The world’s number two insurance broker Aon has revealed that homeowner insurance was the most volatile major insurance line in the world during the 14-year period spanning 1992 to 2005.

Homeowner insurance was three times as volatile as private passenger auto insurance, according to the latest Aon Re Global study.

Aon, which earlier this year announced plans to move its newly centralised global business unit to Bermuda, has conducted a study into the changes within the insurance market- place and found homeowner insurance to have seen the biggest fluctuations out of the major lines.

This volatility has been put down mostly to the 2004 and 2005 Atlantic hurricane seasons.

The Aon study also shows that the private passenger auto line experienced the lowest volatility during that period, followed by the auto physical damage, and commercial auto and workers compensation lines, according to a PRNewswire report.

Excluding catastrophe losses, the homeowners line has a risk level comparable to the commercial auto line.

Liability lines and medical malpractice also have significantly above average volatility. Aon Re’s Insurance Risk Study quantifies the systemic risk for each line of business, representing the risk to a large portfolio from non-diversifiable risk sources such as changes to market rate, weather-related losses, legal reforms and economic activity.

For large books of non-catastrophe exposed business, systemic risk is the major component of underwriting volatility.

The report examined volatility in nearly two dozen lines including commercial multi-peril, other liability (occurrence and claims made), fidelity and surety, and medical malpractice.

“The study provides objective, data-driven underwriting volatility benchmarks by line of business to help insurers provide detailed assessments of their risk profile and quantification of the adequacy of their economic capital,” said Stephen Mildenhall, Aon Re services executive vice president and chief actuary.

“Insurers can use the factors as a basis for their internal capital modelling to ensure that simulation modelling tools produce credible results. The factors also will help insurers address recent rating agency requirements for robust underwriting risk modelling.”