Company
Kiln is an international insurance and reinsurance underwriting group that specializes in complex, unusual risk. Kiln plc is listed on the London Stock Exchange. Its operating subsidiary, R J Kiln & Co Limited has £703 million of capacity under management for the 2005 year of account, making it one of the largest agencies trading in the Lloyd’s of London insurance market. Kiln is a recognized leader in each of the five main business areas in which it operates: reinsurance, accident and health, aviation, marine and special risks, and property. In these and other fields, the Group helps its customers to manage their risk, and provides them with financial protection in the event of disasters and catastrophes. Kiln takes pride in addressing difficult, complex and unusual risks, using a combination of flair and sound judgment. As a Lloyd’s agency, Kiln enjoys a security rating of ‘A’ (Strong) assigned to Lloyd’s by Standard and Poor's and its Combined Syndicate 510 has an ‘A’ (Excellent) rating in its own right from A M Best.
Business Challenges
The Lloyd’s of London insurance market, like many other industries today, faces ever more challenging compliance requirements: Kiln had to move from 3-year to annual accounting and forecasting, in order to meet new FSA regulations for Lloyds.
Reporting and calculations used to be performed for a 3 year accounting period via a variety of tools, using data extracted from the underwriting system (Eclipse). Manual manipulation presented the ‘consolidated’ data values in a spreadsheet type format for Management reporting and Underwriter forecasting. The new annualized forecasting system was needed to automate the data extraction for both annual and traditional 3 year accounting, to load it at the lowest level (policy), and to provide current reporting capabilities plus enhanced analytical and forecasting functionality. Close to one hundred underwriters will use the system to forecast across their business units on both annual and rolling 3 year accounting periods.
These forecasts will then provide a consolidated view for executive management. The data required to populate the system ready for underwriters’ use falls into a number of categories:
- Quarterly Gross triangulations
- Specific Gross Future Premium and provisions from Reserving Database
- Quarterly cumulative Gross Earned
- Premiums by YOA (cumulative within a calendar year)
- Quarterly cumulative Gross Paid Claims and (Underwriter) Incurred Claims by YOA on an Accident Year basis from Eclipse
- Specific Reinsurance Future Premium, IBNR Reinsurance and Reinstatement Premium provisions from Reserving Database
- Reinsurance Targets and Forecasts (both Premium and Claims) on both a 3 year and a 1 year basis
- Cumulative Gross and Reinsurance movements on an Underwriter and Accounted Incurred basis within the calendar year relating to all closed years (i.e. older than 36 months).
Among the outputs required by the Underwriters were:
- Gross Accounting Incurred for Premium Earned to Date
- Forecast Gross Earned Premium to year end
- Forecast Gross Accounting Incurred on year end premium
- Unearned Gross Loss Ratio (calculated)
- Accounting Incurred for RI Premium Earned to Date
- Forecast RI Earned Premium to year end
- Forecast RI Accounting Incurred on year end premium
- Unearned RI Loss Ratio (calculated)
Board Solution
Such complex requirements demanded that the solution should be carefully evaluated. In mid October 2004 a detailed six-week proof-of concept was started: approved by the Director of Underwriting, the application was then successfully moved into production by January 2005. Kiln developed the new forecasting application (DURG) using Board with help from its business partner CIBER UK. This has changed the way Underwriters view and manage their business. It provides new information in terms of earned figures and facilitates the definition of a One Year view of Kiln business and the Accounting Incurred Loss Ratios required for One Year Accounting.
A partial list of the benefits includes:
- Faster and more effective forecasting
- Providing data to the underwriters in a faster and more controlled environment
- Clear link between year of account and annual accounting results
- Less administration thus speeding of the DURG process
- Easier communication between Underwriters and the Syndicate Information Department (SID)
- Enabling underwriters to analyze anomalies at source without reference to SID
- Removing errors in data transcription (automated feeds)
- Providing auditable record of changes to business forecasts
Board allowed Kiln to include in the new application workflow support for a tight integration with the management processes.
Since Underwriters were used to working with spreadsheets, the first version of the new application made extensive use of the Board embedded worksheet component to present a familiar view of the data.
Board visual, programming-free development environment enables an easy transition from this 2-D interface to a more interactive and multidimensional one that exploits all the power and richness of the toolkit without any impact on the back-end, “After the success of the DURG project”, says Chris Locke, Head of IT at Kiln “we see many new applications for Board We have already started work on Claims Reporting and Reserving and have plans for much more. We aim to exploit all the power of the toolkit to support simulations that will enable us on the one hand to optimize our capacity to process renewals and on the other to evaluate very quickly and accurately our exposure to a major catastrophe.”
Talking about the implementation Chris added that CIBER had been a great help in getting Kiln off to a very fast start. “Their people really understand our business but, more importantly, are transferring their knowledge and techniques to help us to full self sufficiency. Our vision is not just self sufficiency but self service for our business users. I do feel I ‘own’ the toolkit, it gives us independence and the ability to rapidly react to (and anticipate) the fast-changing needs of our business.”
In a world where, according to Ventana Research, close to 50% of large companies have difficulty providing executives with data they need to manage the business effectively, and one-third are incapable of delivering even basic financial information on a timely basis, Kiln stands out as an IT-savvy organization which is able to put the technology at the service of the most demanding business needs.
“The knack” adds Chris Locke, “is picking the right tools and that is what we did with Board”.