AOC Aon Corp.

Claims management and tort reforms make impact; patient safety and quality-of-care efforts point to future improvements CHICAGO, Oct. 23 /PRNewswire-FirstCall/ -- Insurance claims against doctors, nurses and other medical professionals have stabilized for the first time in years, according to the seventh annual Aon Hospital Professional Liability and Physician Liability Benchmark Analysis. While that is good news for the medical community, the bad news is that the average size of malpractice claims continues to rise. (Logo: http://www.newscom.com/cgi-bin/prnh/20041215/CGW049LOGO ) The study, which measured 47,735 claims representing more than $4.4 billion of incurred losses in the U.S., found that the overall frequency of medical malpractice claims has not increased for the second straight year. While claim frequency is stabilizing, according to the study, the average size (severity) of malpractice claims continues to increase at a rate of six percent. However, the average amount paid to indemnify claimants is increasing at a rate of only three percent, while amounts paid to defend against liability claims are growing at 17 percent as hospitals invest in claims management. "The improved frequency rate that first emerged in the 2005 study appears to be sustained through 2006," said Greg Larcher, director and actuary of Aon Risk Consultants and author of the analysis. "Based on study findings, we believe that the impact of past state level legislative reforms has largely been realized and we do not expect significant decreases in claim frequency or severity resulting from tort reform in the future unless other states pass legislation that withstands challenges. Patient safety initiatives being implemented today, however, may be critical for sustaining a favorable frequency trend into the future." This year's study found that a statistically significant relationship exists between mortality and claim frequency in certain segments of the database. For example, after adjusting for patient volume and acuity, Texas hospitals with 200 mortalities in 2004 experienced 6 indemnity claims while hospitals with 150 mortalities experienced 4 indemnity claims. This finding gives an interesting perspective on how changes in quality might affect claim counts. Added Larcher, "While it is logical to believe that organizations that reduce preventable harm to their patients will also reduce professional liability claim counts and costs, our study takes a first step at proving this true with data. In the long term, the industry would benefit from a more comprehensive measure of quality, beyond mortality, that measures the success of patient safety improvements and their impact on liability costs." More than 700 healthcare facilities provided loss and exposure data for the benchmark study. These participants range from small community hospitals to large multi-state publicly traded healthcare systems. The study also includes breakouts of claim costs and frequency trends by state and facility type, including university, specialty, long-term acute care and community. The 2006 Hospital Professional Liability and Physician Liability Benchmark Analysis is co-sponsored by the American Society for Healthcare Risk Management (ASHRM) of the American Hospital Association. To purchase a copy, please dial +1.800.242.2626 and request item #178701. Visit http://www.aon.com/hpl_study for more information. About Aon Aon Corporation ( http://www.aon.com/ ) (NYSE:AOC) 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. About ASHRM The American Society for Healthcare Risk Management (ASHRM) is a personal membership group of the American Hospital Association with more than 5,000 members representing clinical care, insurance, law and other related professions. ASHRM initiatives focus on developing and implementing safe and effective patient care practices, the preservation of financial resources and the maintenance of safe working environments. For more information, contact: Raphaele Schnoll, +1.312.755.3592, or Al Orendorff, +1.312.381.3153, 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 execute the stock repurchase program, our ability to consummate the pending sale of the Aon Warranty Group, 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. http://www.newscom.com/cgi-bin/prnh/20041215/CGW049LOGO http://photoarchive.ap.org/ DATASOURCE: Aon Corporation CONTACT: Raphaele Schnoll, +1-312-755-3592, , or Al Orendorff, +1-312-381-3153, , both for Aon Corporation Web site: http://www.aon.com/ http://www.aon.com/hpl_study

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