Aon’s Beveridge: Insurers looking for areas of growth after ‘optimisation’ as market conditions shift

By James Thaler

May 27 - Aon’s global chief broking officer Cynthia Beveridge has said that, as market conditions shift and after a period of “portfolio optimisation”, carriers are honing their focus on areas for growth, and that Aon’s tie-up with NFP is helping insurers go further downmarket.

Beveridge made those comments in an interview with The Insurer TV at this month’s RIMS Riskworld event in Chicago, where she also detailed how Aon’s suite of risk analyser tools is changing the way brokers and carriers negotiate and leading to differentiated outcomes.

“I don't know if I would say that I'm seeing a dislocation,” she said of market conditions. “I think what a lot of insurers have done already is really looked at their portfolios and done what I would call portfolio optimisation.

“They know what they like. They were pretty stringent on their underwriting guidelines, and they like their portfolios. So now they're saying, 'We want growth, and these are the areas that we want growth in,'” Beveridge commented.

“So, I think that's the common thread that I'm seeing in the marketplace.”

Beveridge said that carriers’ focus specifically on profitable growth means they are targeting areas where “they can get the best bang for the buck”.

“They're not necessarily scaling back because they've already done that. Some either want more, or they've already scaled back and we've managed expectations of clients,” she commented.

The Aon executive said the brokerage’s current focus on building out facilities isn’t just about driving efficiencies, but in creating “the best program, the best product that's available in the marketplace, and there are some carriers that aren't interested in those”.

However, she acknowledged that “there are some carriers that aren't interested in facilities where they give their pen”, while she also said Aon is less interested in transacting with “all of the MGAs that are sprouting up if they don't own their own capital”.

“We want to be able to talk to an insurance carrier about getting a deal done or getting a claim paid, and if you don't have that personal relationship, it's quite difficult. So, I think that's maybe a little bit of the dislocation that we see,” she commented.

With carriers’ portfolios across the market generally optimised, there is also an increasing focus among insurers on retaining existing business.

“It's about how to help them retain and we want to make sure that it's the right coverage, the right terms with the right insurance carrier. We've got an abundance to work with,” she noted.

Beveridge also discussed Aon’s “independent and connected” relationship with middle market specialist NFP and how Aon is leveraging its carrier relationships to bring more capacity downmarket.

“We're letting them be independent and do what they do. They've been wildly successful over the years. But when needed, we're talking to them about the markets,” she explained.

“We have market concentration, and there are insurers that actually want the lower end; they want the middle market. It's saturated. Where are they doing well? How are they operating differently? So we're feeding a lot of that into NFP to help them make decisions.”

Beveridge also recently shared with NFP staff a set of “broking principles” to help establish consistency in how it goes to market as a broking operation

“They're very open to hearing about how to do things differently, how to build their strategy, what works for them, and they'll take it and tweak it, or they'll just take it,” she explained.

“We're having insurance carrier conversations, so they're invited to all of our global governance or governance meetings that we're having with insurance carriers, and that's helping them either build their appetite on the insurer side or solve problems on the client side,” she continued.

“So it's working, and it's working quite well,” Beveridge concluded.

Watch the full interview with Aon’s Cynthia Beveridge to hear more on:

• How carriers are honing in on profitable growth after a period of portfolio optimisation;

• Aon’s collaboration with NFP and carriers to bring more capacity to the middle market;

• Why the focus on facilities is about “the best program, the best product that's available” and not just efficiency;

• Aon’s reluctance to trade with MGAs “that don't own their own capital”;

• How Aon’s risk analyser tools are leading brokers to negotiate differently;

• And more…