Aon has unveiled a new auction system for the 1/1 reinsurance renewals.
The broker said the system will be a part of its efforts to drive the greater use of technology across the market.
It said its customers will feel the benefit of the system as it reduces the timeframe around pricing negotiations and contract certainty.
“The technology enables pricing options through blind-bidding for both non-concurrent (where reinsurers receive different pricing based on the quotes provided) and concurrent placements (where the technology identifies a consensus bid, so each reinsurer receives the same price for the layer),” it added.
The auction system will work via five core steps.
- Mutually agreed contract wording is determined prior to the start of an auction to create contract certainty
- Reinsurers enter a single, or multiple price points, and their corresponding capacity at each price point for the layer(s) in a blind-bid
- The insurer provides their maximum auction price point, by layer, at which they are comfortable purchasing the capacity (this is completed via the Aon broker)
- The algorithm identifies the clearing price at which to complete the placement at or below the insurer’s maximum price point
- The bid is binding and accepted automatically. Insurers receive a summary of final terms with the line-up of reinsurers. Brokers will confirm final Signed Lines
Andy Marcell, (pic) CEO of Aon’s Reinsurance Solutions business, explained: “We constantly strive to transform the way we do business and enhance the placement experience for our clients. Our investment in technology gives insurers the power to choose how to secure robust reinsurance protection while continuing to benefit from their Aon broker’s commitment to client advocacy.”
The broker said its clients and partners will continue to access ABConnect Placements – the e-trading platform for Aon’s Reinsurance Solutions business – to participate in the auction.