More and more mid-market companies across Europe are expanding overseas in one form or another. This might be a company that has a sales office in the US, or manufacturing in China, or simply a company looking to export more. It can be a company with just one location abroad, or five or six locations, or more. It is a broad range of mid-market companies that have an international exposure but what they have in common is the need to manage their overseas operations and bring them into a global insurance programme.
These companies are generally underserved by the insurance industry because global insurance programme business has traditionally been aimed at much larger multinational companies, and those offerings may not necessarily be appropriate for a mid-market company.
The current propositions across the industry are tailored to large multinationals, not just in terms of the policies, but also the entire operating model. For example, how insurers interact with the customer, and the kind of data that the insurance industry typically requests, is basically the same for the mid-market as for the very large multinationals.
But mid-market companies need to be treated differently. These companies may not have a dedicated risk manager, or even perhaps a dedicated insurance manager. They do not therefore have the same level of understanding about insurance, and often require more support and help. And they may have less data available that they can share with the insurance carrier. So a different type of discussion is needed.
And it is often the same with the brokers generally used by mid-market companies. They often have much less experience with international business, so they too require a different type of support from the insurance carrier. A large proportion of their business may be purely local and the broker may be less comfortable in the international space. So for the insurer, it is about getting closer to the regional brokers and providing them with support, so that they can in turn support the customer.
A new approach
Many mid-market companies will not even have a dedicated insurance buyer. Very often it will be the chief financial officer, or someone in the finance area, who takes on the role of insurance buying in addition to their other roles. And this again is why a different approach is required when dealing with companies in this market.
For example, mid-market companies typically do not want to have a line-by-line approach but prefer to have all of their insurance needs dealt within one solution, with one team and one contact, which keeps it simpler and easier for them to manage. It is important to monitor service levels to ensure that mid-market customers are getting not only the right coverage, but the right service from the carrier. At Zurich, we have created a regional service manager role to assist customers in this area.
Speed of quotes and ensuring a quick turnaround is an important issue for this sector. It is about making it a quick and simple process, and recognising that the person dealing with the insurance purchasing may have other roles within the company, and insurance may not be their priority.
We believe that getting the policy issued on time is essential for the mid-market. For large multinationals, standard clauses do not fit so the process is more complex, but for the mid-market sector it should be possible to get policies issued quickly and simply, with a good local standard, which fits well with the master policy in the home territory.
The mid-market customer can also benefit from the international experience of the global insurance carrier, and their ability to deal with more complex situations, if required. Mid-market companies do not have risk management departments, so for many companies the provision of easily accessible and understandable claims data is important to help them identify problems and target any risk improvement measures.
For mid-market companies with a structure supporting such solutions, the most appropriate fit to their international insurance needs might be a financial interest cover policy. This is where exposures originating overseas can be covered in some cases with a policy from the home territory, rather than having a local policy in the overseas territory. Although this means that they would not have the local claims support if required, it is much easier from an operational perspective.
This financial interest solution can be appropriate for a company that does not have a lot of claims from a particular overseas territory. For example, where a company has 95% of its exposure in the home territory and just 5% overseas. But if there is a higher claims frequency, or there are more complex claims coming through, then a local policy would be a much better fit, taking advantage of the local office of the carrier to provide claims support, claims data and local knowledge.
In the end, it very much depends on the profile of the customer and the important point is to tailor the solution to their specific needs, while always ensuring that compliance is not compromised.
Contributed by Thomas Saner, project director, business development and transformation, international programmes, commercial insurance, Zurich Insurance Company; and Jeremy Goldnadel, senior manager, strategy execution team, commercial insurance, Zurich Insurance Company.