aon’s 11 th energy insurance training seminar markets and security adam barber-murray
TRANSCRIPT
Aon’s 11th Energy Insurance Training Seminar
Markets and securityAdam 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 email
–“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 email 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?