AOC Aon Corp.

Retiree Healthcare Cost Increases Projected Lower Than Active Employees CHICAGO, June 1 /PRNewswire-FirstCall/ -- While still reaching double- digit figures, healthcare costs are beginning to increase at a lower rate, according to Aon Consulting, the human capital consulting organization of Aon Corporation (NYSE:AOC). (Logo: http://www.newscom.com/cgi-bin/prnh/20041215/CGW049LOGO ) Aon Consulting surveyed more than 70 leading healthcare insurers (representing more than 100 million insured individuals) and found healthcare costs are projected to increase in the next 12 months by 12.2 percent for HMOs, 12.4 percent for PPOs and 11.9 percent for POS plans. This compared to one year ago, when HMO cost increases were 13.2 percent, PPO increases were 13.0 percent and POS cost increases were also 13.0 percent. Meanwhile, consumer-driven health plans (CDH) are estimated to increase by 12.5 percent, similar to a year ago when these plans were forecasted to increase 12.7 percent. (See below for trend data from Aon Consulting's prior healthcare surveys.) "This is the sixth year of double-digit increases in healthcare costs," said Bill Sharon, senior vice president with Aon Consulting and director of the study. "Employers have been responding to this by using a variety of strategies to control healthcare costs such as increasing deductibles and co- payments, expanding disease management programs, adding health promotion programs and introducing new consumer-driven health plans. While these initiatives are slowing the rate of increase, healthcare costs continue to grow at a pace that is three to four times the rate of general inflation." Insurance companies are forecasting consumer-driven health plan trend rates to be on par with PPO trend rates, but it's important to look at the first year of CDH savings, Sharon said. "Although consumer-driven health plans may increase at a similar rate as other plans this year, considerable savings still will be realized by making the switch. Our analysis shows that a company can achieve first year savings of 8 percent of their premium if they implement an effective consumer-driven healthcare strategy." Healthcare rate increases for retiree medical are projected to be lower than active employees, according to the Aon Consulting study. During the next 12 months, Medicare Supplement plans are predicted to increase by 11.5 percent and Medicare Advantage plans will likely increase by 10.2 percent. "Retiree medical benefit cost trends are heavily influenced by government reimbursement rates for Medicare and prescription drug costs," said Jonathan Nemeth, senior vice president, and chief health and benefits actuary with Aon Consulting. "Some modest improvements in these two areas are leading to a slightly lower trend rate for these plans." As for prescription drugs, general pharmacy costs are expected to increase by 12.2 percent, compared to 13.1 percent a year ago. Specialty drug costs will increase by 17 percent, down from 22.5 percent last year. (Specialty drugs are biotechnology-derived injectable medications used primarily to treat high-cost disease states for which previous treatments were more invasive or unavailable.) About Aon Aon Corporation ( http://www.aon.com/ ) is a leading provider of risk management services, insurance and reinsurance brokerage, human capital and management consulting, and specialty insurance underwriting. There are 46,000 employees working in Aon's 500 offices in more than 120 countries. Backed by broad resources, industry knowledge and technical expertise, Aon professionals help a wide range of clients develop effective risk management and workforce productivity solutions. Aon Consulting is among the top global human resources consulting firms, with 2005 revenues of $1.255 billion and 7,000 professionals in 120 offices throughout the world. Aon Consulting delivers integrated consulting solutions to help clients with employee benefits, human resources outsourcing, compensation, communication and management consulting. For more information, contact: Sara Brownell, Aon Consulting, 312-381-5045, -or- Joe Micucci, Aon Consulting, 312-381-4786, This press release contains certain statements related to future results, or states our intentions, beliefs and expectations or predictions for the future which are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from either historical or anticipated results depending on a variety of factors. Potential factors that could impact results include: general economic conditions in different countries in which we do business around the world, changes in global equity and fixed income markets that could affect the return on invested assets, fluctuations in exchange and interest rates that could influence revenue and expense, rating agency actions that could affect our ability to borrow funds, funding of our various pension plans, changes in the competitive environment, our ability to implement restructuring initiatives and other initiatives intended to yield cost savings, our ability to implement the stock repurchase program, changes in commercial property and casualty markets and commercial premium rates that could impact revenues, changes in revenues and earnings due to the elimination of contingent commissions, other uncertainties surrounding a new compensation model, the impact of investigations brought by state attorneys general, state insurance regulators, federal prosecutors, and federal regulators, the impact of class actions and individual lawsuits including client class actions, securities class actions, derivative actions, and ERISA class actions, the cost of resolution of other contingent liabilities and loss contingencies, and the difference in ultimate paid claims in our underwriting companies from actuarial estimates. Further information concerning the Company and its business, including factors that potentially could materially affect the Company's financial results, is contained in the Company's filings with the Securities and Exchange Commission. The following table summarizes Aon Consulting Health Care Trend Survey results from 2001-2006: Fall 2001 Spring 2002 Fall 2002 Spring 2003 Fall 2003 Medical (w/Rx) HMO 14.4% 16.2% 15.1% 16.4% 14.8% POS 15.7% 16.0% 15.1% 16.1% 14.8% PPO 16.8% 16.0% 15.8% 15.7% 14.9% Indemnity 19.2% 18.3% 18.1% 17.2% 16.3% CDH Medical (w/o Rx) HMO 12.7% 14.6% 14.0% 14.7% 13.7% POS 14.0% 14.5% 13.9% 14.5% 14.0% PPO 15.1% 14.6% 14.6% 14.4% 14.3% Indemnity 18.6% 17.1% 17.2% 16.4% 15.5% CDH Dental DHMO 4.4% 4.4% 5.3% 4.8% 5.1% PPO 7.7% 7.6% 7.8% 7.6% 7.7% Indemnity 8.0% 8.4% 8.3% 7.6% 7.6% Pharmacy General 16.0% 17.8% 18.3% 17.7% 15.3% Specialty Vision N/A 3.2% 3.5% 3.8% 3.4% Spring 2004 Fall 2004 Spring 2005 Fall 2005 Spring 2006 Medical (w/Rx) HMO 14.1% 13.3% 13.2% 12.9% 12.2% POS 14.1% 13.6% 13.0% 13.0% 11.9% PPO 14.2% 13.6% 13.0% 13.0% 12.4% Indemnity 15.3% 15.4% 14.6% 14.2% 14.4% CDH 14.1% 13.7% 12.7% 13.3% 12.5% Medical (w/o Rx) HMO 13.4% 12.7% 12.9% 12.7% 12.0% POS 13.5% 13.2% 12.7% 12.8% 11.8% PPO 13.5% 13.2% 12.7% 12.8% 12.3% Indemnity 14.7% 15.1% 14.6% 14.3% 14.4% CDH 13.3% 13.1% 12.4% 13.2% 12.3% Dental DHMO 5.0% 4.3% 4.7% 4.8% 4.8% PPO 7.3% 7.0% 7.1% 7.1% 6.7% Indemnity 7.7% 7.4% 7.6% 7.6% 7.1% Pharmacy General 14.4% 13.1% 13.1% 11.8% 12.2% Specialty 22.5% 19.0% 17.0% Vision 3.9% 3.3% 3.9% 4.0% 3.6% http://www.newscom.com/cgi-bin/prnh/20041215/CGW049LOGO http://photoarchive.ap.org/ DATASOURCE: Aon Corporation CONTACT: Sara Brownell, +1-312-381-5045, or , or Joe Micucci, +1-312-381-4786, or , both of Aon Consulting Web site: http://www.aon.com/

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