M&A insurance market told to ‘avoid a race to the bottom’: Aon’s Lester

By Rebecca Bole on September 27, 2017

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LONDON – The M&A insurance marketplace has been urged to recognize the economic value of its insurance products and stop fierce price competition.

Alastair Lester, the new CEO of Aon M&A Solutions for EMEA, cited rate decreases of 40 percent in 2017, adding “you don’t need to do this”.

“Transaction insurance is a financial instrument with real value. Don’t under-value our value,” Lester explained, while speaking at Advisen’s Transaction Insurance Insights Conference in London on September 26.

Transaction Insurance (including Warranty & Indemnity or Reps & Warranties policies) is one of the most exciting part of the insurance industry, Lester said. “These solutions are true financial instruments – helping to secure investments and enhance returns. The product has grown up from a spotty adolescent to a maturing millennial. There is still a long way to run for this sector,” Lester told the 100-strong London audience.

The conference addressed the growth of competition in the market as more carriers allocate capital to Transaction Liability underwriting teams, identifying it as a growth area.

Tom Saunders, associate director at Aon Risk Solutions and Felix Sloman, M&A broker at JLT Specialty showed a 60 percent increase in the number of Transaction Liability policies placed globally in 2016. They noted that capacity of $1 billion was available globally, with “several insurers” offering more than $100 million on any one policy. However, competition among carriers had led to an 11 percent decrease in rates from 2015-2016.

They said this additional capacity and subsequent competition was driving specialization among carriers and differentiation of products across different regions.


This story in an excerpt of the original. The content originally appeared in Professional Front Page News.
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Rebecca Bole is EVP & Editor-in-Chief at Advisen. She has nearly 20 years of experience in the international insurance markets, both as an underwriter and a journalist. Contact Rebecca at [email protected].