INTERVIEW: JAN-OLIVER THOFERN, AON’S REINSURANCE SOLUTIONS
Flexibility is key for renewals
With the sheer number of parameters in play, Aon’s Jan-Oliver Thofern says it will be necessary to explore different renewals strategies with clients.
Flexibility will be a key requirement in the coming renewals, according to Jan-Oliver Thofern, chief executive officer of reinsurance solutions Germany at Aon.
Faced with a market in flux, he believes it will be necessary to explore different strategies for clients.
“That flexibility can be in structure, it can be in the placement process itself—there are lots of aspects that we’re discussing with our clients at this time,” he said.
He emphasised the sheer number of different parameters that are in play at present. In Europe and Germany there is the impact of rising interest rates, which should give US dollar-denominated reinsurance companies, like for like, a higher capacity.
Pushing against this potential gain are inflation, global geopolitical tensions, and rises in claims—most recently in the US in the wake of Hurricane Ian.
“All these things are going to impact us to a varying degree, depending on where in the world your exposures are located,” Thofern said. “From an insurance standpoint, it varies depending on what the type of business you’re trying to have reinsured.
“As far as the renewals in Europe are concerned, I think we’re going to see some interesting movements in the run up to the final phase of the renewals.”
Hurricane effects
Thofern was in Naples, Florida, when Hurricane Ian hit and witnessed at first hand the devastation, and also the way the US prepares for such an event.
“It’s clear that there is market hardening going on.”
Jan-Oliver Thofern, Aon
“A key takeaway was that the warning systems for hurricanes and natural disasters in that part of the US—and maybe everywhere in the US—are quite good,” he said. “They’re very focused on getting their people in the know before the storm hits. Television, radio, cellphone, landline, email—all of these channels are used to make people aware that something is coming,” he said.
“When you look at the flooding in Germany in 2021, many lives were lost, and there was a lot of damage. Many of those lives could have been saved if we had been up to the same or at least a similar standard as the US in terms of pre-warning.”
He added that the cat renewals in the US have provided evidence of a hardening market.
“US hurricane risk is still the peak risk in the global reinsurance business, but not far away in terms of total capital required to cover it is European windstorm and more importantly, flood risk,” Thofern said.
He noted that in terms of performance, figures released by leading global reinsurers as part of their quarterly business reporting look healthy. Most of them reported combined ratios below 100 percent for H1.
“However, there is a there is a lot of activity going on in the background, and we have the hurricane that needs to be digested, and we’ll have to see how that will impact us,” he said.
“That leads directly to the retro market. A lot of the reinsurers are heavy consumers of retrocession products in various shapes and forms, from traditional to non-traditional capital market-sponsored products. As a leading reinsurance intermediary globally, we are tracking all of these very closely.
“It’s clear that there is market hardening going on, but to what extent it will impact us in certain regions, or even in certain lines of business, remains to be seen.”
“We are prepared in every way on the technical side.”
The best outcome
Thofern added that Aon’s strategy continues to be strongly driven by content and data and is, therefore, backed by heavy investment in data solutions.
“Everything that adds meaningful value to our clients is of interest to us from an investment standpoint,” he said.
In the shorter-term view, Aon’s strategy is focused on understanding each client’s business and getting them to collaborate in the process of defining and creating the transparency they need to get the best results in the upcoming renewals.
“Our key target is to help our clients to get—within their defined frameworks, and according to their own parameters—the best achievable outcome in the market,” he said.
“It’s clear that this renewal is going to be a difficult one, and we are prepared in every way on the technical side, but also transactionally, to support our clients. That’s really all that matters at this moment.”
He added that client satisfaction is a key performance indicator for Aon.
“With that in mind, I think we’re doing well,” he said. “Everything else follows from that, because we’re client-centric. It’s about how we can help them to navigate a market that is heading towards being, as far as I can judge from almost 30 years in reinsurance, one of the most difficult renewal seasons that that we have seen in long time in Europe and elsewhere.”
Jan-Oliver Thofern is chief executive officer of reinsurance solutions Germany at Aon.
Main image: Shutterstock / ZephyrMedia
