Aon’s 11 th Energy Insurance Training Seminar Markets and security Adam Barber-Murray.

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Presentation transcript:

Aon’s 11 th Energy Insurance Training Seminar Markets and security Adam Barber-Murray

Contents How do we find market to follow the leader’s terms Analyse of following market Criteria for choosing following market

Lead Terms Established Need to have support for 100% What is the market capacity? With the leader’s line down – is it job done ? –Send out to all markets by –“fill your boots”

Market Analysis If it’s a renewal look at the expiring market. –Who will renew –Who may come off:- Do we need to find new markets? –Do we blanket the whole market Underwriters choice – Risk record – Treaty restrictions – Renewal rates Client choice (Broker input) – Security – Poor Service – Slow Claims

Market Analysis (continued) There is an art to ‘building’ a placement Need to select markets to be approached. – Build momentum – Underwriters will not write full capacity line for 100% E.g AIG capacity USD200 million Written line 20% – Need to have supporting lead lines The personal touch – Grab underwriters attention – Set the scene

Market Analysis (continued) Important to get support on same terms and conditions. – Avoid fragmentation of the placement – Same deductibles Avoid separate policy with different adjusters – Complications with claims – Duplication of effort for insured

Marketing Considerations What criteria do we use for selecting following markets?

Criteria for selecting Markets Security of the insurer / financial strength Rating Agencies – S&P, AM Best, Fitch, Moody’s – S&P Rating AAA - an insurer rated ‘AAA’ has EXTREMELY STRONG financial security characteristics. ‘AAA’ is the highest insurer Financial Strength Rating assigned by S&P AA - an insurer rated ‘AA’ has VERY STRONG financial security characteristics, differing only slightly from those higher rated A - an insurer rated ‘A’ has STRONG financial security characteristics, but is somewhat more likely to be affected by adverse business conditions than are insurers with higher ratings

Criteria – Security (continued) S&P Rating (continued) – BBB - an insurer rated ‘BBB’ has GOOD financial security characteristics, but is more likely to be affected by adverse business conditions than are higher rated insurers. – BB - an insurer rated ‘BB’ or lower is regarded as having vulnerable characteristics, that may outweigh its strengths. ‘BB’ indicates the least degree of vulnerability within the range to CC

Criteria – Security (continued) Insurer security and the broker The broker does not guarantee security of insurers We have a security committee – responsible for establishing appropriate market security procedures and financial guidelines for all entities within Aon. Includes assessing and classifying all markets/underwriters and intermediaries with which Aon maintains an active trading relationship – Two market security departments – Chicago and London Meets regularly to review insurers security Looks at Credit Rating Agency - financial strength rating Looks at financial size – Capitalisation of US$50 million minimum Looks at claims payments Talks to peers – Monitor rating changes – Issues client advisory packs

Criteria – Insurer Appetite The Risk Appetite of the insurer – Do they write the class of business – Do they write business in the region Nat cat exposures Gulf of Mexico – Do they have the “experience” to handle as supporting market? – Is the insurer in expansion mode? – Is there an existing relationship with the client Needs to be a big line – To keep the momentum going

Criteria – Service The insurers response time new business – Availability of underwriter – Extensive modelling Will the insurer require to be an agreement party – Agreeing all policy changes / endorsements – Slows down service response times General query response times

Criteria – Claims The principle reason insureds buy insurance is to have their claims paid Does the Insurer pay claims swiftly? Does the insurer want to be a claims agreement party

Following Markets How many times, on average does a placing broker have to approach an underwriter with a new risk before the risk is accepted?