Aon survey reveals global programme trends

The biennial survey also reveals that fiscal compliance-the ability to pay insurance premium and related taxes-has become an increasingly important factor for insureds placing multinational programmes. General liability and property coverage continue to be the lines of business most frequently purchased on a multinational basis. However, there have been significant increases in the number of survey respondents purchasing multinational programmes for other lines, including D&O liability, workers compensation, employers' liability and crime. Aon's 2015 Global Risk Management Survey polled 1418 risk professionals, C-suite executives and 'others' across the globe. Each of these three groups accounted for roughly one third of the total responses. They were spread across the regions of Asia Pacific, Europe, Latin America, Middle East & Africa and the US. Although globalisation itself has fallen four places in the survey's top-level risk ranking from 2013 to number 36, it remains a consistent theme for companies pursuing improved operational results. Of the 20 top risks identified by respondents, almost three quarters can be tied directly or indirectly to international exposures, said Aon.hideAs in previous surveys, the Aon research asks respondents about how they control risks and place corresponding insurance. The number of multinational firms controlling all insurance from corporate headquarters is down by 4% from 2013 to 45%. This percentage has fallen across nearly all types of multinational organisations-from those operating in just two to five countries to those active in over 51 countries. At 45%, complete central control of insurance purchasing remains the most popular option for multinationals. 44% of respondents said corporate headquarters has control over some lines while leaving local offices to purchase other areas of cover. The remaining 11% said local operations are left to buy their own insurance with no coordination from corporate headquarters. This is up from 8% in 2013. Aon said this was a 'significant' increase. It pointed out that such arrangements are most frequently employed by multinationals with operations in two to 10 countries. It happens in just 7% of firms operating in 26-50 countries and 6% of firms present in over 51 countries. However, with both figures rising from 4% in 2013, the findings suggest a trend towards less central control even at the largest multinationals. Once again coverage certainty-understanding what is included in the programme-is seen as the most important factor in multinational programme purchase decisions. As in 2013, this is followed by costs and whether multinational programmes are the most economical option. Statutory compliance-access to locally admitted coverage where non-admitted is prohibited-again ranks third. But fiscal compliance-the ability to pay insurance and related taxes-has leap-frogged programme performance. This suggests that 'regulatory compliance has trumped service for this group of respondents', said Aon. Consistent with prior year results, general liability (81%) and property damage (79%) are the most frequently purchased multinational programmes. These percentages are roughly in line with 2013. The next three most popular lines-D&O, marine and workers compensation/employers liability-are increasingly placed in global programmes, according to the survey. The number of respondents buying global D&O coverage has risen to 73% in 2015 up from 63% in 2013. Those placing marine has climbed to 49% from 43%, and workers compensation/employers liability has jumped to 48% from 39%. The number of respondents placing global crime policies has also risen, up to 42% from 32% two years ago. Speaking on the survey's findings, Aon said that as regulatory controls dictate how and what insurance coverage is to be procured, along with what taxes or fees are to be paid for risk transfer in a given geography, 'there continues to be a need to review how multinational risk finance programmes may respond to a claim'. This includes how and where indemnities may be paid and what, if any, costs may be due depending on the structure of the programme placed. In addition, companies should look at the financial design and allocation of related premium costs across the firm, Aon added. It noted that as regulatory controls have increased, become better defined and more strictly enforced, market offerings have also evolved. In some cases, these changes create greater opportunity for multinational firms to align their risk finance structures to address country-specific regulations, said the broker. In other cases, market offerings are more clearly defined as to how, where, and on whose behalf a policy may or may not respond, it continued. "These market developments mean insurance buyers need to consider how and what they may be purchasing. Their final purchase decision will have to balance the local needs of far-flung operations against the efficiency of centralised acquisition of coverage," concluded the broker.

Aon survey reveals global programme trends

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