Peiser: Aon’s Risk Analyzer tools helping brokers design better programs and win business

Aon’s Joe Peiser has said that his firm’s new suite of so-called Risk Analyzer tools for specific lines of business is helping clients and brokers design better insurance programs, and that they have also helped the retail giant win new business.

The global CEO for Aon’s commercial risk solutions division spoke to The Insurer TV on the sidelines of last week’s RISKWORLD conference hosted by RIMS in San Diego, where he touched on a wide range of topics including Aon’s risk capital strategy and its deal for NFP.

Aon united its reinsurance and retail broking arms under the risk capital banner and the leadership of Andy Marcell a year ago, in part motivated by the aim of driving the convergence of the firm’s analytics tools to support both retail and reinsurance broking clients.

Peiser said Aon made the call to unite its retail and reinsurance broking business under the risk capital umbrella in response to what he called a “blurring of the lines” between insurance, reinsurance, and the capital markets.

He also said that in the past five or six years, higher premiums, insured values, and losses have meant that the stakes of (re)insurance purchasing have also gotten higher.

Within risk capital, the Risk Analyzer offering is currently a quartet of analytics tools that have already been launched for property and casualty and are being demoed for cyber risk and D&O.

“These are all possible because of the change we made last year in risk capital. We brought all of our data scientists and analytic professionals from both commercial risk and reinsurance into one single team to develop these tools,” Peiser explained.

Aon started by rolling out the casualty Risk Analyzer in November last year in the US, then launched its property Risk Analyzer at the Aon Property Risk Symposium in Florida this January.

“Those two tools have received an amazing reception from our clients, but also from our brokers, who find that it’s helping them develop better program structures with our clients.

“We know that clients are making different decisions based on these tools. In addition, fortunately, we’ve also won some business where the main reason has been our analytic tools,” he continued.

Peiser suggested that carriers also appreciate a more analytic approach to broking, because underwriters tend to be analytical themselves.

To highlight the way clients have responded to the approach, he said that on a property renewal Aon was able to quantify the value of broader coverage under one option versus another.

“The client chose that broader coverage, which had a higher premium than the other option. And the carrier who lost the deal said to me, ‘How did we lose that? We thought we were the most competitive.’ I said, ‘Well, not really, on a total-cost-of-risk basis’,” the executive recounted.

“We were able to demonstrate to the client quantitatively that the other deal was better for them over time… So, I think this is changing the way that we do business, the way we broke business, maybe not completely, but it’s certainly adding nuance around the margins that make a big difference for our clients,” Peiser continued.

Blurring of lines

In addition to the tactical rationale in accelerating client-facing analytics, the executive said that Aon’s move to form its risk capital division was strategic.

“The more strategic reason we created risk capital is because we saw an… increasing blurring of lines between insurance, reinsurance and the capital markets. One of the realities for the last five or six years is that the stakes have gotten higher. Premiums have gotten higher, values have gotten higher, losses have gotten higher.

“We’re seeing more receptivity in the reinsurance market and the capital markets for corporate risk, so we want to be organised in such a way that we can access that risk in any form, in any geography, across any segment,” said Peiser.

And linking that with the tactical approach around analytics, he said that Aon sees analytics as a way to unlock capital, especially in the quantitatively driven reinsurance and capital markets worlds.

As an example, he suggested that the scope of modelling around natural perils is broadening beyond quake and windstorm in relation to corporate risk.

“We can model flood better than ever, we think we can model hail, we can model wildfire. As we can model more and more perils, we think there are going to be more and more risk takers for that specific type of risk that they’re going into as an investment reason, and we’re going into to help our clients find more risk takers.

“So we think it’s a strategy that differentiates Aon, brings real value to our clients, and is going to be our strategy for the coming years,” Peiser continued.

Watch the full interview with Aon’s Joe Peiser to hear more about:

  • The rationale, execution and vision around Aon’s acquisition of NFP
  • The systemic shift in the US insurance market in relation to E&S, and why Aon maintains a watching brief on the segment
  • Aon’s growth mode, particularly for specialised talent
  • Innovation drivers in a moderating marketplace