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The attractiveness of global insurance programs is growing



Risk managers need to keep track of an organization’s international exposures as a growing number of US-based companies expand their facilities and operations globally.

Demand for global insurance programs is growing as a wide range of companies, from the middle market to larger multinational companies, turn to them to manage their exposures in several countries.

Multinational corporations are navigating a complex global risk environment emerging from the pandemic, and for many, a global program may make sense, said experts interviewed at the Risk & Insurance Management Society Inc.’s Riskworld conference in San Francisco earlier this month.

Businesses are looking for all the benefits they can find to manage costs, create efficiency and ensure consistency in how their business is protected, and a global program provides that opportunity, says David Rahr, global leader for multinationals at Marsh LLC, based in Chicago.

“Think about what risk managers face today. (A few) years ago covid did not exist, now the political issues in Ukraine and Russia have presented themselves. The risk landscape has changed dramatically,”

; says Rahr.

In addition to this, risk managers are facing 17 straight quarters of interest rate increases, he said.

A growing number of mid-market companies have international activities and operations, says Alfred Bergbauer, New York-based head of captives, multinationals, programs and TPA services at Hartford Financial Services Group Inc.

For example, a company that is defined as small in the United States that buys a policy for entrepreneurs from The Hartford may have 30 manufacturing facilities abroad, Bergbauer said.

“When we work with producers to talk to companies about their business and how we can best protect their income statement, cash flow and balance sheet, we find that a large number are underinsured or incorrectly insured when it comes to foreign programs,” he said.

More companies are becoming global each year, increasing demand for different types of coverage, says Andy Zoller, Dallas-based director of international programs for U.S. national accounts and markets in Zurich, North America.

A regional company in the United States may have customers who are outside the United States and “may need an export policy, or they may travel for a seminar and need a kidnapping and ransom policy.” said Mr. Zoller.

“We have seen an increasing shift in the number of global cyber programs, D&O programs, the professional programs, where more local offices are required to have local insurance certificates within these lines than they have before and more countries offer these coverage,” he said.

Over the past year, Zurich has added about 10 to 15 local cyber coverage formulations globally in response to customer demand. “We are up to 30 countries now where we can offer local cyber formulations,” Zoller said.

William Porter, head of international programs for America at Swiss Re Corporate Solutions in New York, said that most of its US-based customers purchase global programs where all of their worldwide coverage needs are gathered in a single global program.

Such programs are usually structured with a main policy issued in the United States that covers the global risks of a particular company, and individual local policies issued in the various countries where it does business.

Laws and regulations vary from country to country as to which exposures are to be covered by a local insurer licensed to operate in a particular country, as well as tax requirements, several industry experts said.

About 90% of Swiss Re Corporate Solutions’ portfolio in the international program area is property risks and in recent years it has seen an increasing demand for accidents, financial lines and liability insurance for directors and salaried employees, said Mr. Porter.

Many multinational companies use their captive insurance companies in addition to their global program, says Brian McNamara, Bermuda-based head of global fronting at Allianz Global Corporate & Specialty SE, a unit within Allianz.

“Captives have become increasingly popular simply because of a lack of capacity in certain areas and then the effective interest rate hikes in some industries have driven more companies to either increase the use of the captive they have or form a new captive or cell prisoner to deal with that, said McNamara.

Financial lines, errors and omissions, D&O and cyber have been among the most popular business areas for multinational prisoners, he said.

Risk managers should evaluate all options when looking at how to manage their international exposures, says Lori Seidenberg, New York-based global director, real assets insurance risk management, at Blackrock Inc.

“We looked at how we could consolidate programs and leverage our market share and our spending. What we found was the best step we could take and what could benefit individual countries was to have more regional policies,” Seidenberg said.

Finding an insurer that was willing to do a global program was difficult because so many countries have local requirements, she said.

“We also found that from a premium perspective we did not do any specific region justice, so consolidating from a regional perspective was very beneficial for us,” said Seidenberg.

When Blackrock’s innovations reach countries outside the United States, markets begin, conditions resemble more U.S.-based forms, and pricing is more like a tough U.S. market, she said.

“The more my other regions come up for renewal, the more they look like a challenging American market,” Seidenberg said.


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