Aon Corp plans merger of PA and PR accounts

Aon Corporation, the UK’s biggest insurance broker and risk management company, is planning to merge its PA and PR accounts as UK insurers brace themselves for a shake-up in the regulation of the sector.

The move could put in jeopardy the company’s two-and-a-half year relationship with retained corporate adviser Financial Dynamics.

Aon head of media and public affairs James Wood said the company had ‘decided to look at how we might combine PA and PR as part of a wider review of our operations’. He added that Aon was in discussions with several PR and PA specialist firms and had drawn up a shortlist.

Aon’s plans come as the Financial Services Authority prepares to take full responsibility for the insurance market from 14 January 2005.

Aon’s involvement in insurance and corporate risk assessment in areas such as retail insurance, re-insurance and wholesale brokerage, claims management and HR consulting services (pensions) means that any combined corporate and PA brief is likely to be wide ranging.

In February, Aon alerted corporates to the pension risk inherent in an ageing population, calculating a 3.5 per cent increase in pension costs (or around £100m for every FTSE 100 firm) for every year of increased life expectancy. But it also said the pensions black hole could be reduced by more than a third if the FTSE 100 continued to rise and corporate bond yields improved.

In April, the company’s US arm was one of several insurance brokers to receive subpoenas from New York attorney-general Eliot Spitzer asking for more information about arrangements made with the insurance companies whose policies they sell. Spitzer is investigating the fees earned by insurance brokers.

In May, Aon posted consolidated first-quarter revenues of £1.3bn, up nine per cent on the previous year.

Aon is the world’s second biggest insurance broker.

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