Q1 Aon Advice to Clients

Address Your Evolving Risk Profile and Objectives

Economic and geopolitical related factors have likely impacted your risk profile, and market conditions may have evolved your risk strategy and transfer objectives. Challenge and re-set your risk tolerance, appetite and strategy, and align your risk management programs accordingly. Leverage risk appetite modelling to ensure optimal value of insurance. Work with your Aon team to review policy terms and conditions, risk retention, attachment points, indemnity periods and sub-limits, and re-examine loss scenarios. Given the renewed scrutiny on banks and related financial industry companies, this is a good time to reevaluate your Management Liability program, paying particular attention to bankruptcy-related and Side A provisions, the preamble language and scope of the exclusions, the priority of payments provisions, change in control provisions, the entity or insured-vs-insured exclusion, as well as the definition sections of “claim”, “loss”, “notice” and any investigation coverage.

Increase Underwriter Confidence in Your Risk

Superior placement outcomes are achieved through underwriter confidence and trust. Engage throughout the year to bring insurers along on your journey and differentiate your risk. Communicate transparently and often – in person, when possible – and provide access to relevant experts across your organization. Likewise, build relationships across insurer stakeholders. Start the renewal process early and define clear objectives. Tap into available data to provide robust, quality underwriting information including property valuation methodologies, risk modelling, risk control and mitigation practices and actions you have taken from past recommendations. Demonstrate positive momentum and evidence of ESG investments.

Leverage a Robust Approach to Managing Your Property Risk

The Property market – especially for Natural Catastrophe-exposed risk – is challenging, and valuations remain under scrutiny. It has never been more important to evaluate your asset valuation methodologies and ensure accurate values, in partnership with Aon’s Business Interruption, Contingent Business Interruption and Asset Valuation teams. Leverage Catastrophe Modeling solutions to highlight exposed profiles and loss drivers. Develop a Property risk improvement strategy and be prepared to make required investments. Traditional risk transfer continues to play a vital role in achieving risk management objectives; however, in challenging markets and risk situations where capacity is limited – such as Natural Catastrophe Property – alternatives may provide greater flexibility and some pricing relief. Work with your Aon team to explore a range of solutions including Parametric insurance, Alternative Risk Transfer, Structured Insurance, Captives, Cell Companies and Stock Throughput for significant inventory exposures.

Conduct Due Diligence on Your Counterparties

Following the recent situation whereby a US-based MGU was binding business to a non-rated insurer after it lost its Lloyd’s capacity, it is evermore important to conduct due diligence on your counterparties – especially MGAs and MGUs. Be cautious, skeptical and judicious. Remember the adage: If it sounds too good to be true, it may very well be. Have a Plan B.

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