Aon Benfield launches annual life benchmarking survey

More life companies buying reinsurance ahead of Solvency II, according to Aon Benfield study

London, UK (Oct. 26, 2013) – Aon Benfield, the global reinsurance intermediary and capital advisor of Aon plc has launched its annual Life Catastrophe Benchmarking Study of global life insurers to provide insight into catastrophe reinsurance purchasing patterns and help benchmark retentions, quantity and price.

The survey is based on the responses of 290 life insurers from 17 countries or groups of countries, which buy a combined catastrophe reinsurance capacity of EUR7.5 billion in terms of XL per-event treaties. The geographical scope of the study is focused on Europe but also includes Canada, China, Israel and Japan.

Key findings include:

  • More companies are buying life catastrophe protection, increasing from 78% in 2011 to 83% in 2013.
  • The capacity purchased in Europe for XL per-event has constantly grown since 2010, rising by 17% between 2010 and 2013, reaching EUR6.6 billion in 2013.
  • The earthquake and tsunami that occurred in March 2011 have impacted the Japanese market with a 10% increase in Rate on Line (ROL) – the percentage of premium paid for the unit of cover.
  • The largest purchasers of capacity per event in terms of number of lives covered are Turkey and Israel, mainly due to their exposure to earthquake and terrorism.
  • Apart from the increase in Japan and a 13% decrease in Finland, the global ROLs have remained stable since 2010 in the studied countries.

Anne-Lise Bagur, actuary at Aon Benfield Analytics, said: “Our study shows that the current capacity in XL per-event cover equates to at EUR 6.6 billion in Europe – an increase of 17% since we started the study four years ago. This figure also reflects how the number of companies not taking out reinsurance has decreased from 22% in 2011 to 17% in 2013. We believe Solvency II is the main driver of the increase in reinsurance purchase in Europe, as companies prepare for the forthcoming regulation by buying reinsurance to reduce capital requirements.”

The survey enables actuaries to verify pricing calculations for alternative reinsurance pricing structures, and gives intermediaries the data to place and negotiate the most effective and fair reinsurance terms and conditions.

This is part of Aon Benfield’s global breath of capabilities for Life insurers, including catastrophe models from Impact Forecasting, ReMetrica – its dynamic financial analysis tool for life and broking expertise.

To download the report, click here.

About Aon Benfield

Aon Benfield, a division of Aon, is the world’s leading reinsurance intermediary and full-service capital advisor. We empower our clients to better understand, manage and transfer risk through innovative solutions and personalized access to all forms of global reinsurance capital across treaty, facultative and capital markets. As a trusted advocate, we deliver local reach to the world’s markets, an unparalleled investment in innovative analytics, including catastrophe management, actuarial and rating agency advisory. Through our professionals’ expertise and experience, we advise clients in making optimal capital choices that will empower results and improve operational effectiveness for their business. With more than 80 offices in 50 countries, our worldwide client base has access to the broadest portfolio of integrated capital solutions and services. To learn how Aon Benfield helps empower results, please visit aonbenfield.com.

About Aon

Aon plc (NYSE: AON) is the leading global provider of risk management, insurance and reinsurance brokerage, and human resources solutions and outsourcing services. Through its more than 65,000 colleagues worldwide, Aon unites to empower results for clients in over 120 countries via innovative and effective risk and people solutions and through industry-leading global resources and technical expertise. Aon has been named repeatedly as the world’s best broker, best insurance intermediary, reinsurance intermediary, captives manager and best employee benefits consulting firm by multiple industry sources. Visit www.aon.com for more information.