How Data Changed the Game for Aon’s Brokers
Despite playing a very important role at the heart of London’s reinsurance market, James Milne, AON’s UK and Ireland head, tells City PM that he doesn’t often hear about insurance around the dinner party table.
But when he does, it’s usually the cost of car insurance, which has gone up significantly over recent months as the price of claims – that is, the cost of completing repairs or replacement cars – have also advanced.
The truth is, however, that without reinsurance – where James sits – that insurance would be a lot more expensive. In short, his job is to act as a broker to diversify the risk taken by motor insurers, allowing them to charge drivers less.
But there’s a little more to it than that, as is so often the case in the insurance industry. For instance, it’s unlikely that too many people are grappling with a question occupying James’ time at the moment: is an electric vehicle, which is quieter than a traditional petrol or diesel car, more dangerous to vulnerable road users, despite the fact they tend to come with more advanced safety features as more modern cars? Reinsurance is an increasingly complex game, with individuals like James working as much like consultants as traditional brokers.
We’ve got bucketloads of data and we can advise and inform insurers on trends and patterns that we’re seeing, but they might not
James Milne, AON’s UK and Ireland head
“If you can go to a client and say these are reinsurers’ concerns, how can you articulate why they shouldn’t have these concerns? How could you think about underwriting differently to control these concerns? When you can have that sort of conversation you can create a much more efficient process where you can genuinely make significant savings,” he says.
A lot of the insight which underpins those conversations comes from data, with reinsurance now in many ways an analytical game.
“Reinsurers and brokers have loads of data. Insurers, especially those that are writing just UK policies, don’t have the quantity of data,” he tells me.
“We are there to advise them on things that we see outside – we can spot things and trends that their data
set might not allow. We do annual studies based on property, or motor, so that we can identify trends, feedback to them and help them make informed decisions.”
In some ways, James has been at the bleeding edge of the changes to the insurance and reinsurance industry since the turn of the century. He’s seen the way in which data analysis has shaken up a world that was at times built more on relationships and lunch partners.
“Benfield predates me” he says, referring to the broker bought by Aon in 2008. “Benfield was the early mover on analytics in reinsurance, and what I’ll say for Aon is that everything I’ve seen and I’ve worked around has been analytical-led broking,” he tells me.
There is still the last bit of any process which requires the human touch, of course, but that approach has allowed James to be around growing teams offering far more than relationships – instead opening up long-term solutions for insurers looking to de-risk their balance sheets and improve the efficiency of their capital, whilst also offering insight and advice to change the way they write and price policies.
That approach means that brokers are now drawn from a host of different professions, from lawyers to actuaries to catastrophe modellers. “We’re a client representative. Ten per cent of our job and that bit that still pays brokers is the going and finding reinsurance capacity for insurers. But ninety per cent of it is the conversations leading ot that point, led by people with different skill sets. It’s the perfect place to introduce new skill sets.”
One of James’ colleagues referred to reinsurance as the best kept secret in the City? Is that true? James nods, knowingly.