The broker Aon plc has launched an auction capability for the Jan. 1, 2020 reinsurance renewals, which is designed to provide additional options for insurer clients by reducing the timeframe around pricing negotiations while providing contract certainty to secure pricing for its insurer clients.
At the beginning of a reinsurance renewal, Aon will initiate the usual contract negotiations with reinsurers, including discussions around changes in exposures and modeling.
The only difference when using the auction platform is around the timing of when the placements are completed, explained Bob Olson, Aon’s chief information officer, Reinsurance. “Cedents and reinsurers agree the contractual wording before the auction is open, so that when the auction is completed, we’re good to go at that point in time [and ready] to bind lines,” he said.
The insurer, or cedent, provides the maximum auction price point, by layer, at which they are comfortable purchasing the capacity. During the same time period, the reinsurers provide pricing and capacity at a level which are comfortable selling, Olson added.
During the blind-bidding process reinsurers enter single, or multiple price points, and their corresponding capacity at each price point for the layer or layers they would like to assume, said Aon in its announcement about the auction, which was released at the recent Reinsurance Rendez-Vous de Septembre…