ACE Report Urges Risk Managers to Reexamine Capabilities of Insurer Partners

ACE urged risk managers at multinational European companies to reexamine 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 percent of European risk managers have increased their use of captive insurance arrangements over the past three years to help manage their multinational risks.

The report entitled, “Structuring multinational insurance programs – 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:

Krishnan 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 program.”

Kaushal 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 program, and who will explore with them potential scenarios and stress tests to establish how their multinational insurance program 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 program.”

Source: ACE Group