Insurance Risk Study - Aon

Foreword
Since the first internal Aon Benfield Insurance Risk Study in 2003, the insurance world has been shaken
by mega-catastrophes and threatened by financial market turmoil. Industry best practice in enterprise
risk management has evolved almost beyond recognition, and techniques for risk quantification and
capital modeling have advanced from nascent specialties into mainstream core competencies.
Yet despite change and progress, much remains constant. Risk quantification still relies fundamentally on accurate
parameterization and realistic stochastic models. An incorrectly specified model is often worse than no model at all.
Bad models can lead the user astray, as was shown by numerous examples during the financial crisis. Aon Benfield
has consistently focused on the need to provide our clients the robust data and fact-based parameters published in
this Study to complement state-of-the-art financial modeling tools such as our ReMetrica ® software.
The Study is a cornerstone of Aon Benfield Analytics’ integrated and comprehensive risk modeling and risk
assessment capabilities.
> Our reinsurance optimization framework, linking reinsurance to capital, relies on the Study for a credible
assessment of baseline frequency and severity volatility
> Our global risk and capital strategy practice, providing ERM and economic capital services, uses the Study to
benchmark risk, quantify capital adequacy and allocate capital to risk drivers
> Our ReMetrica risk evaluation and capital modeling software provides easy access to the Study parameters and
risk insights
2010’s Fifth Edition has again expanded in scope and coverage from previous editions. It includes:
> Results from 46 countries, comprising more than 90 percent of global premium
> A global market review showing premium, historical loss ratio and volatility parameters for the top 50 countries
> A new approach to loss ratio volatility that measures year-over-year changes illustrating the magnitude of
historical planning misses
> A focus on the potential impact of inflation on P&C companies
The massive database underlying the Study is supported by more than 450 professionals within the global Analytics
team who are available to work with you to customize the basic parameters reported here to answer your specific,
pressing business questions.
Aon Benfield’s Insurance Risk Study, now in its fifth edition, continues to be the industry’s leading
publicly available set of risk parameters for modeling and benchmarking underwriting risk. We are
pleased to offer the Study for the advancement of risk management within our industry. For convenient
reference, you can find earlier editions of the Study at aonbenfield.com. I welcome your thoughts and
suggestions, which you can share with an e-mail to stephen.mildenhall@aonbenfield.com.
Stephen Mildenhall
CEO, Aon Benfield Analytics
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