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Appeal of global insurance programs grows


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

Demand for global insurance programs is accelerating as a broad range of businesses, from middle-market to larger multinationals, turn to them to manage their exposures across multiple countries.

Multinational companies are navigating a complex global risk environment coming out of 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 every edge they can find to manage costs, create efficiency and ensure consistency in the way their operations are protected, and a global program provides that opportunity, said David Rahr, global leader of multinational at Marsh LLC, who is based in Chicago.

“Think about what risk managers are facing today. (A few) years ago, COVID didn’t exist, now the political issues in Ukraine and Russia have presented themselves. The risk landscape has changed dramatically,” Mr. Rahr said.

On top of this, risk managers are facing 17 straight quarters of rate increases, he said.

A growing number of middle-market businesses have international activities and operations, said Alfred Bergbauer, New York-based head of captives, multinational, programs and TPA services at the Hartford Financial Services Group Inc.

For example, a business defined as small in the U.S. that is buying a businessowners policy from The Hartford could have 30 manufacturing plants overseas, Mr. Bergbauer said.

“As we work with producers to talk with companies about their operations and how best to protect their income statement, cash flow and balance sheet, we’re finding a large number are underinsured or improperly insured when it comes to foreign programs,” he said.

More companies are going global every year, which is increasing demand for different types of coverage, said Andy Zoller, Dallas-based head of international programs for U.S. national accounts and middle markets at Zurich North America.

A regional business in the U.S. could have customers that are outside the U.S. and “might need an exporters policy, or they may travel for a seminar and need a kidnap and ransom policy.” Mr. Zoller said.

“We’ve seen an increasing shift in the number of global cyber programs, D&O programs, the professional programs, where more local offices are being requested to have certificates for local insurance in those lines than they have in the past and more countries are offering those coverages,” he said.

In the last year, Zurich has added around 10 to 15 local cyber coverage wordings globally in response to customer demand. “We’re up to 30 countries now where we can offer local cyber wordings,” Mr. Zoller said.

William Porter, head of international programs for the Americas at Swiss Re Corporate Solutions in New York, said most of its U.S.-based clients are buying global programs in which all their coverage needs throughout the world are rolled up into a single global program.

Such programs are typically structured with a master policy issued in the U.S. that sits over the worldwide risks for a particular company, and individual local policies issued in the various countries in which it does business.

Laws and regulations vary by country as to which exposures should be covered by a local insurer licensed to conduct business in a particular country, as do tax requirements, several industry experts said.

About 90% of Swiss Re Corporate Solutions’ portfolio in the international program space is property risks and in the last few years it has seen increasing demand for casualty, financial lines, and directors and officers liability coverage, Mr. Porter said.

Many multinationals use their captive insurers alongside their global program, said Brian McNamara, Bermuda-based head of global fronting at Allianz Global Corporate & Specialty SE, a unit of Allianz.

“Captives have become increasingly more popular simply because there is a lack of capacity in certain areas and then the effective rate increases on certain lines of business have driven more companies to either increase utilization of the captive they’ve got or form a new captive or cell captive to deal with that,” Mr. McNamara said.

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

Risk managers should evaluate all the options when looking at how to manage their international exposures, said 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 spend. What we found was the best step we could do and what could benefit the individual countries was to have more regional policies,” Ms. Seidenberg said.

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

“We also found that from a premium perspective we weren’t doing any one specific region justice, so consolidating from a regional perspective was very beneficial for us,” Ms. Seidenberg said.

As Blackrock’s renewals come up in countries outside the U.S., the markets, terms and conditions are starting to look more like U.S.-based forms and the pricing is more like a hard U.S. market, she said.

“The more my other regions come up for renewal, the more they are looking like a challenging U.S. market,” Ms. Seidenberg said.