Aon launches Public Private Enterprise practice to address insurable protection gaps
Aon’s Reinsurance Solutions business has announced the launch of its Public Private Enterprise (PPE) specialty practice
...which will focus on building a centre of excellence in providing advice and solutions to entities with insurable protection gaps, including governments.
Led by Emma Karhan, working alongside Jon Wood, the PPE practice will be initially based in London, focusing on terrorism and natural hazard risk and integrating with Aon’s Credit & Guarantee and Government practice in the US, in addition to working closely with Aon Securities, to provide a single global offering in the government space.
The PPE team will build on Aon’s successful models of government de-risking through commercial plan structures, recent examples of which include ongoing mortgage credit programmes for Freddie Mac/Fannie Mae in the US – which have transferred more than $20bn of risk to the re/insurance market – and a $1bn risk transfer solution for the US Exim Bank.
Other examples include Aon Securities’ structuring of the largest ever earthquake catastrophe bond, on behalf of the World Bank, and the team’s completion of the first standalone flood deal in the US for the National Flood Insurance Program (NFIP). Aon has also serviced The Earthquake Commission (EQC) in New Zealand for 30 years.
The PPE practice has been launched in recognition of the importance of addressing the insurance protection gap globally; it will work with a range of Aon teams – including Impact Forecasting’s catastrophe modelling developers – to identify opportunities to develop coverages, and engage with the industry to build post-loss resilience within economies.
The Harvey, Irma & Maria (HIM) losses in 2017 highlighted that the protection gap generally prevails; less than 50% of the total economic loss from these events was transferred into the insurance industry, with government aid and flood plan recoveries exceeding the amount paid by the commercial market, despite the abundant capacity available in the re/insurance market.
Nick Frankland, UK CEO of Aon’s Reinsurance Solutions business, said: “The re/insurance industry has record levels of capital at a time when public entities need increased protection against the risks they face. In particular, there is great potential to make the most of this capital through parametric triggers. Aon has proven its ability to structure ground-breaking solutions on behalf of governmental, and quasi-governmental organisations, and we now intend to build on these successes to assist ultimately in the development of more robust economies across the world.”
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