aon property laser
TRANSCRIPT
Risk. Reinsurance. Human Resources.
Aon Risk SolutionsProperty
Aon Property LaserAn Innovative Approach to Total Cost of Risk Managemant
Aon Property Laser: An Innovative Approach to Property Total Cost of Risk Management
Reducing your organization’s property total cost of risk (TCOR) is fundamental to its operational resiliency and its financial bottom line. Aon Property Laser is a unique property and business interruption risk management methodology that incorporates leading-edge diagnostic and analytical tools to quantify your risk exposure. By identifying and analyzing key property performance indicators, Aon Property Laser enables you to improve your risk profile while also making your insurance policy work more effectively should you sustain a loss. Aon property experts can benchmark your pre-loss and post-loss risk management practices, activities and results to help you assess and optimize your property risk profile.
What is Aon Property Laser?
• An advanced approach to your pre- and post- loss property profile using analytics and industry benchmarking
• Identifies and prioritizes risk mitigation opportunities
• Identifies and helps prioritize areas for improvement in your property program
• An approach that integrates the combined expertise of Aon’s property risk network, from broking to risk consulting to catastrophe modeling, engineering and claims management
• Quantified impact from a multi-disciplinary, integrated approach to risk
Aon’s Proven Approach
Aon Property Laser starts with a series of questions designed to evaluate the factors driving the key elements of your property TCOR—retained losses, risk transfer costs, and risk mitigation costs. We produce an Executive Summary Dashboard to initiate an enterprise-level strategy to reduce your TCOR. Once we identify the key factors, we employ various tools to make an in-depth analysis at the location level.
• Identifying primary cost drivers
• Providing prescriptive “Next Steps” for program structures, risk improvement and risk mitigation strategies using various diagnostic tools
• Monitoring progress and measuring results
Sample Executive Summary Dashboard
Metric Assessment Explanation
Loss History Loss ratio below 70% over past 5 years.
Asset Valuations Appraisals performed at major facilities within last 3 years.
Business Interruption Valuations High level Business Interruption calculation of Declared Values with use of 10K Financial Reports is more than ±25% of reported values using BI worksheets.
Property Risk Management Program/ Risk Profile
Three active risk improvement recommendations are triggering underwriting considerations.
Property Risk Control Surveys Only primary characteristics for natural catastrophe modeling are collected.
Managing Change/Engineering/ Capital Expenditure Management
Change is managed by involving property loss control consulting on some matters including exposures to natural catastrophe. Plan reviews are completed.
Property Loss Responsiveness Client has plans in place for disaster mitigation but does not have contractual commitment from restoration vendors. If not, an Aon Rapid Response client will not have access to a global team of loss mitigation consultants able to respond on-site within 48-72 hours after a property loss. Also, client will not be informed of property exposures.
Business Continuity Management A business continuity management (BCM) policy and governance is formalized, but not implemented and enforced throughout the enterprise. Risk assessments of operations using a defined, documented and approved method are performed, but infrequently. A BIA has been performed for some departments throughout the enterprise. Infrequently planned complex exercises are undertaken.
Insurer Stability The ratings of the insurers on the program are reviewed only at renewal.
Driving Property Program Value
Aon Property Laser is an end-to-end property risk tool that enables risk managers to proactively quantify and benchmark key property risk indicators to drive program optimization and deliver measurable economic value. Beginning with our proprietary, online Laser assessment, Aon provides a dynamic process for evaluating property exposures, as well as all related risk management activities, and driving continuous improvement across an organization’s entire property program.
Three Key Phases
Quantifying yourRisk Profile
Program Design
Program Optimization & Property Resiliance
Discover Develop & Deliver Review
Aon’s Property Laser Survey Tool Evaluates Program Performance
and Creates a Prescriptive Dialogue to Evaluate TCOR
Quantifying the Risk & Prioritizing Resources
Aon Property 360 Keeps Your Property Program On Track
As commercial property insurance market conditions fluctuate, organizations must be able to effectively manage overall property TCOR to optimize risk transfer efforts and protect the organization’s balance sheet.
Leveraging a 30-minute client survey approach, known as Aon Property Laser Assessment, Aon property risk analysts can help clients carefully and critically assess elements of their property TCOR program against Aon’s proprietary key performance indicators (KPIs) to identify specific areas for immediate focus or improvement over time.
After completing the Property Laser Assessment, members of Aon’s Property Management team partner with you to review the KPI findings and leverage them to help you design a more effective and “informed” property program. This program inherently drives ROI by identifying and directing internal and external resources to create improvements in the areas identified as needing attention.
As your organization evolves–whether through new facilities in geographically disbursed regions, expanding supply chain, or assuming new and emerging risks, such as risks related to M&A–your organization’s property program requires continual review and maintenance.
Aon’s proprietary Property 360 client database and stewardship process helps keep your property program on track by constantly monitoring changes and providing 360 Dashboards that monitor critical program components.
Property 360 is a breakthrough in property risk management, finally offering risk managers a solid quantitative diagnostic for reviewing and managing risk.
Achieving ROI by Mitigating Risk
Improve your underwriting submission. Aon Property Laser can help focus efforts to develop and provide necessary and relevant data to the property markets. A TCOR strategy that leverages Aon Property Laser can have direct, quantifiable results, including:
• More precise capital expenditures–Risk mitigation and physical improvements can be costly and need to be prioritized effectively to ensure adequate premium savings or reduction in Loss Expectancy.
• Reduced property risk consulting/engineering costs–Base your property consulting investment on a continuum of TCOR drivers.
• Potential reduced insurance premium costs–By exhibiting an optimized portfolio that reduces exposures, you could qualify for reduced insurance rates.
• Complete and accurate understanding of your entire property program to clarify:
Actual Asset Valuations–Too high and premium is too high, too low and losses may not be covered
Loss Expectancy Drivers–Eliminate or reduce the key factors that are influencing your loss expectancies
Accurate Retentions that reflect the state of your business – Aon Property Laser information may help you achieve reduced premiums through decisions on higher retentions
Aon Laser Diagnostics Driving Measurable Savings in Your Insurance Portfolio
When introduced in 2011, Aon’s Casualty Laser diagnostic ushered in a new era for measuring the broad scope of casualty total cost of risk. Since then, Aon Casualty Laser has evolved as a strategic casualty risk tool enabling risk leaders to identify and measure cost drivers across more than 100 key performance indicators. Aon Casualty Laser has helped our clients identify more than $400 million in aggregate cost savings opportunities and create sustainable TCOR management programs.
Aon Property Laser extends Aon’s leadership in TCOR diagnostics to the property side of the insurance program. Aon Property Laser combines the global know-how of Aon Property Broking, one of the largest brokers in the world, with the insight and technical expertise of Aon Global Risk Consulting, for a dynamic new approach to measuring property TCOR. Aon Property Laser enables clients to accurately measure and benchmark the spectrum of their property exposures in specific locations and regions, as well as on a global basis, to gain critical insights for program-wide decision-making. When used as a part of the property stewardship strategy, Aon Property Laser can yield significant understanding of the overall effectiveness of the program.
Combined, Aon Casualty Laser and Aon Property Laser provide our clients with an unparalleled, fact-based approach to driving down insurance total cost of risk.
Risk Profile From an underwriter’s perspective, a client’s risk profile is a key consideration in determining pricing, terms and capacity. In addition to recent and historical loss experience and industry sector, a risk profile typically includes property geography, values, structure, and catastrophe risk exposure. The risk profile also considers a firm’s implementation of sound risk management practices, such as fire safety, updated and regularly exercised business continuity plans and supply chain resiliency. Measures aimed at strengthening your risk profile can lead to more effective negotiations with insurers and a lower overall cost of risk.
Prevention and Engineering There is no proven strategy to eliminate exposure to loss, but risk leaders can manage, mitigate and minimize the complex web of loss exposures, which can range from damage or destruction of owned physical assets and those of suppliers to business interruption or curtailment from a variety of perils. For businesses and suppliers that operate in catastrophe-prone regions or that have limited water supplies to address fire risks, fire protection and engineering services can elevate a company’s capabilities to meet global standards.
Business Continuity Management One of the most devastating exposures for any business is the disruption or curtailment of critical operations. Besides the obvious loss of revenue is the potential for prolonged or permanent loss of market share, reputational damage and flight of key employees. Effective business continuity management calls for identifying vulnerabilities, calculating maximum foreseeable loss, and developing plans that focus resources on critical operations.
Supply Chain For many businesses, even a temporary outage of a critical supplier can have devastating consequences that can extend beyond short-term revenue loss to include reputation damage and deterioration of market share. Given the strategic significance of global supply networks, businesses need to direct adequate resources to maintain their supply chains and protect the value they deliver. Solutions ranging from enterprise risk management to actuarial capabilities and exposure valuation analytics can help firms pinpoint how and where value is generated, quantify potential vulnerabilities, and focus resources where they will deliver maximum protection, and assess or determine the adequacy of business interruption (BI) and contingent BI insurance coverages.
The Fourteen Key Performance Indicators of Aon’s Property Laser
Building on decades of industry leadership in all areas of property insurance brokerage, risk management consulting, and claim services, Aon Property Laser is a dynamic tool for assessing, measuring, strengthening and continuously improving the 14 critical elements that comprise an enterprise’s property TCOR.
Values (Asset Valuation) The ability to provide precise values of properties to underwriters is critical. This not only ensures proper recovery in the event of a loss, but helps optimize your property insurance purchase. Similarly, businesses need concise analyses of the critical functions and operations contributing to their revenue streams for accurate assessments of potential business interruption exposures. Regardless of the size or scope of your operations, you need to make sure your property and business interruption values are accurate and current, as well as to distinguish replacement values from market values for your physical assets.
Loss History Property insurance programs consider 5- and 10-year loss experience. Many property underwriters consider loss history, including both frequency and severity, to be the single most significant factor in rating a client’s insurance program. Thus, there is a direct correlation with an insured’s loss experience and its property total cost of risk. By analyzing geographic locations and vulnerability to natural hazards, industry-specific exposures, supply chain, construction and business continuity planning, businesses can reduce their exposure to loss going forward.
PricingPolicyTerms
Limits & Sublimits
Insurer Stability
Supply Chain
Business Continuity
Prevention & Engineering
Insurance Recovery
Retention
CATExposure
Risk ProfileLoss
History
Values
Structure
Aon Property
Laser
Aon Client Promise® FrameworkOur Commitment to You
Client PromiseMethodologyThe way we work together to empower results
Partnership
Deliver
DevelopReview
Discover
ResultsExcellence
InnovationExpertise
Client Promise AcademyOur modular training approach drives consistent value
Aon Client PromiseOur commitment to ensure you receive value and personal service
Insurance Recovery Whenever a business sustains a loss – whether it involves damage to an individual facility or a major catastrophe that causes supply chain outages or destruction of multiple properties – effective insurance recovery requires a fast and often comprehensive response from claim professionals. Because the ability to achieve a timely and complete insurance recovery is a critical element of a company’s TCOR, businesses should take steps in advance of any loss events to review their protection and position themselves to maximize recoveries should a loss occur.
Pricing There are many variables that affect the pricing of your property program; from commercial insurance market conditions, the amount and type of coverage purchased, risk retained, program structure, and all the elements that make up a company’s risk profile (loss history, location and construction of properties, industry sector, and various loss control and prevention). Working with your broker to benchmark your program against similar types of exposures will help to ensure that your program is priced competitively and in line with your risk appetite.
Policy Terms Policy terms can change from year to year, depending on market conditions and loss experience, as well as changes in an insured firm’s risk profile and operations. As insurance market conditions evolve, policy terms and conditions can become more favorable or restrictive. For example, in response to the number of natural catastrophes in recent years, many insurers tightened coverage for business interruption (BI) and contingent BI exposures.
Structure An efficient program structure can go a long way to helping an insured business or entity control its premium outlay, address critical exposures, and manage property total cost of risk. In evaluating this element of risk costs, businesses should work with their broker to assess any potential coverage gaps and determine how consistently their various property policies will respond to a loss event.
Limits and Sublimits Businesses need to assess the adequacy of their property insurance limits to address any maximum foreseeable loss and understand how sublimits for certain types of perils, such as flood or wind, might affect the financial consequences to their firms from various loss events.
Insurer Stability The challenging investment climate and the potential for property insurance companies to sustain large losses despite sophisticated tools and algorithms to manage their aggregated exposures have created an environment where insurance market security and claims-paying ability requires constant monitoring.
CAT Exposure and Natural Catastrophe Modeling As businesses expand operations globally, they must be aware of potential vulnerabilities to natural disasters and catastrophic risks to ensure they confidently measure and manage their property TCOR. Natural catastrophe modeling data provides primary and secondary characteristics on potential exposures, and uncovers seismic risks from which organizations can pinpoint areas where properties potentially require engineering or property control attention to ensure they are properly prepared to mitigate effects of an event. As an example of scope, Aon’s top 100 windstorm-exposed accounts represent $750B in aggregate value.
Retentions With respect to managing property TCOR, more businesses are leveraging analytical methods to determine their optimal level of risk retention. Depending on how much risk they choose to retain, they might consider evaluating the effectiveness of single-parent or group captives or other alternative risk-financing approaches as strategic mechanisms that might provide the ability to raise retentions and reduce risk transfer.
Risk. Reinsurance. Human Resources.
ContactsJoe Galusha Aon Global Risk Consulting Risk Control, Claims & Engineering 1.313.418.9990 [email protected]
Mike Panfil Aon Global Risk Consulting Property Risk Control 1.312.381.3970 [email protected]
Anne Parkin Aon Global Risk Consulting Property Risk Control 1.248.936.5216 [email protected]
Peter Jagger Aon Global Risk Consulting Claims Preparation, Advocacy & Valuations 1.214.989.2623 [email protected]
Richard Miller Aon Risk Solutions | Retail Aon Property Broking 1.617.457.7707 [email protected]
John Dempsey Aon Global Risk Consulting Claims Preparation, Advocacy & Valuation 1.203.423.8211 [email protected]
Philip Reardon Aon Global Risk Consulting Claims Preparation, Advocacy & Valuations 1.312.381.4124 [email protected]
About Aon Aon plc (NYSE:AON) is a leading global provider of risk management, insurance brokerage and reinsurance brokerage, and human resources solutions and outsourcing services. Through its more than 69,000 colleagues worldwide, Aon unites to empower results for clients in over 120 countries via innovative risk and people solutions. For further information on our capabilities and to learn how we empower results for clients, please visit: http://aon.mediaroom.com.
© Aon plc 2015. All rights reserved.The information contained herein and the statements expressed are of a general nature and are not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information and use sources we consider reliable, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate profes-sional advice after a thorough examination of the particular situation.
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