Aon launches new model offering greater insight on class action exposure, risk in struggling D&O market

Sydney, 4 May 2021 –  Aon (NYSE:AON), the leading global professional services firm providing a broad range of risk, retirement and health solutions, has announced the launch of a new Directors and Officers (D&O) exposure modelling service, the D&O Decoder, that offers greater insight on shareholder class actions to help listed companies navigate the challenging D&O market.

Shareholder class actions have been a significant factor in the rise of the cost of D&O insurance and the availability of coverage, and these class actions remain a critical concern for listed companies.

Aon’s D&O Decoder provides data and analytics on an organisation’s securities class action exposure and the probability of the event occurring, the nature of their exposure and how their position compares to peers.

The new model runs 250,000 simulated class actions based on data sourced from Australian historical class actions and traces the impact to a company’s share price and resulting claims.

“The threat of D&O shareholder class action activity remains high in Australia, and for those companies potentially subjected to class actions, the rapid increase in insurers’ premiums coupled with capacity restrictions has resulted in increased scrutiny and reductions in the amount of insurance procured to protect organisations from their exposure to securities class actions,” said Jennifer Richards, Managing Director of Aon Global Risk Consulting.

The outputs of the model can be used by organisations to help inform the decision-making process with respect to proposed reductions in their insurance programs.

“This additional scrutiny in the D&O market has created a surge in demand for analytics beyond what is typically available. Sophisticated modelling is key to addressing and exposing the level of risk of a shareholder class action, and the resulting impact on availability of D&O insurance. The Aon D&O Decoder brings new insights to organisations, illuminating aspects of exposure that may not otherwise be known,” said Richards.

“Aon is responding to client need in developing this modelling, as more and more organisations seek out data and analytics to better understand their class action risk and exposure. Our model goes much further than the traditional benchmarking or modelling currently available in the Australian market, to help organisations navigate through these uncertain times and provide greater surety on the risk exposure of shareholder class actions and resulting financial impact,” said Eden Fletcher, Director, Financial Services Group at Aon.