Q2 Aon Advice to Clients
In Q2, we saw once again that proactive market engagement and the use of data-driven risk insights builds trust and credibility, can attract more capital and favorable pricing, terms and conditions, and is key to optimizing risk transfer strategies. Working with your Aon Team, be prepared to:
Start the Renewal Process Early
With the heightened focus on risk selection and a growing reliance on data and modeling, underwriting is taking longer, especially for challenging and Natural Catastrophe-exposed Property risks, which may take up to six months to solution. Allowing additional time will position you to describe your story in detail – including changes in business or operating models – and respond to any queries that may arise, building underwriter trust and confidence in your risk. It is also increasingly important in parts of the market, like Natural Catastrophe-exposed Property, where insurers’ 2023 capacity maximums may be met as year-end approaches. Be sure to set and manage timing expectations amongst key stakeholders and decision-makers.
Leverage Data-Driven Insights to Inform Your Risk Strategy
Advances in technology have enabled the robust identification and quantification of risk. Utilize risk modeling solutions and re-examine loss scenarios to inform decisions, evaluate trade-offs and identify risk management practices that can be improved to build greater resilience. Reconsider policy terms and conditions, risk retention thresholds, attachment points, indemnity periods and sub-limits. Work with your Aon Team to explore alternative solutions like Parametric Products, Alternative Risk Transfer, and Captives.
Scrutinize and Update Your Asset Values
Inflation, a slow supply chain recovery, rising labor costs, and other factors have driven up costs and extended timelines, creating a significant underinsurance risk which could have myriad direct and indirect consequences. In partnership with Aon’s Business Interruption, Contingent Business Interruption and Asset Valuation teams, conduct a thorough review of your asset values and valuation methodologies. Secure appraisals and conduct PML studies. Leverage Catastrophe Modeling solutions to highlight exposed profiles and loss drivers. Develop a property risk improvement strategy and be prepared to make required investments.
Clearly Articulate Your ESG Strategy
Risks related to ESG, which can arise from myriad complex, interconnected factors, continue to create volatility and uncertainty for insurers and the risk community at large. Underwriters remain focused on organizations’ ESG maturity and their plans for achieving disclosed targets. Include in your submission the details related to your ESG strategies, including investments you are making in cyber governance, Diversity, Equity & Inclusion initiatives, and energy transition. Engage with Aon to measure and benchmark your transition to a net-zero future, using Aon’s Transition Performance Index.
We encourage you to engage with your Aon Team to learn more about each of these recommendations.
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