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Systemic event-driven protectionism set to make life more tricky for multinational insurance buyers

Protectionism is set to rise yet further on the back of the pandemic and other systemic events, making insurance regulations even more complicated for multinational buyers, said panellists at Commercial Risk’s latest event.

In response, they advised risk managers to use as many sources at their disposal as possible to keep on top of changing local regulations around the world and, crucially, conduct regular reviews of the regulatory landscape with the help of experts.

Multinational insurance buyers have long struggled to keep on top of and manage the myriad of local insurance regulations around the world governing programme placement and compliance.

Speaking during the ‘Global regulations and local complexity’ panel debate, Praveen Sharma, global practice leader, insurance regulation and tax at Marsh, said the laws change regularly, with a clear trend for protectionist and “insular” regulations around the world. He said the rules are therefore “not fit for purpose” for multinationals, creating “angst, anxiety and confusion” among insureds.

To make matters worse, protectionism is predicted to get worse for multinationals following the pandemic, and as governments react to a growing number of systemic risks and events.

“Protectionism has actually been trending for several years in parallel to globalisation. It is something risk managers have long had to contend with. I think the more recent rise in systemic events, which in my opinion would include climate change and ransomware attacks, has just further exacerbated the global rise in litigiousness, the scrutiny we are already seeing in some of the protective, contractive regulations that already underway,” said Rajika Bhasin, associate general counsel at AIG multinational.

“So yes, this will make life more difficult for [multinational] risk managers, but it will also make life more difficult for the businesses they represent and corresponding insurers. I think it just underscores the need for timely management and meaningful collaboration pre- and post-bind,” she added.

Jospeh Finbow, director IPT in the captive practice at TMF Group, said another problem is regulations are struggling to keep up with the rapid change in risk transfer solutions on offer.

“We are looking at interesting and new solutions all the time and I would say one of the issues is that coverages and programmes are developing faster than the laws and the legislation. So, a big issue is that the coverage is changing and the regulations are struggling to keep up,” he said at the virtual event, being held on 14-16 September and sponsored by Allianz, AIG, AXA XL, Axco, Globex Underwriting Services, Marsh, TMF Group, Willis Towers Watson and Zurich.

Mr Sharma said risk managers at multinationals clearly need to understand a lot of variables when it comes to regulations, and advised them to get as much as information as they can well in advance of renewals by leaning on their advisers and insurers.

“Buyers also need to buy smartly,” and make sure the insurance they take out is of “real value” and not simply what is best for insurers or brokers, he added.

Mr Finbow also advised insurance buyers to use as many sources as they can in order to keep up to date with local regulations. It also important to double check and verify what you know, he added.

Shiwei Jin, global programmes and captives regional director APAC at AXA XL, was in full agreement. She said multinational insurance buyers can look at public sources, such as the media, as well as tailored databases from specialist companies such as TMF and Axco, broker bulletins and insurance carriers’ databases, to access as much information as they can.

But she stressed, above all, that it is vitally important to conduct regular reviews of the regulatory landscape affecting multinational insurance placement, in collaboration with experts.

“Collaboration among the service providers and risk managers is critical. Dialogue, collaboration and a very clear plan year on year are vital. Not just for renewals but also regular checking to see what we need to improve in the programmes. What are the regulatory change of directions? How can we ensure going forward that we get the best value from global programmes? Those are critical for the dialogue. So, intention and action is what we can control,” she said.

You can still sign up for the rest of the Global Programmes conference –  supported by risk management associations Airmic, Belrim, Ferma, GVNW, Narim, Parima and Rims – here.

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