LONDON--(BUSINESS WIRE)--
ACE today urged risk managers at multinational European companies to
re-examine the capabilities of their global insurance partners as the
international regulatory and business environment grows increasingly
complex.
The recommendation follows recent ACE research, which suggests that 70%
of European risk managers have increased their use of captive insurance
arrangements over the past three years to help manage their
multinational risks1.
The report, “Structuring multinational insurance programmes –
anticipating emerging global challenges for captives”, was released
during the European Captive Forum in Luxembourg and is authored by
Suresh Krishnan, Executive Vice President, Global Accounts at ACE;
Suneeti Kaushal, Insurance Manager at Ikano Insurance Advisory; and Rémy
Massol, Director of Multinational Services for Continental Europe at ACE.
The report sets out key themes for captive owners to consider when
implementing a multinational insurance programme, including:
-
Prioritise transparency of documentation and cash flow
The emergence of a complex array of rules in the diverse markets in
which global companies operate – including rules concerning local policy
issuance, ‘premium withheld’ obligations, and local currency export
restrictions – means that captive owners increasingly need to seek
insurance partners who will work with them to build multinational
insurance programmes that comply with local requirements.
-
Evaluate the implications of increasing international scrutiny of tax,
capital, and solvency issues
European captive owners should be aware of, and ensure that they work
with, an insurance partner who understands the potentially significant
increase in the capital and compliance requirements imposed on them by
developments such as US FATCA legislation, the emergence of gross
reserving requirements in certain markets, and the uncertainty posed by
Solvency II.
-
Ensure that the ability to value, adjust, and pay increasingly complex
claims across borders is incorporated within the multinational
insurance programme
European risk managers are experiencing more claims outside their home
market, according to ACE’s research2. To manage this
increase, it is imperative that they work with insurance partners who
can help them to deliver transparency in surveying, valuing, and paying
multinational insurance claims, along with transparent and timely loss
reporting.
-
Understand the implications of a multinational insurance programme on
captive credit exposure and ensure that they discuss credit risk fully
with their global insurance partner
Changes in a company’s international exposures, coupled with the
potential impact of Solvency II on the capital-adequacy requirements for
European captives, could cause insurance partners to re-examine a
“no-collateral” reinsurance programme. The implications of credit risk
should therefore be thoroughly discussed before a multinational
insurance programme is implemented.
Suresh Krishnan, Executive Vice President, Global Accounts at ACE said:
“Financial strength, underwriting acumen and price are important
criteria for captive owners when choosing a global insurance partner. In
today’s complex international regulatory and operating environment, the
requirement for best-in-class service and use of leading-edge technology
to effectively manage programme performance should also be given due
consideration.
“Transparent claims-service standards that are agreed before the
programme is bound; metrics that objectively measure the performance of
local premium payments and local policy issuance; a clear credit-risk
methodology; and broad breadth in compliance know-how, are all equally
important aspects of an insurer’s global capability and, ultimately, of
a successful captive insurance programme.”
Suneeti Kaushal, Insurance Manager at Ikano Insurance Advisory, said:
“As clients, we want to work with insurers who are value-adding
partners; partners who will critically examine our assumptions, and who
will work with us to inform and navigate the complex, but varied,
regulatory and compliance demands of each country in which we operate.
“Captive owners and managers should insist on an insurer-partner who has
the information owners require to make properly considered decisions
about the structure of their multinational insurance programme, and who
will explore with them potential scenarios and stress-tests to establish
how their multinational insurance programme will respond to particular
claims situations. It is important to work through the difficult
questions with the insurer-partner at the beginning; agree on service
standards and guidelines; establish clear communication channels and the
means to access information, all long before the inevitable claims-event
that will test the integrity of a multinational insurance programme.”
For more information, and to download the report, go to: http://www.acegroup.com/eu-en/assets/2014-11_captive_report.pdf
ENDS
About ACE:
ACE Group is one of the world’s largest multiline property and casualty
insurers. With operations in 54 countries, ACE provides commercial and
personal property and casualty insurance, personal accident and
supplemental health insurance, reinsurance and life insurance to a
diverse group of clients. ACE Limited, the parent company of the ACE
Group, is listed on the New York Stock Exchange (NYSE:ACE) and is a
component of the S&P 500 index.
Visit www.acegroup.com/eu
1 ACE European Risk Briefing, ‘Changing Multinational Risks
and Evolving Solutions’, September 2014
2 Ibid.
Source: ACE