ACE risk manager survey: 90% say risk complexity increasing

The range of risks companies want multinational insurance solutions for is growing, with emerging and liability risks at the top of the list, according to a new survey of European risk managers. ACE European Group’s Andrew Kendrick discusses the findings of the study – and says that brokers and insurers need to ensure their service is up to par.

Nine out of ten risk managers agree that their companies’ risk profiles are growing more complex, according to ACE Group’s study of 280 European risk managers. At the top of their concerns are the rising exposure to emerging markets and the growing complexity of international regulation.

These concerns have contributed to the fact that 83% of respondents expect their use of multinational insurance programmes to increase over the next three years – currently around half of risk managers say their company has one or more in place.

The survey highlighted that consistency and compliance are viewed as the top benefits of implementing multinational programmes.  Of particular interest, is the finding that risk managers are increasingly targeting multinational programmes beyond the “standard” property and casualty risks. Indeed, when asked what risks their multinational operations are most exposed to, four of the top six relate directly to liability issues including professional indemnity and directors and officers liability.

This illuminates the increasingly challenging operating environment for decision-makers in a more globalised and post-crisis world. Environmental liability was also flagged up by risk managers, underlining a growing awareness of new and emerging liabilities on a global scale. Cyber risk, which has a significant liability dimension too, is also in the top six and expected to grow in significance over the next three years.

Multinational insurance programmes can be difficult to understand, so given the growing demand for them combined with increasing complexity in the risk landscape, there is a need for better education and dialogue.

A significant number of risk managers still believe that taking a multinational programme approach is unnecessary, mostly due to their global footprint not being wide enough to justify it. This may be the case for some domestically-focused companies, yet some may simply be failing to appreciate the impact of growing regulatory divergence on their current insurance arrangements both in terms of the compliance and execution risk.

Another reason given is cost concerns. However, it is often only when a company makes a claim that it discovers that cutting corners in the short term can prove to be a false economy. Interestingly, more than a quarter of respondents agree that multinational programmes have a positive impact on costs by driving economies of scale, while 15% point to their benefits in streamlining things and reducing duplication.

Our research also highlights that European risk managers are looking for practical expertise and support in guiding them through areas of potential complexity, especially regarding the following four areas: DIC/DIL implementation; local policy compliance; timely programme reporting and information; and cross-border claims management. 

Overall, the research reveals a strong focus on service, with more than one-third of risk managers wanting to have agreed service standards in place with their insurer. While risk managers do not appear unhappy with their insurance partners overall, fewer than 30% of risk managers are very satisfied with overall service levels from their insurer in respect of their multinational programmes.

Fewer still are very happy with claims performance (surely the acid test of any insurance programme), insurer responsiveness to their budgetary pressures, consistency of coverage, and availability of effective technology solutions. This shows that the insurance community still has some way to go to make global programme solutions more seamless for risk managers. This is a challenge that we at ACE are certainly up for.

Andrew Kendrick is president of ACE European Group

Andrew Kendrick - ACE European Group