Reactions magazine saw (free article) what I noticed in Aon’s report this week on July 1 treaty renewals:
Commenting on the June 1 cat renewals it said pointedly that the pricing of Florida renewals was flat to -5% for our clients [my italics]. It went on to say that “Florida accounts where clients required co-broking averaged increases of 10% and clients we served as sole broker averaged decreases of 7.5%”.
I was surprised at Aon’s candor. I’ve always thought brokers took no side in negotiation; they were advocates of the deal – since with no deal, they made no money. Marketplace reality plays with that some, since the cedant picks the broker, but still. . . .
“Many of those differing with our analysis are not reinsurance brokers, reinsurers or firms otherwise familiar with the inner workings of these key renewal markets. Some reinsurance intermediaries with substantially lower or no market shares or experience chose to publish expectations that did not reflect critical underlying currents in demand or reinsurance dependence,” it went on.
“The differences in the results we achieved for our clients were dramatic. While our competitors reportedly placed business at increased rates of as high as 15%, we drove flat to reduced pricing through to completion for US property catastrophe program renewals,” the note continued.
“These results were achieved despite a market and other reinsurance intermediaries that tried to establish the case that reinsurance rates in all markets needed to rise as a result of the significant, but not unprecedented, losses in the nine month period leading up to June and July 1.
“By focusing on the facts, the capital position of the reinsurance industry and not the emotion stirred in the market, we were able to navigate through a turbulent period and achieve differentiating client results.”
If that isn’t throwing the gauntlet down to its rivals, as well as its markets, I don’t know what is.
That’s great for the ceding companies, I guess. It’s great for reinsurers, too. Now it’s easy for them to conclude that henceforth Aon is acting as an agent, not a broker or a more-or-less neutral intermediary. And that all information Aon sends out should be viewed through that lens.