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Aon launches tools to tackle global insurance programme compliance
London
NYSE: AOC

LONDON, 9 June 2008 – Changing regulation and local laws mean that companies could be relying on invalid insurance policies for certain countries or face penalties for not fulfilling the local regulatory and tax requirements. As more global organisations strive to tackle corporate responsibilities across multiple territories, leading insurance broker Aon Global UK has launched its Pre-Placement Tool (PPT) and Premium Allocation Tool (PAT) to ensure maximum compliance with local insurance and tax regulation. 

For firms that operate in multiple countries, global insurance programmes offer premium savings, plus the knowledge and certainty at HQ that there is consistency of protection globally. However, Aon is encouraging companies and insurers to monitor the compliance duties that come with global programmes.

The PPT is an advanced database tool used to check all regulatory elements of a global policy before cover is placed. A traffic light red warns if a policy is ‘non-admitted’ or must be placed by a local insurer, so clients can be advised accordingly. Hotspots in global policies include:

·        China, Brazil or India, for example, prohibit overseas or ‘non-admitted’ insurance for directors and officers, general liability, property;

·        many African countries require local risks to be covered by local licensed insurers;

·        parts of Europe such as France, Italy and Spain require local risks to be covered by EU licensed insurers.

 
PAT allocates the global premiums on a just and reasonable basis – according to where the risk is located, rather than countries with more favourable tax rules – to determine the premium tax liability in each territory for either the insurer or the insured. The tools are updated regularly for changes in worldwide regulatory and tax rules, such as the tax rate changes in the Netherlands and the new Australian Direct Offshore Foreign Insurers regulation in 2008.

Tax compliance failure could lead to interest on unpaid balances and penalties for insurers, brokers and insureds. For example, in the UK, failure to notify the government makes the insurer liable to a penalty equal to 5% of the relevant tax. Generally in the EU, an insurer or its fiscal representative is responsible for collecting and discharging the premium tax. But in US, Canada, Australia and New Zealand, the local insured or its broker is responsible.

Ken MacDonald, CEO of Aon Global UK, commented: “It’s time for all organisations to demand greater compliance and insurer transparency. For the CEO, FD or risk/insurance manager, insurance is not just about achieving the best coverage at the highest security and lowest cost but it is also a capital replacement tool that must respond and comply with local fiscal and regulatory realities. The good news is that companies are now finally switching on to the implications, while insurers are waking up to the issue. With the increased profile of fiscal and regulatory compliance risk, Aon is now raising the bar to help our clients be compliant.”

“At our recent conference on compliance for global companies, there was a growing interest to ensure regulatory and tax compliance to support the efficacy of insurance programmes and corporate governance. As such, we have been investing our resources to develop our new tools and design insurance programmes that support clients. These work alongside consideration of clients’ needs, available capacity and coverage and the vagaries of the insurance market.”

Martin Massey, head of business development for Aon’s actuarial and analytical services, whose team developed the tools, commented: “These tools place a spotlight on the territories that require special planning in the design of the insurance programme. They provide a complementary service to our existing corporate allocation modelling tools that aim to provide consistent service and benefits to our clients in three main areas of IT functionality, methodology and compliance.”
 

Ends

For more information contact:

Alexandra Lewis

020 7882 0541

Alexandra.lewis@aon.co.uk

 

 

About Aon

Aon Corporation (NYSE:AOC) is the leading global provider of risk management services, insurance and reinsurance brokerage, human capital and management consulting. Through its 36,000 colleagues worldwide, Aon readily delivers distinctive client value via innovative and effective risk management and workforce productivity solutions. Our industry-leading global resources, technical expertise and industry knowledge are delivered locally through more than 500 offices in more than 120 countries. Aon was named the world’s “best broker” by Euromoney magazine’s 2008 Insurance Survey. Aon also was ranked by A.M. Best as the number one global insurance brokerage in 2007 based on brokerage revenues, and voted best insurance intermediary, best reinsurance intermediary, and best employee benefits consulting firm in 2007 by the readers of Business Insurance. For more information on Aon, log onto www.aon.com

 

 

This press release contains certain statements related to future results, or states our intentions, beliefs and expectations or predictions for the future 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: general economic conditions in different countries in which we do business around the world, changes in global equity and fixed income markets that could affect the return on invested assets, fluctuations in exchange and interest rates that could influence revenue and expense, rating agency actions that could affect our ability to borrow funds, funding of our various pension plans, changes in the competitive environment, our ability to implement restructuring initiatives and other initiatives intended to yield cost savings, our ability to successfully close the sales of our Combined Insurance and Sterling Life Insurance businesses, the impact of current, pending and future regulatory and legislative actions that affect our ability to market and sell, and be reimbursed at current levels for, our Sterling subsidiary's Medicare Advantage health plans, changes in commercial property and casualty markets and commercial premium rates that could impact revenues, changes in revenues and earnings due to the elimination of contingent commissions, other uncertainties surrounding a new compensation model, the impact of investigations brought by U.S. state attorneys general, U.S. state insurance regulators, U.S. federal prosecutors, U.S. federal regulators, and regulatory authorities in the U.K. and other countries, the impact of class actions and individual lawsuits including client class actions, securities class actions, derivative actions, ERISA class actions, the impact of the analysis of practices relating to stock options, the cost of resolution of other contingent liabilities and loss contingencies, and the difference in ultimate paid claims in our underwriting companies from actuarial estimates. 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.

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