Aon-Willis tie will fill innovation gap and solve silo mentality

Aon’s merger with Willis Towers Watson will create a new organisation the likes of which the world has not seen before, capable of bridging the gap between traditional brokers, professional services firms and technology providers, Eric Andersen, president and member of the global executive committee, Aon, told Intelligent Insurer.

Andersen said the COVID-19 global pandemic has illustrated more than ever the importance of clients being able to access a joined-up service when it comes to advisers, who can offer a combination of risk transfer services, advice and technology.

“Our combined organisation will defy traditional categorisation,” Andersen said. “We will be a more capable professional services firm, with better insurance brokerage services, more complete benefit provider capabilities and a better consultancy across a number of areas including health, retirement, investment and human capital.

“What we build together will enable us to have a vital seat at the table, advising clients on issues that have traditionally been left unmanaged due to the gap between traditional brokers, professional services firms and technology providers.”

Andersen added that the focus will be on continuing to evolve based on what clients need.

“Today, many traditional insurance brokers and benefit providers tend to view client relationships through product silos with an emphasis on risk placement.

“Meanwhile, professional services firms can offer advice but don’t have capital to bear, and leading technology providers have aggregated data and recognised patterns but have not translated those insights into actual client solutions.

“As a result, it has exposed a gap, and client needs are outpacing innovation. In times like this, our clients need our collective experience and insight like never before,” he said.

“For intermediaries and risk-takers alike—this is the time when our clients look to us to help them navigate the current situation.

“Now more than ever, it’s about having the right insights that can enable better decisions and help unlock new solutions for clients. We saw the COVID-19 pandemic wreak havoc on business continuity around the world, and it exposed even more the need to help clients better plan for the next long-tail risk on the horizon and build more resilient workforces.

“This is why I am so excited about our combination with Willis Towers Watson. Together we will be able to accelerate innovation and strengthen our client-serving capabilities to meet these new challenges and address the demands they place on our clients.”

Closing the gap
Aon revealed its intent to combine with Willis Towers Watson through an all-stock transaction on March 9, 2020. In late August it secured the support from the shareholders of both firms. The deal is expected to close in the first half of 2021.

Andersen believes the deal will help close the gap between the needs of clients, as they innovate and adapt to a rapidly changing world, and the services brokers can offer them.

“We are dedicated to helping clients meet rapidly changing, increasingly complex challenges,” he said.

“Our world is becoming more volatile and interdependent than ever before, creating risks that are more interconnected and severe.

“While Aon and Willis Towers Watson have both made real progress in the industry, there is a reality that client needs continue to outpace innovation. By taking a bold step to bring our organisations together, we combine complementary solutions, capabilities, skillsets, and expertise that will allow us to accelerate innovation more quickly to address these unmet client needs.

“The combined entity will enable the firm to have distinctive client insight across segments and geographies and advanced analytical capabilities, which together will help us deliver superior outcomes for clients by creating access to new sources of capital and introducing new structures that improve client choice.

“Ultimately, we will be better positioned to address the innovation gap and help clients and communities around the world be better prepared for long-tail risks that have a lasting impact on the global economy and society.”

He said that COVID-19 has not changed the nature of the deal or its timing, but the challenges presented by the pandemic have illustrated the need of clients for complex solutions.

“The events of 2020 certainly demonstrate the exact type of complex challenges posed by emerging risks that our combined organisation will be better positioned to address,” he said.

“The pandemic has had significant worldwide economic and humanitarian implications, and it has exposed how risks that were once thought of as rare can happen at any moment, with an impact that grows more severe over time.”

Andersen added that clients are becoming increasingly aware of threats and learning how these issues connect to existing challenges. The company conducted a survey of C-suite and senior executive leaders in the US, UK and EU, and two-thirds of those companies said the pandemic had exposed new risks and vulnerabilities that require a significant change in how businesses like theirs should think about the future.

“As a result, we are witnessing a fundamental reordering of client priorities on a global scale. They are looking to Aon not only to help them recover but to help them be better prepared for the next time,” he said.

“To do so, it is imperative to expand traditional risk management to address classes of risks that are longer-tail in nature—such as climate change or cyber—that are increasingly relevant but lack comprehensive solutions that address risk mitigation, incident response and compensation for loss.

“This is core to the thesis of our combination, because together we will combine our complementary skills, analytics and technology to create predictive models that look forward—not only relying on history—so we can better advise clients and develop new solutions at a faster pace.”

Getting better
One of the challenges of being the biggest is around the nature of growth going forward. In terms of where the company heads next in search of growth, Andersen said that is not necessarily the focus now.

“The combination is not about getting bigger, it is about getting better. On day one, we are raising the bar and setting a new standard of client leadership.

“We will be able to help clients identify, manage and transfer risks in a way that has previously been unmanageable,” he explained.

“Cyber risk is a great example. Cybersecurity is very complex, because there is nothing linear about its history or trends, and each organisation has its own unique set of challenges.

“While it is impossible to eliminate cyber risk, it is possible for an organisation to build more resilience by taking a comprehensive approach.

“Aon has been investing for a number of years to strengthen our technical expertise related to incident response and digital forensics services.

“When we combine these skills and analytical capabilities with Willis Towers Watson’s existing cyber risk transfer capabilities, it will generate insights into severity and frequency that will help accelerate market confidence in underwriting this emerging risk—unlocking a larger addressable market for the industry and driving better solutions for clients.”

For an extended interview with Andersen where he discusses more on post-merger plans and market conditions, click here.