CHICAGO, March 21 /PRNewswire-FirstCall/ -- Aon Re Inc. has studied the results of companies that have implemented more sophisticated customer segmentation strategies over the past few years. The results of the study show that while the overall returns for the personal lines property industry still lag the cost of capital, "we are starting to see differentiating results between insurers," according to Randall Brubaker, Aon Re Services senior vice president. "This differentiation has been somewhat masked by the increased frequency of hurricanes during the past two years but the underlying progress is evident."
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Brubaker continued, "It is clear that the core disciplines and customer segmentation tactics that are commonly utilized with personal lines automobile have improved the financial results of the non-catastrophe personal lines property business. The next phase of improvements in personal lines property will include substantial improvements to the disciplines and tactics associated with customer level segmentation on catastrophe risk. The current more active hurricane period has only accelerated the need to implement more sophisticated catastrophe based customer level segmentation strategies."
The ability to pair the Aon Catastrophe Scores (sm) at the policy and location level with insurance, credit and other core multivariates will allow insurers to improve the quality of pricing for all of the risks insured within the policy. The Aon Catastrophe Scores (sm) also allow insurers to implement pricing and underwriting strategies that immediately reflect the significant learnings from the past two hurricane seasons, views on increased frequency levels and higher levels of capital consumed by property insurance writings. All catastrophe perils including hurricane, earthquake, fire following earthquake, tornado hail, winter storm, brushfire, flood and terrorism and other localized perils can be incorporated into Aon Cat Scores (sm).
Aon Catastrophe Scores (sm) are based upon multi-model analysis for the unique portfolios of individual insurers. Aon Re has led the industry with applications of multiple catastrophe model processes to manage catastrophe pricing and underwriting. The results from the past two hurricane seasons has proven that multiple model strategies have been more predictive than the use of any one standard model. Catastrophe Scoring (sm) is the next step in developing services that represent a competitive advantage for Aon Re clients, through more predictive catastrophe pricing at the customer level.
Michael Bungert, Aon Re CEO, said, "The need to incorporate more sophisticated catastrophe underwriting and pricing approaches into customer segmentation models is clear. We are pleased that our continued investment in catastrophe modeling and our continuing significant investment in our own technical client service capabilities will make the transition into the next phase of underwriting and pricing sophistication easier for our clients and prospects."
Contact:
Al Orendorff
312-381-3153
Aon Corporation ( http://www.aon.com/ ) is a leading provider of risk management services, insurance and reinsurance brokerage, human capital and management consulting, and specialty insurance underwriting. The company employs approximately 47,000 professionals in its 500 offices in more than 120 countries. Backed by broad resources, industry knowledge and technical expertise, Aon professionals help a wide range of clients develop effective risk management and workforce productivity solutions.
This press release contains certain statements related to future results, or states our intentions, beliefs and expectations or predictions for the future, which are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from either historical or anticipated results depending on a variety of factors. Potential factors that could impact results include: general economic conditions in different countries in which we do business around the world, changes in global equity and fixed income markets that could affect the return on invested assets, fluctuations in exchange and interest rates that could influence revenue and expense, rating agency actions that could affect our ability to borrow funds, funding of our various pension plans, changes in the competitive environment, our ability to implement restructuring initiatives and other initiatives intended to yield cost savings, our ability to execute the stock repurchase program, changes in commercial property and casualty markets and commercial premium rates that could impact revenues, changes in revenues and earnings due to the elimination of contingent commissions, other uncertainties surrounding a new compensation model, the impact of investigations brought by state attorneys general, state insurance regulators, federal prosecutors, and federal regulators, the impact of class actions and individual lawsuits including client class actions, securities class actions, derivative actions, and ERISA class actions, the cost of resolution of other contingent liabilities and loss contingencies, and the difference in ultimate paid claims in our underwriting companies from actuarial estimates. Further information concerning the Company and its business, including factors that potentially could materially affect the Company's financial results, is contained in the Company's filings with the Securities and Exchange Commission.
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