London – 18 November 2004 –  Changing attitudes towards risk management have put buyers of property insurance in Asia in the driving seat when it comes to negotiating rates, terms and conditions, according to Aon’s ‘2004 Asia Property Report: A market in the balance’.  The report is based on a survey of buyers and sellers of property insurance in Asia and shows that buyers are now lending greater importance to, and investing more in, reducing their risk exposures, and sellers are rewarding their efforts.  This has led to a continuing softening in rates which is being further fuelled by competition in a market where premium volume is growing strongly as a result of the booming Asian economy.

The main findings of Aon’s survey from the buyers’ point of view show that not only are buyers paying more attention to risk management, they are also showing increasing interest in self-insurance and larger deductibles.  Most are expecting further rate cuts and many are becoming more confident about shopping around for keener prices.  Insurers in Asia are also paying more attention to risk information and risk management, but their primary focus remains on returning an underwriting profit.

According to Oliver Schofield, director of the Global Property Practice at Aon Group Inc, heightened awareness of good risk management procedures has been driven by the impact of globalisation on the Asian insurance industry, “As US firms continue to invest heavily in Asia, they bring high engineering and construction quality standards with them and Asian companies are learning from this,” he says. 

Investment by Asian firms overseas is having a similar impact.  Those building facilities in the US or Western Europe, for example, must comply with local construction and risk management standards which can be tougher than those traditionally maintained elsewhere in the world.  “Risk managers are bringing their experiences and higher quality standards back home, which is raising the bar across the region,” says Schofield.  “Pressure to improve safety standards and risk management is therefore coming from both directions.”

Commenting on the Asian insurance market, Benjamin Chang, regional director, Global & Risk Managed Accounts, Aon Asia Limited, said, “Although there are now signs of a moderate slowdown, the Asian economy has enjoyed exceptional growth in recent years.  This has fed into the insurance market, boosting premium volume but also resulting in stronger competition as insurers aim to take advantage of the opportunities that are now available, particularly in China and India.  Premium growth is therefore being offset by a continuing softening of the market, creating a fine balance that could tip in either direction.”

Asian insurance buyers’ views on terrorism cover differ widely from those who have little or no interest at all to those who believe it is essential.  According to the sellers, the reasons for those showing little interest mainly boil down to cost and/or a perception that the risk is very low.  This is despite recent terrorist attacks in the region and the continuing threat of further action by Al Qaeda and leads Aon to conclude its report with a word of caution to insurance buyers that their apparent indifference to this risk may be misguided.

 

Notes to Editors

The report
Aon’s ‘2004 Asia Property Report: A market in the balance’ is based on the results of a survey of 22 of Aon’s insured clients and 41 insurers in the region.   It is the first of an annual series that will highlight the market’s key trends and analyse the demands and expectations of property insurance buyers and sellers.   It follows similar reports on the US and European property markets.  A copy of the report is attached in the 'Related Links' box to the right of this page.

About Aon
Aon Corporation (www.aon.com) is a leading provider of risk management services, insurance and reinsurance brokerage, human capital and management consulting, and specialty insurance underwriting. The company employs approximately 52,000 professionals in its 600 offices in more than 120 countries.  Backed by broad resources, industry knowledge and technical expertise, Aon professionals help a wide range of clients develop effective risk management and workforce productivity solutions.

This press release contains certain statements relating to future results, which are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995.  These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from either historical or anticipated results, depending on a variety of factors.  Potential factors that could impact results include the general economic conditions in different countries around the world, fluctuations in global equity and fixed income markets, exchange rates, rating agency actions, resolution of regulatory issues, including those related to compensation arrangements with underwriters, pension funding, ultimate paid claims may be different from actuarial estimates and actuarial estimates may change over time, changes in commercial property and casualty markets and commercial premium rates, the competitive environment, the actual costs of resolution of contingent liabilities and other loss contingencies, and the heightened level of potential errors and omissions liability arising from placements of complex policies and sophisticated reinsurance arrangements in an insurance market in which insurer reserves are under pressure.  Further information concerning the Company and its business, including factors that potentially could materially affect the Company’s financial results, is contained in the Company’s filings with the Securities and Exchange Commission.

 

Aon Limited is authorised and regulated by the Financial Services Authority in respect of insurance mediation activities only.