Aon launches auction for reinsurance renewals, seeks to save insurers’ time
Aon has launched an auction capability for the January 1, 2020 reinsurance placements, claiming it can save insurers’ time.
The broker said the introduction of the auction capability, part of its suite of services, can benefit insurers by reducing the timeframe around pricing negotiations and contract certainty.
The technology enables pricing options through blind bidding for both non-concurrent (where reinsurers receive different pricing based on the quotes provided) and concurrent (where the technology identifies a consensus bid, so each reinsurer receives the same price for the layer) placements.
In the auction process, a mutually agreed contract wording is determined prior to the start of an auction to create contract certainty. Reinsurers enter single or multiple price points, and their corresponding capacity at each price point for the layer(s), in a blind bid.
The insurer provides its maximum auction price point, by layer, at which it is comfortable purchasing the capacity. An algorithm identifies the clearing price at which to complete the placement, at or below the insurer’s maximum price point.
Andy Marcell, chief executive officer of Aon’s Reinsurance Solutions business, said: “We constantly strive to transform the way we do business and enhance the placement experience for our clients.
“Our investment in technology gives insurers the power to choose how to secure robust reinsurance protection while continuing to benefit from their Aon broker’s commitment to client advocacy.”
Aon stressed the efficiency benefits at a briefing in Monte Carlo. Marcel added: “The main driver is for more transparency and choice for the client.”
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