services Agreement which gave customers a substantially more robust delivery framework, and also provided the basis to allow a major upgrade to the IMR infrastructure necessary to support the massively increased volumes to be delivered in July 2009. The IMR is now integral to the core service being used in 85% of all premium submissions and supporting the majority of all in scope claims, and is accessed by over 5000 users. The surcharges added to USMs and SCMs to cover operational costs incurred by running and use of the IMR remained static in 2008. The new Service Agreement introduces a new pricing mechanism from 2009 as stated in Attachment 1. VAT Under current legislation, Ins-sure Services in Attachment 1 are exempt from VAT. Should these services become subject to VAT, VAT will be applied to our invoices for these services. Timing Subscriptions will be collected on 28 January 2009. The new transaction prices will be reflected in the February collection for January. Settlement & Trust Fund Operations (STFO) Ins-sure Services collects a proportion of the total operating costs of STFO on behalf of Lloyd s through a surcharge on USM transactions. The surcharge for 2009 will be 0.11 (2008 0.11) per transaction. Further information on STFO services can be obtained from Ian Wootten, Manager STFO (Lloyd s ext 2098 or ian.wootten@lloyds.com). Reporting Services Prices for standard and bespoke reporting services provided by Data & Information Services will also increase by 3.5%. Details of the prices for each standard service are shown in Attachment 2. These prices are subject to VAT at the reduced rate of 15%. Commitment to Service Xchanging is committed to providing high-quality services that add value to our customers business. We look forward to the opportunity to continue to provide you with these services in 2009. Should you have any enquiries about this or any other aspect of Xchanging s Services, please do not hesitate to contact your Customer Relationship Manager. JULIE LYNCH SERVICE DIRECTOR INSURANCE SECTOR Enc
Attaching to Xchanging Market Communication 2009/012 Attachment 1 2009 PRICE TARIFF FOR LLOYD S MANAGING AGENTS Subscription Per Syndicate 56,347.00 Discount 1 11,392.00 Net Subscription 44,955.00 Original Premium Transactions Processing charge per case 2 (shared equally by the number of participating Syndicate signed lines 3 ): Binding Authority FDO 44.18 All other Original Premium & Treaty FDO 27.78 Subsequent Transactions Processing charge per case 2 (shared equally by the number of participating Syndicate signed lines 3 ): Additional/Returned Premiums (including Treaty Balances) 4 18.93 Non-premium Endorsements: Broker Prepared Policies 18.93 Ins-sure Services Produced Policies 27.78 Corrections 5 18.93 Policies Processing Charge per Signed Policy, excluding copies (shared equally by the number of participants): Broker Prepared Policies: Full Policy, including Manuscript Wordings Binders and Open 101.00 Market with first submission pre 1/7/07 and re-submission post 1/7/07 Full Policy Open Market first submission post 1/7/07 (Policy 41.59 Signing Service PSS) Slip Policy 6 only on risks incepting pre 1/7/07 10.26 Ins-sure Services Produced Policies: Non-Marine Direct (excluding Binding Authority) 88.37 Other 214.60 1 This discount is only applicable to those syndicates that are due to pay a full subscription in January 2009. New syndicates starting during the year pay the full subscription. 2 Case means LPAN and/or Treaty Statement to which Ins-sure Services assigns a unique signing number and date reference and any corrections thereto, where the correction is not the consequence of an Ins-sure Services error. 3 If the same syndicate appears more than once within a case, its share of the transaction charge will be limited to one occurrence. 4 Excluding AP/RP transactions processed via Scheme Canada where no Ins-sure Services case charges shall apply 5 Attributable to underwriters and brokers. Corrections attributable to Ins-sure Services only are not chargeable. 6 Slip policy means that there is no requirement for a full policy document or reinsurance wording to be produced but the content of the slip is sufficiently clear to allow a full policy or wording to be drafted if or when required. This definition excludes fully claused slips signed on a slip policy basis. Page 1 of 2
Run-off Surcharge Per USM Syndicate Transaction for electing syndicates 5.63 Direct Settlement Per payment transaction 21.47 Syndicate Transactions USM: Premiums/claims 1.66 Scheme Canada 1.66 LORS 1.66 SCM: Claims advice 1.51 Claims Review Notification 1.01 CLASS at Lloyd s Per SCM syndicate transaction for active users of the live system. 0.19 STFO Charge (collected on behalf of Lloyd s to recover the costs of Settlement & Trust Fund Operations) Surcharge on each: USM 0.11 Insurers Market Repository Subscription charge per Live Managing Agent 5,000.00 Subscription charge per Run-off Managing Agent 2,500.00 Annual Customer User Licence + VAT 200.00 USM 0.89 SCM 1.11 Page 2 of 2
Attaching to Xchanging Market Communication 2009/012 Attachment 2 Report Purpose Charges in 2009 Electronic Syndicate Reconciliation US$ business reconciliation for Lloyd s US Reporting Quarterly Reports: 274 p.a. XDH 412 p.a. e mail UK Insurance Premium Tax Reconciling tax payments made to Quarterly Reports: 412 p.a. HM Revenue & Customs by Lloyd s on syndicates behalf VAT on Premium Determining partial exception ratios Quarterly Reports: 274 p.a. Central Accounting Balances Preparing syndicate returns Annual report: Half yearly reports: Quarterly reports: Monthly reports: 206 p.a. 307 p.a. 412 p.a. 685 p.a. Late Premium Settlement Identifying broker performance Monthly Reports: 412 p.a. Legacy Unsigned Policy Report Content Management Service Daily Claim Advices for Syndicates Outstanding Balances by Syndicate Market Quarterly Reporting Service Currency Matching and Localisation Details risks held in system for which a policy has not been signed as at the end of the reporting period Allows Lead u/w to use the legacy unsigned policy report to operate the Content Management Service Identifying claim transactions processed each day Reconciliation of outstanding claims Cash flow and year of account analysis For completion of SR18 Matching and Localisation Net Outstanding Liabilities (including IBNR) form Monthly Reports: Quarterly Reports: Daily reports: 197 per report 197 per report 104 per report 1 per policy successfully changed to new status 0.67 per A4 sheet Monthly, Quarterly or Annual Reports: csv file: 412 per standard report (up to 2 synds) + 67 per additional synd no. csv file: 546 per report incl trust fund (up to 2 synds) + 67 per additional synd no. Quarterly reports: 546 + 67 per synd no Annual Report: 685 p.a. Page 1 of 1