Balancing the needs of multinationals with rising protectionism

Q: In the current era of rising protectionism, which is concerned with keeping premiums local, it is becoming increasingly difficult to operate multinational programmes. Against this backdrop, what solutions do you advocate to help clients? 

A: First things first, in talking about solutions, I would like to distinguish between the tools and the expertise.

While having the right tools in place is essential, this is arguably not the aspect that makes the biggest difference to a multinational client. Now, more than ever, the competence and expertise of the global carrier represent the true differentiating factor.

Every week there seems to be a new piece of regulatory provision, many of which aim to close or protect the local market and, for sure, most of them have an impact on the programme’s structure and execution, reinsurance flows and taxation. In short, they pose a challenge to building an efficient and compliant multinational programme structure.

Amidst this ever-increasing complexity, the solution centres squarely on gaining a deep understanding of the client’s business – its footprint, operations and exposures – together with an intricate understanding of how to use the multinational programme – the ‘what, why and how’ of local regulations, market practice, tax implications etc.

It is not only a matter of offering cover solutions, such as the financial interest clause, but assessing how these covers can fit with new scenarios and meet the customer’s need. To do that you need to have the right people, in the right place – namely, just beside your customer.

The challenge is to keep everything compliant, simple and efficient. And to provide solutions that give contract certainty, ultimately helping the customer face its own challenges.

It is thanks to our skills, tools and network at Generali that we are able to assist and support the customer to understand the most efficient solution for a specific need, in a specific territory, and to ensure compliance.

Partnering with a global carrier and setting up a global programme supports risk managers in many ways. It gives them worldwide control of their own operations; access to the global services around and beyond the policy cover; access to the global carrier services and to the services of its own partners through which it can provide added-value services specialised for multinational companies at worldwide level.

Q: Do global programmes still represent the right solution to emerging risk management challenges, such as climate change, the energy transition and increasing need to follow ESG principles? 

A: In my opinion, global programmes can help risk managers even more than in the past. 

Global programmes have always been a tool to provide risk managers with local regulatory insights and market trends, and help clients control their own global exposures and operations while providing cover clarity and contract certainty.

Right now, this is more important than ever. 

Risk managers may have limited knowledge or understanding of what happens around the world. The pace of change is faster than ever now, in terms of regulatory changes, sanctions, mandatory cover, claims trends, etc. In a very uncertain regulatory scenario, having updated information is fundamental.

The great deal of information collected and the tools available to process that data help to run scenario planning and anticipate trends. It helps to consider a ‘black swan’ event approach. In short, to think the unthinkable. This is essential considering the Covid-19 pandemic experi-ence during the last couple of years.

Q: What challenges and lessons learnt do you see for a global carrier in the post-pandemic era? 

A: As a corporate and global carrier, we manage and offer complex products, tailored around the customers’ needs, spanning multiple regions and subject to ever-changing and complex regulations. In the new scenarios, we must focus more on the ‘relationship dimension’, explaining our products to the customer, to ensure contract certainty.

Being able to build trust and a long-term relationship is key to managing the new risks. Agility and flexibility are also paramount to managing new risk, as well as the new trends of traditional risks. 

Global carriers need to be flexible, with the ability to quickly adapt their operating model to support risk managers. We need to be more service-driven than process-driven; be prepared to think beyond established industry practices.

Premium payment terms review and payment deferral, to help clients cope with liquidity problems due to the decrease of turnover during Covid-19, represent only small examples of concrete actions that we put in place to support our customers during the pandemic.

Being flexible and able to quickly adapt to customers’ needs also meant mobilising our own risk engineering network to provide free consultancy to customers, to safely restore operations after shutdown.

Q: And, finally, how are you helping customers face new risk challenges, such as the energy transition? 

A: The energy transition implies a dramatic business model transformation for customers. We must offload complexity, or operational burden, from our customers. And we as a business must be prepared for it as well, making sure we have the right competencies. 

The new technology needed to achieve the zero-emission target as soon as possible implies a challenge for everyone. For example, we need to review all of our people’s skills to be prepared to face the new demands; claims people and loss adjusters in particular.

Aligned with this are the climate change goals, designed to pivot away from fossil fuel dependence. This also requires a dramatic business model transformation in different economic sectors. 

Climate change is also a source of new laws, standards and duties of care. It poses new challenges ahead and we need to be prepared for it, and anticipate the new trends. 

Nuisance claims may be just an example of the new trend related to climate change that we must be prepared to manage.

Since the adoption of the Paris Agreement, climate litigation has gained pace, increased in volume, and expanded in scope and geographical coverage. So far, the majority of cases have been brought against governments. However, there is clear evidence that lawsuits against corporate entities are on the rise. We must support risk managers with regards to this new challenge. Climate change-related litigation is a truly global phenomenon.

In these new scenarios, we see an increased duty of care for both customers and ourselves towards all parties – employees, stakeholders and society.