Aon Corporations stranglehold on regions insurance brokerage

Insurance and risk management is now widely viewed as a critical boardroom issue. It is the cornerstone of every company’s capital structure. A poorly constructed program may leave an organization vulnerable to major long-term setbacks, or worse, insolvency and bankruptcy. When well-designed, an insurance and risk management program frees a corporation to pursue its vision—unhindered by concerns that it may need to hoard precious financial capital or maintain unusually high levels of liquidity.

Although the importance of insurance cannot be overemphasized, the Kenyan insurance sector has been grappling with low penetration due to bad perception and lack of understanding of how insurance works. At 2 per cent, insurance penetration is at a very low level and to further compound the problems of underwriter’s in sensitizing the masses about the importance of taking insurance covers are agents who sometimes swindle claimants off their claims or are unable to articulately explain the actual risks of a particular cover.

It has been in Kenya for the last half a century, it started out as Minet before changing to Aon Corporation a risk consulting and brokerage firm that bought Minet in 1995. Aon Corporation is the leading global provider of risk management services, insurance and reinsurance brokerage, and human capital consulting. Through its more than 36,000 colleagues worldwide, Aon delivers distinctive client value via innovative and effective risk management and workforce productivity solutions.

“Our industry-leading global resources, technical expertise and industry knowledge are delivered locally through more than 500 offices in more than 120 countries. Aon was ranked by A.M. Best as the No. 1 global insurance brokerage in 2007, based on brokerage revenues, and voted best insurance intermediary, best reinsurance intermediary and best employee benefits consulting firm in 2007 by the readers of Business Insurance,” says Joe Onsando Aon Corporations CEO for East Africa.

Aon Kenya business is principally broken into two, Aon Consulting which deals with employee benefit consulting, group life and personal accident while Aon Risk solutions deals with corporate clients and risk management by insuring all their assets.

“Aon recognized many years ago that our clients want products and services built around their unique needs and provided by professionals with deep expertise in their industries and local markets. We saw that globalization demanded two capabilities: gather the best thinking from around the world and then deliver solutions locally. With worldwide distribution, a vast base of intellectual capital, and leading technology, we have built a professional services company to achieve these important goals—all focused on areas increasingly in demand: insurance brokerage, risk management, and human capital consulting,” says Onsando.

He adds that Aon Kenya has a specialty division dealing with areas like Telco’s, logistics and hospitality. It also has the mining division which deals with larger exploration works such as the Magadi Soda, the middle market division deals with SME’s while the personal line division caters for individual insurances ,car, house and family medical covers.

Emphasizing on how they cover large corporations, the CEO cites SYNOC, a Chinese oil exploration multinational which if it engages an underwriter to do research for them the corporation has to have experience in mining. “Knowledge to service such an account is specialized and unavailable in the country. For us at Aon we work through knowledge exchange in the United Kingdom, Canada, Australia and South Africa. We have a specialty division because of new industries that have come up,” he says. For example Telco’s is a developing industry, the risk they face and assets they employ is different and keeps changing, Aon therefore has a team specialized in Telco’s. “Our strategy is to understand our client and their business operating environment thus tailor make a solution specifically for them.”

To effectively deliver these, and other, services, Aon has developed a global network of local resources brought together via its Global Business Units and a Strategic Account Management system. “These resources let us deliver services around the world—to multinational companies, small businesses, independent agents or brokers, associations and affinity groups and even individual consumers—with the local expertise necessary to meet your specific needs,” Onsando opines.

Aon is moving from being a broker that acts as an intermediary between a policy holder and an insurance company to consulting. Aon Corporation is now the largest Human Resource Consulting firm after buying Hewitt. “Hewitt is among the world’s top global human capital and management consulting firms, providing a complete array of consulting, outsourcing and insurance brokerage services. Our professionals possess extensive knowledge and experience in a variety of fields and help companies of all sizes attract and retain top talent. We can help you achieve better business results by finding, developing, motivating and rewarding employees in ways that fit with your broad financial and business goals,” explains Onsando.

Although renowned for handling large corporation the CEO says that Aon also has a unit that handle’s SME’s. “Because we are by far the best in what we do apart from covering SME’s, large company’s come to us. An example is the cover’s we have given Telco’s and the recent concession of Kenya Railways since we know and have the resources to handle such transactions,” he says.

Onsando is of the opinion that developing and packaging a product is half the story; the only problem is pushing it in the market. “For us the simplest and most effective way is to work through affinity groups. One of our affinities’s for selling to SME’s is banks; we therefore make sure we have a good relationship with the leading banks. We look for creative ways to distribute to the SME market through own trade associations,” says he.

On how they mitigate risks the CEO says that fortunately Aon already has a good reputation globally. He lauds the efforts being done by the Association of Kenya Insurers (AKI) in educating the public about the role played by brokers and agents. “At Aon, we pride ourselves in terms of ethics and standards, each of our 300 employees undergo training and get certified to understand what is expected of them. Every year a form is filled to ensure transactions are within Aon ethics, any business expense exceeding 100 dollars must be accounted for,” offers Onsando.

According to the CEO Aon has maintained a stranglehold on insurance brokerage by specializing in big complicated deals. “Being a large multinational organization with a presence in 19 African countries AON gives its clients access to markets from the United States to UK. When you have a complicated need like during the Safaricom IPO which needed Directors and Officers Cover and Professional Negligence cover we come at our best since it’s not something that anyone can do,” he says.

Going forward, Aon aims to leverage on their position as the largest insurance organization in East Africa, this Onsando says has been made possible by standing by clients and giving them solutions in a honest manner. “Our CSR philosophy ensures that we recognize society’s needs and continue to take care of them,” he remarks.

“I see Aon growing bigger as a consequence of economic performance which will ensure foreign direct investment. As Chinese and Indian companies continue investing in Africa our markets will continue to be big for their products hence we aim to drive our growth even further. At Aon we ensure that we understand forces shaping the world economy and put in place infrastructure to tap into this,” he explains.

Asked about the challenges that Aon faces in their quest to fulfill their corporate agenda Onsando says that although Kenyan politics is getting more stable by leaders realizing the need for micro economic stability, perceptions created by the events of the post election violence have really affected business growth. To them political instability is the biggest threat. “We are in a service industry so external shocks are what can really affect us also if the region grows the way it’s meant to, human resource will become a challenge hence the need for proper recruitment and training strategy,” he observes.

Born in Kisii in West Kenya, Onsando has worked for AIG, rising through the ranks to become the AIG Zimbabwe CEO in 2001, a post that lasted for four years before he was approached by Aon Corporation to come back to Kenya and oversee the Corporations East African business.

The Aon Kenya’s point man’s other interests are rugby-where he is the long-term chair of Kenya Harlequins, he plays the guitar and loves to travel and read history. “I am lucky because my job gives me the opportunity to travel and get to meet lots of people,” he says with a smile.