Aon's Risk Forecaster

Aon's Risk Forecaster has been developed by working with the Aon Centre for Innovation and Analytics. It makes the process around the collection of fairly standard data – from major health related benefits – as simple as possible for clients, so the audit can be completed quickly.

Risk Forecaster

Aon's newly developed tool, the Risk Forecaster, analyses and quantifies health data and premium trends, then benchmarks performance and projects future premium spends. With this information, it is possible to model alternative scenarios and recommend strategies that deliver ROI projection. In turn, it also increases the likelihood of better employee engagement and supports governance processes.

One client was shown that benefit spend could increase from £8m to £15m in three years if recommended actions were not taken and sustained due to particular risks and resulting price rises.

Case study overview

Aon Employee Benefits conducted a risk profiling exercise on behalf of Client Y to support its wider employee health strategy and project future benefit expenditure. It was carried out by using data obtained by major health related benefits: Private Medical Insurance, Income Protection, Group Life Assurance (lump sum and death in service pension) and the Employee Assistance Programme.

Aon used its range of modelling tools, market knowledge and consultancy expertise to reveal a number of key findings:

Total spend across these insurances in the last complete accounting year (2013/14) was c£8,400,000.
Informed projections suggest that costs for 2015 are currently coming in at £11.7 million, and that by 2017 on a like for like basis could almost double from present levels to nearly £15,000,000 if action is not taken and sustained.
Broking has proven to have had a significant impact on keeping historical pricing in check across all lines. But for a number of reasons this is proving harder to keep current pricing sustainable if conducted in isolation.
The proposed price increase from the risk insurer on the IP Scheme was almost unprecedented for a scheme of this size and a three-tiered approach to the renewal (broking, redesign, improvement to future process) was recommended as a priority.
Similar exercise also warranted on PMI and Life Assurance benefits.
Ongoing governance and data management will play an important role in the future sustainability of these benefits.