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Aon urges insurers to act now on Solvency II
Benefit from Basel II experiences
London
NYSE: AOC

LONDON, 5 August 2008 - Global insurance broker Aon is urging insurers to learn from the work undertaken by their banking colleagues in implementing the Basel II accord and start preparing for Solvency II now. At a roundtable hosted by Aon for leading insurers, under Chatham House rules, the participants were encouraged by a panel of speakers to view the impending regulations as a chance to create wider business opportunities.

Solvency II, which aims to ensure the financial soundness of insurers and protect policyholders, will be implemented in 2012, but insurers should look to influence the drafting of the legislative text now before the process begins in earnest in 2009. Comparing the lead up to Basel II for banks, a recurring theme from the speakers was that many financial institutions found the process at the time much more complex and time-consuming to plan and implement than anticipated, with a requirement for significantly more resource than expected.

Learning from this and the activities already taken by some leading insurers, Aon recommends the following actions:

  • identify and secure an executive level sponsor within your business;
  • bring together a team to lead the project that has the necessary skill sets, including IT and risk professionals as well as project management;
  • look at the way in which your organisation collates data on operational risk loss events and challenge yourselves to improve its granularity;
  • engage in a constructive debate with the FSA and other regulators to develop the focus and implementation of the legislation - help shape Solvency II;
  • be collaborative and be prepared to develop, share and implement risk models as an industry;
  • look to harness the insurance policies currently purchased within the operational risk frameworks in your firm. This will lead to better decision making, improvements to the risk management process, cost efficiencies and potential capital relief through the ICAS procedure.

Tony Hills, director at Aon's financial institutions team, commented: "Solvency II presents a significant challenge to the industry, especially with the process for drafting the legislative text due to start in 2009. And with implementation due in 2012, businesses in the sector need to start preparing for this now. As with previous regulatory frameworks, there are considerable opportunities available and it will be interesting to see which businesses are in a position to take advantage of them.

"We hosted the roundtable to raise awareness and communicate the urgency of starting to prepare for the new regulation. We want to help insurers better understand what their peers are doing and to establish a forum to share best practice."

Ends
For more information contact:
Alexandra Lewis
020 7882 0541
Alexandra.Lewis@aon.co.uk
http://aon.mediaroom.com

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. In 2008, Aon ranked highest on the Business Insurance ranking of the world's largest insurance brokers based on commercial retail, wholesale, reinsurance and personal lines brokerage revenues. Aon also was ranked by A.M. Best as the number one insurance broker based on brokerage revenues in 2007 and 2008, and was 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.

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