New risks and a united front for Aon
Cyber, alternative capital and shifting government risk into the private sector will be some of the talking points at PCI—as will Aon’s changes to its brand, George deMenocal of Aon’s Reinsurance Solutions US business tells PCI Today.
“We have been successful to date in developing growth strategies in voluntary flood.”
There have been some significant changes at Aon—will they be apparent at PCI?
Aon announced earlier this year that it was retiring its Aon Benfield and Aon Risk Solutions brand names, having already retired the Aon Hewitt brand in 2017. This has allowed the firm to approach clients and stakeholders simply as ‘Aon’. Save
Internally, we have long talked about ‘Aon United’ as a concept of how we work, but these latest changes have helped us to remove structural barriers globally within our firm and to operate as a coordinated network of colleagues in this united way. People will notice this change in our meetings at PCI in terms of the breadth of discussions we are now able to have.
What capabilities do you bring to the 2018 conference?
We have representatives at PCI from all of our 16 US practice groups, which support clients across a huge range of business lines. Each practice group has quantitative and qualitative risk management strategies for its individual client portfolios, based on our firm’s wealth of market data and associated analytics.
Coming back to the Aon United ethos, these groups will be far more connected going forward, allowing us to work across the scope of our clients’ businesses, and offer them seamless access to diversified forms of capital on a global basis.
Which topics will be under the microscope this year?
There will be the traditional discussions in the casualty and property spaces around available capacity, losses, new exposures, and optimisation of capital. In terms of the latter, a few weeks ago we were excited to announce the launch of our Capital Advisory team in the US, which follows the launch of the Capital Advisory function based in London.
These new units are a great example of Aon United, as they bring expertise to clients on the asset and the liability side of the balance sheet, advising them not only on what forms of capital may be best suited to their needs, but also where they may want to consider investing for the best returns.
In terms of perils, I think discussions will focus significantly on flood, an area in which we see great potential for transferring further risk from the public sector to the private markets. Our flood team is working hard with our clients to develop growth strategies after the announcement from FEMA to allow write-your-own voluntary writers as of October 1, 2018 to offer and sell a competing voluntary flood policy. We have been successful to date in developing growth strategies in voluntary flood and securing reinsurance capacity for this line of business.
What about emerging areas of focus?
Clients are placing more emphasis on cyber, so we have built out our teams and capabilities to meet current and future demand.
The industry is gradually shaping its view on cyber risk and how it can be covered, and our firm has launched a ‘silent cyber’ product to help address our clients’ exposures.
Another topic will be the prospective influence of insurtech, which continues to show growth and maturity, and is targeting the entire insurance ecosystem—moving well beyond the distribution arena and into ways to leverage artificial intelligence, data and analytics and automated technologies across various lines of insurance business.
Aon has formed partnerships with insurtech entities to support our clients in a variety of lines of business, including Clara in workers’ compensation claims diagnostics; and Claims Logic, which digitises claims and enhances the customer experience in personal property lines.
Aon has placed a lot of emphasis on the protection gap. Is it starting to narrow?
We have continued to make great inroads worldwide into projects that de-risk the balance sheets of governmental and quasi-governmental organisations. We launched a Public-Private Enterprise practice in London just a few weeks ago, which will coordinate with our government and credit practice in the US, and our investment banking team, Aon Securities.
Aon Securities structured the largest ever earthquake catastrophe bond this year on behalf of the World Bank, and we’ve seen excellent growth in our US mortgage credit programme—with more than $20 billion of risk transferred to re/insurers since its inception five years ago. We are now extending this into other areas of public and commercial credit.
Reinsurers are willing to provide capital support in public-to-private infrastructure projects, so we are working with our markets and clients to continue to expand this developing area of risk transfer.
George deMenocal is president and chief executive officer of Aon’s Reinsurance Solutions US business. He can be contacted at: george.demenocal@aon.com
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