The goal of Aon’s fireside chats is to drive growth across the re/insurance industry in order to bring capital closer to clients’ needs and enable them to flourish in a stronger economy. The series will discuss the challenges and opportunities facing major re/insurers and insurance buyers, sharing both perspectives.
In the chat hosted by Andy Marcell, CEO of Aon’s Reinsurance Solutions, de Wolfe said that to “maintain cash internally for as long as we can,” in recent years Mars had increased the utilization of its captive, backed by reinsurance – a trend which he had observed among a growing number of corporations with large balance sheets. He added that alternative capital was of interest to Mars, both for protecting the captive and in terms of providing wider risk solutions.
de Wolfe proceeded to hail parametric solutions for risk transfer, explaining that while data was in general a limiting factor in their progress, for weather risk it was “relatively easy with the right technology” to utilize predictive analytics to price a parametric programme due to the larger volumes of data available in this area.
“I’m totally into the concept of parametric programmes; I think they’re fantastic; I think it’s the next cool thing to come into our industry.
One day, when computing power becomes more effective and more data becomes available, I hope that parametric-type programmes will become available for a broader range of risks.”
de Wolfe said that insurers’ expertise in assessing and quantifying risk across varied businesses and sectors should be used more broadly to assist clients, helping them to establish strategies that protect their balance sheets and earnings from those risks.
“When [insurers] come in and give us recommendations around loss prevention or continuity plans or resiliency strategies, as they do that they’re bringing the knowledge from not just our account, but from their entire portfolio or from the industry experience, and that brings a much, much broader level of information, which can support any arguments you might have for needing loss prevention or business continuity and resiliency.”
Rather than rely solely on insurance, he said it was important for Mars to focus on risk management, risk mitigation and business continuity planning.
“The opportunity to try and avoid that loss from happening in the first place is what’s most important for us. That’s what helps us keep products on the shelf or services provided to our customers, and that’s always going to be the priority,” he added. “Insurance is an important part of our portfolio; but first and foremost: manage the risk, mitigate the risk and then insure what’s left.”
de Wolfe said that Mars valued its long-term relationships with insurers, with the “mutuality principle” being the “cornerstone” of how the firm negotiated insurance to work towards a mutually beneficial outcome.
“If we have to make changes we will make changes, but never without first going back to our existing risk partners, with whom we’ve had long meaningful relationships to say, ‘do you really want to do this because we’re going to be there next year too, and we need your help to ride through these things.”
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