Updated: Jun 25, 2021
Lloyd's Market Association Bulletin LMA21-027-TB
The LMA Claims Committee (LMACC) has sponsored and funded the Gemini development and implementation on behalf of the market to respond to the market’s legacy challenges and to significantly improve the visibility and oversight of expert performance and spend, to increase data quality recorded as part of the claims management process and to drive cost savings by reducing the costs associated with multiple expert fee management services.
This bulletin sets out a recommendation that is endorsed by the LMACC and LMAOC to deliver a centralised solution to accurately validate and process expert spend and VAT liabilities to Lloyd’s Europe new business and Part VII claims for both open market and DA business.
We know that:
Gemini will help the market meet Lloyd’s Europe’s Fee and VAT reporting requirements.
The contract is to standard Market terms in alignment with other centrally managed LIMOSS services.
Lloyd’s Europe Claims & VAT
Following engagement with Lloyd’s Europe and the market, the LMA wish to both highlight and endorse the use of Gemini to support and overcome the expert VAT recording and reporting challenges, that are currently creating a commercial risk to managing agents and the market, by way of inaccurate or duplicative VAT payments.
The total amount of fees on Lloyd’s Europe claims per annum is approximately £120mil and therefore the potential market VAT liability is 21% - £24mil. Accurate capturing and reporting of fees and VAT will ensure this liability is kept to the required minimum.
Gemini can support Lloyd’s Europe open market and binder claims, integrated with the current claims agreement process and in collaboration with experts, DCAs, and managing agents.
The current process for managing and reporting VAT is manual with no validation and or reconciliation to ensure that the correct VAT is captured at source accurately and reported via the claim’s agreement process. Gemini can facilitate:
accurate, data driven identification of applicable tax rates at source, between expert, TPA and Gemini
enhanced and accurate expert, tax, and regulatory reporting via Gemini and Lloyd’s Claims Reporting Suite (CRS) • reduced propensity for duplicative tax payments
automated reporting of data to managing agents and or TPAs, via API, or a data export; and
centralised access for Lloyd’s, to enable LIC oversight, audit, and reporting of invoices and tax.
Whilst Lloyd’s have extended the reporting in the Claims Reporting Suite and Insights Hub to cover Lloyd’s Europe new business and Part VII reporting, the data that is extracted is dependent on the quality of the data captured within the claims process.
The attached document provides more detail on the Gemini solution for Lloyd’s Europe new business and Part VII reporting on experts’ fees, covering:
An overview of how the adoption of Gemini delivers a solution (as validated by Lloyd’s Europe) for more accurately capturing expert spend and VAT on open market claims with no change to process.
A comparison of the “as is” process for recording VAT on expert fees versus the Gemini process, and associated benefits this offers for both submission/validation, processing and reporting.
A high-level process flow that that explains the system driven validation that occurs to ensure the expert records the correct VAT rate/amount in Gemini (which is then used to ensure the data populated in ECF is accurate).
A proposal for how the existing Gemini platform could be utilised reusing the existing logic to deliver a solution for DA claims (which will necessitate a change to process for DCAs to facilitate the binder claims fee data to be fed in to Gemini, either by direct entry or batch extract).
Lloyd’s Europe have made clear that market data capture and submissions for Claims Fee and VAT for both new business and Part VII business is either incomplete or of poor quality. The market is generally not meeting its obligations under the Managing Agent Outsource Agreement for data submissions in respect of Claims VAT and Fees. This is having a potential material financial impact on the market in respect of VAT costs.
Lloyd’s Europe strongly support LMA’s endorsement of Gemini as an effective option to improve this position. Tim Bowling Senior Executive, Claims
The original article was published by the LMA here.