Delivery and service important for US international casualty programmes, says WTW

When it comes to measuring the quality of their international casualty programmes, Willis Towers Watson (WTW) recommends that US organisations take a holistic approach and place value on issues beyond price, such as the delivery of information and service. In the international casualty section within its Insurance Marketplace Realities 2021 report, WTW says: “The most effective carrier partners are those who deliver accurate and timely policy documents, quality post-binding services around the world, and offer an insured the ability to influence localised policy coverage terms.” On the issue of pricing, WTW says individual results vary widely, with some insureds still benefiting from rate improvement while most others are renewing with single- and double-digit rate increases. It says its best estimate for most US buyers looking ahead to 2021, however, is a 10% increase. It notes that with many businesses reporting a decrease in revenues, that reduction in exposure may not equate to a 1:1 reduction in premium. “Global programmes administration costs are somewhat inelastic and are a significant portion of the total programme costs, so insureds may feel an actual rate increase as their exposures drop,” the report states. WTW says global programmes of US organisations of all sizes are becoming more sophisticated. “Buyers with smaller international risks may have opportunities to impact their total costs and ensure compliance by taking a centralised approach to certain functions, starting with a focus on the safety of their traveling employees through a global approach to foreign voluntary workers compensation, kidnap, travel assistance and health coverages. For companies with existing global programmes, opportunities are available to streamline operations by leveraging relationships with a select number of global carriers, minimising coverage gaps and ensuring economies of scale,” it states. “For the buyers of large, complex global programmes, clarity of coverage will be increasingly important, not just at the master policy level but also at the locally admitted level. Also, contracts with third parties may include specific insurance requirements (such as unique local coverages and/or higher limits) that need to be contemplated in the programme design,” it adds. The report goes on to say: “One of the ways higher admitted limits can be obtained is by asking the international casualty carrier to raise its master policy limit, enabling flexibility around what limits can be localised. An additional benefit of raising the primary limit is driving pricing relief in the excess layers, an important feature when excess limits are more expensive. Alternatively, an umbrella carrier that has a global network can issue its own local umbrella policy as and where needed. Teams should consider both options and compare associated costs.” WTW says that programme administration remains an important focus. “In a marketplace that does not generally see the same type of claims frequency or severity as the US domestic lines, multinational programmes often require more administration costs from carriers, brokers and insureds. As a result, all parties should look for ways to drive value through efficiencies,” the report states. It adds: “Key to achieving a programme that delivers value is a disciplined approach to timelines, with teams beginning the renewal process early and documenting clear objectives up front. International casualty programmes require significant administration and collaboration, so rather than differentiate purely through price, carriers and brokers are creating and/or enhancing operational tools, leveraging technology and offering underwriting flexibility and/or enhanced transparency around country-specific coverages.” The report suggests that alternative risk programmes are likely to be more attractive as rates increase. “The market for fully fronted programmes remains fairly limited; however, they can be popular for insureds who wish to control cost allocations and centralise coverage documentation. If rates on global programmes increase in the risk transfer market, we expect insureds will consider utilising captives to transfer risk and/or facilitate admitted coverage. Carriers that write programmes with significant retentions are often well established and have the underwriting expertise, global network, technology and cashflow capabilities to handle these programmes effectively,” it states.

Delivery and service important for US international casualty programmes, says WTW

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