core activities” that managing agents may decide to exercise as they choose whether to perform more “non-core activities” in-house or contract with competing third party suppliers.


There are several examples of “core activities” that need to be fed


by data, particularly where the underwriting is delegated to managing general agents. The efficient, low cost collection and formatting of this data will be a key “non-core” activity. One example, that is being prototyped at the moment by several managing agents, is the facility to report tax and regulatory data directly to Lloyd’s for certain types of business outside of the “core activities”.


“Few licensors of systems would claim that their products do not reduce cost or improve efficiency. So, too, would few system developers claim their systems do not reduce risk.”


This activity requires a stringent data standards framework to be


enforced, which can be helped by “non-core” systems. There is no guarantee that this prototype will go mainstream but it does give us some indication of what constitutes “non-core” activities.


A good guess as to what may be next for delegated authority business


could be a suggestion that, once the “reporting” devil is dealt with, Lloyd’s will want to see how a delegated book fares in regards to premiums, claims, endorsements and overall underwriting loss ratio. Since Lloyd’s has made no secret of its hope to expand delegated authority growth in the future, as a means to diversify its risk portfolio better, can there be little doubt about an ultimate requirement to evaluate specific, individual risks that are part of a bordereau or programme, to reflect their own individual performance?


The efficient, low cost collection and formatting of the data to feed


this activity would fall into the “non-core” sector where companies such as CATEX can provide competitive alternatives.


Better reporting alone is unlikely to be the end goal. Rather, better


reporting could be the first step in a path to place Lloyd’s underwriters in a position where they can compete by doing what they do best, by underwriting and pricing narrow sectors of risks associated with the possibility of loss to those specific risks.


If that is the future then it would seem that planning for it could


offer a competitive edge. A bordereau reporting system that has finite limits and can’t generate data pertaining to contracts, premiums, claims, ledger transactions and accounting entries associated with a delegated authority book could be out of date upon delivery.


Selling a licence to any system is hard enough if you are a software vendor.


Selling a licence to a reporting system, to meet a requirement for better bordereau reporting, at least means that a prospect knows they have a new system need. Selling a system that manages front and back office data and manages bordereau reporting requirements is a much tougher task.


We don’t advertise our bordereau reporting system as anything but


that—a bordereau reporting system. However you should be aware of this: the CATEX Bordereau/Program Management & Reporting System can, if desired by a client, manage the entire transaction cycle of all the delegated authority business of a syndicate, broker or coverholder.


Even if what is to come in the future is only half of what we think


it will be, our clients will be very well prepared. The system that they purchase from us to comply with the new reporting requirements can also easily manage any new data needs regarding policies, premiums, claims, accounting, ledgers, etc. Our clients will be ahead of any future requirements curve, which is a pretty good place to be.


Francis Fortunato is chief executive officer of CATEX. He can be contacted at: ffortunato@catex.com


Spring 2012 | INTELLIGENT INSURER | 57


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