Risk
Casualty Risk Consulting eNewsletter

Aon Casualty Laser, A Proven Approach to Help Drive Down
Cost of Casualty Risk

$450 Million In Aggregated Cost Savings Identified In 340-Plus Client Engagements
by Paul Capuzzo and Kelly Black


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In step with their leadership’s imperatives to cut costs, many risk managers are looking for effective ways to reduce the total cost of risk across their enterprise. To address these needs, Aon Casualty Laser offers risk managers a proven approach to assess significant casualty cost drivers, pinpoint opportunities for cost reduction and anticipate the corresponding ROI, evaluate results, and drive continuous improvement strategies.

Aon believes that building the right solution for any client starts with gaining a deep understanding of their business and the marketplace in which they operate. Aon Casualty Laser leverages the tenets of The Aon Client Promise® methodology, beginning with a prescriptive, yet flexible analysis of a client’s current situation and objectives, and defining a clear action plan tailored to drive value for each client’s business.

Aon Casualty Laser has been deployed in more than 340 engagements since its launch in 2011, enabling clients to identify casualty cost of risk reduction opportunities of nearly $450 million. All along, Aon has continued to enhance the Casualty Laser’s capabilities, including new market-driven key performance indicators (KPIs) for losses and robust industry-specific benchmarking. The Casualty Laser approach has also spawned Casualty Analytics, a tool for mid-sized organizations with smaller loss picks.

Targeting Significant Cost Drivers

Today, Aon Casualty Laser uses more than 90 quantitative and qualitative key performance indicators and benchmarks to assess 14 carefully defined areas of a casualty program known to have the greatest bearing on total cost of risk. Accordingly, there’s a strong emphasis on workers’ compensation, the single largest casualty cost component for most enterprises with U.S. operations. Areas evaluated include:

  • Program structure, coverage, cost and collateral
  • Workers’ compensation disability management
  • Workers’ compensation medical management
  • Litigation management
  • Safety management
  • Claim process effectiveness
  • Loss performance related to key employee demographics, including aging and obese workers
  • Various trends contributing to the overall loss profile
  • Actuarial platform
  • Effective use of data for decision-making

A Road Map for Driving Down Costs

The Casualty Laser process begins with a discussion of casualty program KPIs (and their availability). As casualty data is identified and aggregated, Aon experts work the client’s claims and risk leaders tobenchmarking an organization’s key casualty metrics against Aon’s KPIs, proprietary peer data and established insurance industry benchmarks. This groundwork provides a basis to:

  • Compare and measure loss trends using Aon’s proprietary 14-point diagnostic tool
  • Measure performance against industry and OSHA norms as well as Aon’s own benchmarks
  • Identify Claims Trends and Forecast Outcomes
  • Reduce claims spend, lower risk management expenses and drive higher margins

The resulting Casualty Laser report provides an assessment of a client’s existing casualty program in each of 14 key categories and identifies actionable program improvement opportunities. Projections of potential cost savings associated with each opportunity enable clients to set priorities in driving down costs. At the same time, baselines included in the report enable clients to track improvement progress over time.

Further, by tapping into the human capital expertise of Aon Hewitt, the Casualty Laser process includes insights on both occupational and non-occupational program elements that drive costs, such as total absence management and hiring strategies, to deliver the industry’s most comprehensive casualty TCOR analysis.

Reigning In Claim Costs

Aon analyzes actual loss data to identify root causes and risk criteria that contribute to key loss cost drivers. Predictive modeling concepts are then used to identify risk characteristics that may be precursors to complex or legacy claims. Aon then flags future claims with similar characteristics to direct them on a path to resolution with limited escalation opportunity, which provides the foundation for sustainable casualty program outcomes.

Aon’s broking and consulting experts work closely with clients to anticipate the impact of internal and external business drivers – such as M&A activity, new or divested product lines, geographic expansion, union negotiations, and hiring practices – that may affect their casualty risk profile and should be considered in the development or refinement of their casualty risk program.

Custom Benchmarking Empowers Market Negotiations

Casualty Laser’s capabilities include next-generation multivariable analytics. Although traditional benchmarking is still used throughout the industry, it often fails to capture important distinctions between large and complex organizations, as well as those in the same industry. For example, different workers’ compensation jurisdictions, retentions, limits, size and nature of vehicle fleet, as well as other factors, can result in significant differences in program performance and results.

Adjusting for these factors enables Aon to create custom benchmarks for each client. This provides a framework for Aon brokers to structure tailored programs for individual clients and present them on a proactive basis to the insurance market. In addition, Aon can model different scenarios, such as mergers, acquisitions and divestitures, to assess program impacts and budgetary goals.

Contact the Authors

To learn more about Casualty Laser, and see if your organization could benefit from a Casualty Laser Diagnostic, please reach out to Paul Capuzzo, Managing Director, Aon Casualty & Marine Practice, or Kelly Black, Managing Consultant, Aon Casualty Risk Consulting Practice.