Aon boss defends Berkshire Hathaway sidecar
Greg Case, the chief executive of Aon, has defended the broker’s controversial sidecar deal with Berkshire Hathaway last year and said the facility has been a resounding success with clients despite a mixed reaction to it in the wider markets.
Speaking at the Chartered Insurance Institute (CII)’s seminar in London yesterday (Thursday April 10), Case said that the sidecar increases the attraction of the London Market.
“London is known for its creative use of capital and we can’t slow down now,” he said. “Think about how and why our sidecar with Berkshire Hathaway came into the market. There’s always a lot talked about and a lot said with sidecars, and that was certainly the case with this, but client response has been great.
“In 2013, we had 2,500 individual policies which used the capacity, representing over $1 billion in premium, so clearly clients are happy.”
Case also said that the premium placed by Aon’s clients in Lloyd’s increased by 3 percent last year and that sectors such as construction, energy and property had experienced higher than average increases in premium – partly because of the sidecar.
“We’re not saying that this is the perfection, but we’re saying that it is one example of innovation that has had a positive effect,” said Case.
Case also discussed the need for innovation in the market more generally. Risk advice is more important than ever and brokers must evolve faster than clients if they are to sustain London’s position as a leading market, he said.
“The need for risk advice is larger than ever and we must continue to evolve faster than our clients,” he said. “The speed, complexity and magnitude of risks are increasing as is the level of risk; the pace of change in unparalleled.”
Case said that the London Market is now more important than ever and that the concentration of talent in the insurance industry in the market has no equal.
“London is a magnet for top talent and Lloyd’s is the largest market in Europe, which is important because insurance is a key factor for growth in the economy,” he said.
Case said that the need to revolutionise the market was clear, but stressed that it must start with the brokers, who must continue to provide innovative solutions which allow clients to take risks, which will generate growth.
“We are data rich, but information poor. We need to seek to understand this data to drive action, currently we’re insight starved. If we could solve cyber risk and help our clients understand the impact of sustainability we could increase the size of markets around the world by 20 percent,” he said.
