ArticleBroking Contract Builder

How can Lloyd’s brokers prepare for MRCv3 and CDR?

Artificial
Artificial13 Apr 2023

Blueprint 2 is fast approaching, and many brokers in the Lloyd's market are wondering the best way to integrate with the new MRCv2 and CDR mandate.

How can Lloyd’s brokers prepare for MRCv3 and CDR?

A supposed panacea for the ills of the insurance industry, BP2 promises to create ‘solutions that will digitalise our market, making it better, faster, and cheaper for all participants’.

It’s clear that brokers are facing fundamental challenges in how they prepare for the initiative and, in particular, the fast-approaching mandate for adoption of the Market Reform Contract (MRCv3) and the Core Data Record (CDR).

This is a pivotal point for brokers. There are, broadly speaking, two options to prepare for the oncoming mandate: manually transfer old MRC Word templates into the new format, or adopt technology that enables the creation of digital MRCs in line with the CDR.

Either option involves effort and investment, but we believe only one offers both protection and opportunity for the future; those who tackle the foundational challenges with the right technology will reap analytical and efficiency benefits further down the line.

The MRCv3 challenge

Why are the MRCv3 and CDR causing such headaches to Lloyd’s brokers?

By the end of Q3 this year, it will be a business-critical requirement for brokers to use MRCv3, with embedded structured data, to create a standard way of placing business across the market.

"An MRCv3 with structured data embedded into it, a common way to place business, a digital gateway that ingests, appends and validates the data and sends it for digital processing, placement and money movement in days."

Future at Lloyd’s

Most brokers in the market still rely on disjointed systems, unstructured data and legacy technology that will not align to the requirements laid out in BP2. Coupled with the looming deadline, it appears that a wave of urgency has washed over many to find a solution to the challenge.

The question is: what is the solution, and how do we implement it?

Is it time for a fundamental change?

Brokers are investing large amounts of money and time into this challenge, and the associated challenges are not insignificant.

After speaking to our partners, we see two potential solutions: a broker can either transfer all of their existing MRC Word templates to the new format, or make a fundamental upgrade to their technology to automatically populate the new MRCs with internal and third-party data.

On the one hand, if a company decides to spend the budget on outsourcing the transfer to a Word Doc MRCv3 (or doing it in-house - which doesn’t seem like a good use of brokers’ time), the outcome would have little-to-no benefit besides basic compliance with the new legislation. A sticking plaster for a more fundamental problem.

If more fundamental technology is implemented, however, the outcome is less transactional and the rewards are potentially far greater.

The benefits of implementing a data-first solution are not only the ability to generate Lloyd’s-compliant MRCs, but further operational and financial efficiencies across other areas of the business.

Say you’re in a Formula 1 team and you experience engine issues in qualifying. You face a choice: do you opt for a quick fix and send the car out to race, potentially leading to failure that costs you points or leads to a crash? Or do you address the fundamental issues - even if it requires more effort in the short term - and put yourselves in greater stead for the rest of the season?

You could also think of it in a more philosophical way. Do you want to be a broker of the future, or do you want to continue using old systems and simply hope that you don’t get left behind?

The next inevitable mandate from BP2 will come along and, if you’ve chosen the latter, you could find yourself doing another quick fix after quick fix, eventually leading to a patchwork of solutions that cannot work harmoniously across the business. And importantly, with no structured data for use across your organisation.

On the other hand, the right tool implemented across a brokerage could be transformative beyond MRCv3 and CDR - not dissimilar to Red Bull’s rise to prominence through futuristic engineering.

A new generation of broker tools

Artificial’s contract builder is a powerful and comprehensive solution for brokers transitioning from the manual production of MRCs in Microsoft Office, to fully digital contracts in MRCv3 format, compliant with CDR requirements.

The Contract Builder process:

1. A broker opens a LOB-specific template in Contract Builder.

2. The existing MRC is uploaded to Contract Builder and the CDR data points are extracted, with any missing information completed by a human.

3. Using this information, an MRCv3 is dynamically generated for brokers to edit and structure using the same functionality as MS Word.

4. The finalised version of MRCv3 is available in PDF format to be shared with the market. All CDR data points within the new MRC are structured and can be shared with the broker’s Policy Administration System. The need for rekeying, as a result, is eliminated.

5. Any MTAs or Endorsements can be generated as structured edits to the agreed MRC. These edits are available in summary format and can be automatically applied to a renewal MRC.

From Day 1, brokers using Artificial’s Contract Builder have the ability to create fully-digital MRCs that are compliant with CDR requirements, contracts that can be shared with the market seamlessly and data within that can be used and shared with existing systems.

The future of Lloyd's broking

Adapting to this new way of working will still require effort in the short term, but the potential gains far outweigh any sticking-plaster solutions. The inevitable market switch to digital is coming quickly, and those who implement the right technology now will never need to do it so fundamentally again.

Because we expect that all data in the Lloyd’s market will eventually be structured, this technology will allow brokers to gain unprecedented insight into the data they ingest - from limits to deductibles and beyond. Down the line, this ultimately means you will have ownership over more data than competitors, which means more insight, analytics and market opportunities.

However, we believe that it’s crucial for humans to overlook and verify the information, particularly in the short term. Friction when implementing any new technology is inevitable but can be minimised with the right team of forward-thinking people in place.

If you’re ready to take the leap, get in touch with us today.

Never miss an update

Sign up for the latest insurtech insights with our mailing list and receive only the most relevant articles delivered straight to your inbox.

By submitting your details, you agree to receive occasional marketing emails from us. We will never pass your details to any third parties. For further information on how we manage your personal data, visit our Privacy Policy.

We and selected third parties use cookies or similar technologies as specified in the cookie policy. Learn more