We plan to capture key details about risks as separate pieces of information within the CDR and so, ultimately, remove the need for risk and foreign insurance legislation (FIL) codes. The CDR includes the information required to derive risk and foreign insurance legislation codes. The colour wheel below is a summary of the information that needs to be captured to enable this new method of classification.
Lloyd’s recognises that risk codes are currently used in many systems and processes and plans to enrich the data in the CDR with the appropriate code(s) using the key facts provided about the risk.
• Where the insured item is Fine Art, only one risk code FA can apply.
• Where the insured item is Bloodstock or Livestock applying a code is a little more complicated. Where the business is written under Excess of Loss, risk code NX applies; otherwise, if the insured item is Bloodstock, the code is NB, and if the insured item is Livestock then the code is N.
• Where the insured item is property many different codes may apply. Typically, we will need to consider the:
- coverage, e.g. difference in conditions or property damage;
- perils, e.g. fire, terrorism or war on land;
-method of placement, e.g. open market or binder; and
- location of the property.
This diagram shows how logic might be used to derive risk codes for Open Market North American Property Insurance business.
Foreign Insurance Legislation (FIL) codes are currently generated manually and are used by Lloyd's and market participants to group transactions and drive multiple downstream processes including regulatory reporting. There is a set of key data fields which we aim to collect through the CDR to enable the calculation of FIL codes automatically. This sort of logic is already being used in Lloyd's Direct Reporting (LDR). The example below illustrates how FIL codes will be calculated within the scope of Open Market North American Property insurance.
Not every single coverage or peril included under the Market Reform Contract needs to be provided in the CDR. We recognise that when it comes to claims, this will limit the information available in the CDR, and it also doesn’t provide a complete digital record of all elements of the risk.
These are complex data sets that aren’t fully standardised across the market, so we have focussed on driving digital processing, as per the scope of the CDR in Blueprint Two.
Mapping of risk classification information to risk codes can now be found in the ‘Risk Code Mappings’ tab in the CDR Airtable.
Aggregate information is summarised as the type(s) of item(s) (for example property, vehicle, person), and the country(ies) and country sub-division(s) (for example California, US) where the items are located and/or registered.
This approach is driven by the lack of standardisation in schedule of values information and the complexity around having this readily available for all contracts at the point of bind.
Both the CDR and iMRC will be governed by the Data Council.
(This is as set out in the LMG introduction to the Data Council in February 2022.)
In its press release of 31 March 2022, the London Market Group (LMG) announced that ACORD will be the market’s chosen data standards methodology, and that the CDR will align to ACORD’s Global Reinsurance and Large Commercial (GRLC) standard. The technical implementation information will be owned, managed and maintained by ACORD. The Data Council will work with ACORD to get some news elements added to the GRLC to ensure complete alignment with the CDR. You can read the press release and technical Q&A on the LMG’s website: see Data Council agrees ACORD standards adoption and content for Core Data Record.