Certainty of coverage most common reason for global programme, Aon survey finds

The most common reason for purchasing a multinational insurance programme is certainty of coverage, followed by cost savings and statutory compliance (access to local admitted coverage where non admitted is prohibited), Aon’s 2017 Global Risk Management Survey reveals. These are the same top three reasons as in the last survey two years ago. In fourth place was programme performance (access to local claims and/or other services from local insurer/ policy provider) followed by fiscal compliance (ability to pay insurance premium and related taxes). These two swapped positions in the ranking compared to the last survey in 2015. In sixth place was accounting (ability to allocate risk transfer costs to local operations versus pay from corporate). “The consistency in the rankings from survey to survey suggests that respondents have not faced challenges that would sway their priorities in selecting the best multinational programme option,” says Aon. When asked about their multinational insurance purchasing habits, 49% of respondents reported having control over all insurance purchases including corporate and local placements from corporate headquarters, an increase of 4% from 2015. Aon notes: “While this may suggest greater control being exhibited across all respondents, the number is skewed by a prevalent use of this approach amongst respondents with operations in just two to five countries.” The survey finds that 41% of respondents reported corporate headquarters controlling some lines and leaving local offices to purchase other lines, with just 10% allowing each operation to buy its own insurance with no coordination from corporate headquarters. Interestingly, when looking at companies operating in 26-50 countries, 49% control all insurance from the corporate headquarters, yet for companies with operations in more than 50 countries, it is only 41%, compared to 55% that control some lines centrally and allow some local purchasing. The survey found that, unsurprisingly, general liability (85% of respondents) and property coverage (79%) continue to be the lines of business most frequently purchased as a multinational programme, including master and local policies. Aon says that while the use of multinational programmes for other areas remains about the same, there is an increase in the use of programmes across lines of coverage such as auto/motor vehicle liability (46%), which are historically reserved for local purchase, and lines historically purchased on a global basis without underlyers at the parent level, such as product recall and contamination (21%). Nearly half (49%) purchased workers compensation/employers liability as a multinational programme, 69% purchased directors & officers liability, 48% purchased marine/ocean cargo and 40% bought crime insurance. Just 18% purchased trade credit as a multinational programme. Aon points out that of the 20 top risks identified by survey respondents, about 16 can be tied to international exposures, although as a specific risk, ‘globalisation’ continues to drop in the participants' ranking of top risk concerns, slipping from number 36 to number 40. “This may be because globalisation is becoming more understood and accepted as an integral part of risk associated with businesses, all of which are deeply affected by heightened global influence at all market sizes, geographies and industries, as opposed to being its own topic,” says Aon.

Certainty of coverage most common reason for global programme, Aon survey finds

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