Retirement Savings Estimate

According to recent report and analysis from the benefits consultant in Aon Hewitt, the average worker needs to save 11 times of his or her final working salary beyond Social Security payments, to pay for retirement at age 65. The estimate is based on the retiree continuing to maintain the same standard of living and takes accounts for inflation and post-retirement medical costs. Reports also indicate that delaying retirement to age 67 reduces the amount to 9.4 times pay, while retiring earlier, at age 62, increases it to 13.5 times pay.

This analysis examined the projected retirement levels for approximately 2 million employees at 80 large companies in the United States and found that most employees are not on track to meet the goal of 11 times pay, although many are doing a bit better than they were a couple of years ago.

Most full-career employees are on track to save 8.8 times their final pay, leaving a shortfall of 2.2 times pay, which is still an improvement from the shortfall of 2.4 times pay in 2010. Full-career employees are considered to having a potential career of 30 years or more with their current employer before retirement, and who are currently saving in their defined-contribution retirement plan, like a 401(k).

Essentially, workers need to work and save more to close the gap since we don’t expect employers to provide more generous contributions. Fewer than 30 percent of full-career employees are on track to achieve adequate retirement income, Aon Hewitt found. This low percentage is due to our economy that can’t generate these kinds of savings rates. “Sound financial advice” generally urges Americans to save more money for retirement than could be available in our financial system. In the past our economy has been built on the premise of continuing growth and expansion. We know there are limits to growth, and our nation is beginning to run up against them. This, I believe is the true essence of the problem. A small portion of workers may be able to save enough for retirement, as recommended by financial planners, but a macroeconomic analysis makes it clear that this is not advice that can be followed by the population at large.

Diversity and Corporate Culture

In determining the status of Aon’s corporate culture and for diversity and inclusion efforts to be effective, they should be implemented in an organization’s culture supported by its top leadership and leveraged as part of an overall business strategy.

The insurance industry organization such as Aon, treat the management of diversity the way other companies treat management of other initiatives in the organization by tracking results and holding people accountable for meeting or failing to meet results. Management should definitely avoid setting up metrics where people just go with the flow. For example, if you set up a metric where you need to check off five men here, ten teenage boys there, that’s a mistake because the goal is not to just fill a seat: the goal is to make your organization better.

Aon creates a diverse decision-making group and implements diversity in talent development programs, focusing on placing employees in departments and units suitable in their area of expertise. With the proper training, experience, and appropriate support group, these employees have the growth potential to make the company more successful with the knowledge and service they can provide for their clients.

Sponsorship is also integral to a successful diversity program with senior leaders advocating for the promotion of diverse talent. This has to come from the top of management as part of a change initiative.

Ken Oehler recently joined Aon consulting organizational performance and implementation practice division, who brings more than 15 years of human capital strategy experience to Aon consulting. Oehler is responsible for helping to lead the expansion of Aon’s Change Implementation Services in response to the changing market conditions and also to assist companies in managing change, minimizing risk and guiding organizational initiatives.

Since employers are required to shape a future workplace based on today’s volatile economy, guiding the organizational initiatives is important now more than ever.

At the end of the day and in today’s technological world, the most significant advantage that any organization can have is its people: how these people are treated, how they feel about the company they work for, how they feel about themselves, and having aligned towards the company’s vision.

If you get the people practices right and focus on the culture, organizational performance, leadership development, talent management, and employee engagement, there is no doubt that it will benefit the business, and Aon is one of the companies that does this best.

AON, the Official Sponsor of the NFL UK

Watch out futbol, American football is coming to town!

The NFL announced Aon, the world’s leading provider of risk management and human resource solutions, as an official sponsor of the NFL UK. Aon is helping to bring American football to the United Kingdom, as the company moved corporate headquarters to London earlier this year. The NFL will play its 6th regular-season game at Wembley Stadium this Sunday, when the St. Louis Rams host the New England Patriots.

Aon will be working with the NFL to promote the sport in the UK and they have planned to host a series of football clinics to educate those who are unfamiliar, but passionate for the game. The main purpose for these events are intended to introduce the sport to a new audience, including employees and families of Aon’s partner companies in the UK.

Earlier yesterday, New England Patriots owner Robert Kraft shared his belief that London is ready to have its own professional football team. SInce the UK already hosts the Premier League for soccer and football is considered to be the premier sport in the world, it only makes sense for the country to have its own NFL franchise, based in London.

As for Aon, assisting the NFL to promote such a popular sport in the UK and showcase their services to clients and prospects in the sport market is a prestigious opportunity for the insurance powerhouse. Just like the NFL, Aon’s brand qualities of team work, execution, and the pursuit of excellence can empower and generate great results.

AON SWOT Analysis

Just a quick SWOT Analysis chart I made for AON by using Microsoft

Broke Young Americans Relying on Parent’s Health Coverage Will Cost Parents More

A favorable health law provision that allows parents to cover dependents up to their 26^th birthday certainly benefits the increasing unemployed young adults that still rely on health coverage from their parents’ expenses today. 

The number of unemployed young adults, that have reached nearly double the rate of older workers, will now put more financial burden to their dependents, as health benefit and insurance companies have developed new, innovative pricing strategies that may cost parents to pay more on their health coverage.

According to Aon, Health benefit companies are aiming to increase their employee’s payroll contribution so they are progressively reconstructing their per employee contribution formulas by increasing the premium for each dependent a worker adds to their coverage and other benefits analysts. 

Depending on how much an employer quotes the price on workers’ coverage, each additional child added to the coverage for example, may cost an additional few dollars to every biweekly pay period; however, for those parents with a high number of children and offspring, employers will generally cap the “per participant” cost to a maximum number of children so that a parent who has 10 children does not have to pay 10 times.

Although less than 5% of the nearly 300 employer benefit programs have adopted this strategy, employers could still provide such pricing before the law takes place since this has become a emerging and marketable trend.

Employers agree that this strategy also allows them to fairly distribute costs among employees, which in turn allows the employer to more carefully manage and guide a family to a better health by focusing on awareness, prevention and wellness across a family.

Yes, this will financially take a toll for many American families and parents with the increase in premium and with a higher tax rate to take effect after this presidential election starting effectively 2013, but this is the price we pay to live in a country where we have access to health service. People are much more health conscious today so health insurance is a big part of maintaining our health and general well being.

Forbes $126 Billion Cover

Just a little something that caught my attention. It has nothing to do with insurance or the company that I am reporting on, but I thought it was blog worthy.

Forbes recently released their 30th anniversary issue of the Forbes 400, where billionaires and near billionaires came together in New York at the Forbes 400 Summit on Philanthropy. A photo shoot was taken place at a New York public library of the 12 greatest living philanthropists whom all share one common goal to resolve the world’s most attractivble problems in the world and the net worth of this cover is approximately $126 billion, which has to be the richest picture to have ever been taken.

These 12 influential people are the true titans of philanthropy where they have given some serious money, time and dedication to their cause starting with Bill and Melinda Gates who founded the most influential foundation ever in philanthropy by helping eradicate polio in Africa. Warren buffet has pledged to donate 99% of his wealth, Jon Bon Jovi served over 10,000 meals in his latest Soul Kitchen project and Marc Benioff has pledged $100 million to a children’s hospital. The other remaining members in the cover include Oprah Winfrey, Pete Peterson, Leon Black, David Rubenstein, Steve Case, Laura Arrillaga-Andreessen and Marc Andreessen.

Everyone in this latest cover of Forbes is a star in their own right and it is pretty spectacular how the nations’ and world’s most powerful and influential people gathered in one room, one place and one time with a common goal to make the world a better place. This is truly a marker of success and a score keeper for capitalism. 12 people to get together for the right and ethical reason is great for both Forbes and the world. 

Hurricane Isaac Effects on Property Casualty Claims

Over this past summer, I was an intern at a private insurance brokerage firm in downtown Los Angeles working with real claims, many including automobile, property, general liability and workers’ compensations line of coverages. I came across an article of the estimated property and casualty claims that Hurricane Isaac will cost insurers just onshore alone and my initial thought and concern were for the homes, buildings, property and the general well being for those devastated by this storm.

According to Rod Fox, CEO of reinsurance broker TigerRisk Partners, the property-casualty insurance companies are looking at an estimated final onshore claim costs between $1 billion and $2 billion. The majority of the claims and losses will be covered by primary insurers like Allstate, Travelers, followed by the small regional insurers and even possibly coverage from the reinsurers, although Fox did specify that losses for reinsurers will be minimal.

From my own understanding and knowledge of reinsurers and reinsurance, I do know that “reinsurance” is a typical term used for insurance for insurers and that it is also the practice of insurers transferring portion of the risk portfolios to other parties that is underlined in accordance. The sole purpose of why reinsurance exists today is so that the insurer can reduce and minimize the likelihood of having to pay a large obligation resulting from an insurance claim.

With that being said, the article mentioned that there would be only one company that would rely on their reinsurer, Louisiana Citizens, whom is considered the 4th largest property insurer in the state and the state’s insurer of last resort for homeowners who can’t find coverage elsewhere. With Hurricane Isaac on the offense and attack, Louisiana Citizens is looking at a situation where homeowners and businesses concentrated along the Louisiana coastline seek desperate aid, coverage and emergency services with around $21.8 million in total exposure on the line.

Now, the Citizens reinsurance will only kick in when its total losses hit up to $200 million; however, once losses reach over that $200 million mark, the loss from the state-run insurer will be consumed by the capital market per prior agreement when Citizens sold a catastrophe bond called Pelican Re. The accordance states that this Pelican Re bond will trigger to the open market when losses reach that $200 million level, which would only bring more catastrophe to the bond market  if the Citizens bond triggers.

Now as an accounting major, I’ve always been more interested with the financial status of a business or company, rather than the product, services, or the insurers behind it. Rather than trying to determine a company’s debt to equity ratio or how much of equity are provided through banks and private sources to keep the company running, I have learned to think from an insurer’s perspective after my 10 weeks in the insurance industry. I’ve thought about the earthquakes in California and how important it is to insure buildings, and why a customer’s slip and fall in a business would fall into a general liability line of coverage for that business. Insurance is a whole new language itself, but I am fascinated to learn the underwriter’s role and how all the coverages and policies work and apply to actual business and everyday life.

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