Risk Management in the Global Era Requires the Strength and Flexibility of Forward-Thinking Partners
It’s safe to say that the global events of the past two years have forced every company in every sector to leap into a new era — an age where interconnectivity is the norm and relationships are the highest priority.
For risk management teams gazing over their organizations’ presence in multiple countries, anticipating and mitigating emerging exposures requires the transparency, financial stability and agility of an insurance partner who shares that global perspective.
“The current landscape is fraught with economic uncertainty – coming out of the pandemic, the on-going war in Ukraine, supply chain issues, rising inflation and an uncertain global property cat market – bringing about significant concerns for risk managers, brokers and carriers alike,” observes Brian Grabek, executive vice president and multinational leader at Sompo International.
“In times such as this, brokers and clients need a collaborative and nimble partner that has a deep understanding of their portfolio and the global expertise and insight to provide solutions for today’s challenges and tomorrow’s emerging risks,” adds Grabek. “Finding a trusted advisor to help navigate these dynamics is more important than ever in today’s environment.”
As organizations seek to protect their assets and expand their operations, consistency of insurance coverage and adequacy of policy limits around the world are imperative. From this position, coordination with excess towers can be carried out more seamlessly.
Executive teams grappling with the ripple effects of record-level inflation and ongoing supply chain interruptions, all against the backdrop of geopolitical conflicts and natural disasters, can find comfort in multinational programs.
“Helping clients gain confidence that their global risks are addressed properly and consistently and with adequate, compliant coverage is an important part of any multinational program,” Grabek said.
Insurers have vast amounts of historic data that inform their underwriting and pricing practices. As they too evolve with the global economy, carriers who can leverage and share a combination of historic and real-time data will provide the most value to insureds.
“Leaning heavily into analyzing data, understanding trends and seeing what market forces are at play is incredibly important,” Grabek said. “We work across our global network to help our clients see what’s next in 150 countries. An issue happening in one country today could educate us on something that will be happening across the globe tomorrow.”
Everything Is Connected
Just how interconnected tomorrow’s economy will be is already apparent in the realm of claims.
Throughout the world, claims costs are soaring due to the effects of startling inflation in the U.S. and Europe, as well as lingering supply chain issues that stem from the earliest days of the coronavirus pandemic.
“Supply chain issues are having a significant effect on property claims globally. Lead times to get materials continue to be a strain for companies looking to re-build or replace raw materials in their manufacturing process. This is critical in markets such as the automotive industry – or any business with manufacturing involving steel or micro-chips. In addition, the cost or lack of labor is also causing concerns globally, including on-going transportation labor shortages that continue to influence claims costs across industries. This sharp increase in recent losses has resulted in a tightening of the Property CAT market with shrinking capacity and higher prices globally,” said Grabek.
The interplay of global supply chain dynamics, natural catastrophes and ever more severe weather patterns creates the need for ongoing risk advisory and loss control support. Global risk managers will increasingly look to their insurers for risk advisory powered by advanced modeling technologies that assist in differentiating exposures.
Digital Transformation for a Changing World
Supporting global risk management teams in visualizing emerging events in various locations across the planet comes down to the speed of data collection, analysis and communication. Grabek explains this is why more and more insurance companies like Sompo are taking steps to transform their digital capabilities.
“Sompo’s Digital Strategy Planning Department is focused on transforming existing businesses and creating new ones by gathering information on cutting-edge technologies and building networks with leading local companies”, says Grabek. Our aim is to achieve digital transformation for the entire Sompo Group leveraging Sompo Digital Lab locations in Tokyo, Silicon Valley, and Tel Aviv.
Every sector — from automotive to manufacturing to hospitality and real estate — can benefit from having greater insight into the potential exposures that may impact their coverages of all types.
“From the acquisition of client data via our future interfaces with brokers, to how that data is routed through our rating, modelling, and underwriting systems – to how the implementation of the program is provided back in the form of policies, claims, money movement information, pre-issuance documentation and loss prevention reports is precisely what we are focused on today,” noted Grabek. The future is in finding new ways of sharing and using data.
“For example, consider a US based client with exposures at a location in South America. In the future, we can potentially provide drone coverage or satellite imagery, in addition to other data we have on that location, in order to develop more detailed and location specific modeling for them to enhance their decision-making process.”
Recognizing the need for a real-time interface for complex transactions, Grabek said that using advanced technology aids the way insureds structure their insurance programs and provides them with full transparency about where their program stands. Access to their global money movement on claims and premiums, digital transparency on their policy wordings and access to current database of country regulations and market practices globally are essential for our Multinational insurance clients.
The True Benefits of a Multinational Program
“Due to the complexity of global regulations, and the emerging issues across the number of countries you’re dealing in, you clearly can’t prevent every issue,” Grabek said. “What you can do, though, is set up a global infrastructure that is prepared to deal with each issue as it arises and use those lessons to develop other solutions.”
As a company that has over 70,000 employees in 30 countries and considerable financial strength, Sompo International is aiming to leverage its breadth to provide insureds with a sense of certainty in today’s transforming economy.
One of the advantages of putting together a multinational program, Grabek said, is that as acute issues in an individual country are identified, they can be mitigated from a broad examination of a client’s global exposures.
“There will always be exposures and risks, things that are changing country to country,” he said. The idea is to look at them holistically and identify how they’re progressing in a market or region. This is one advantage of a company’s investment in a global insurance program versus taking an individual country-specific approach.
“By putting together a single global program, you’re able to have consistency in coverage and limits and consistency in how claims are handled,” Grabek said. “And when you get into complex areas like cyber and product liability, you want to be sure those claims are being handled in partnership with the client and broker. There are many contingencies that flow into cyber and product liability that require oversight and advisory into the claims settlement process”.
Adherence to local regulations, taxes and compulsory coverages are also key areas of risk management a global insurer can help an organization to streamline.
“There is a reputational risk and a financial risk if you’re operating in a country and you don’t adhere to their taxes, their rules, their regulations,” Grabek advised. “So having a global program, with a carrier that can provide the advisory for meeting the parameters for operating in each country is business critical.”
Ultimately, global teams shaping the new era of business must be able to fully engage with their data and thereby have full confidence that their operations are keeping pace with the unique changes of each location.
“By having a singular multinational program, you have all that data in one place, allowing you to control your data and manage your global risks effectively,” Grabek said. “So, if something happens at any time, you know you have the local coverage and you know you have the claims capabilities to handle that claim and provide your local operation the assistance they need for whatever issue they are facing.”
To learn more, visit: https://www.sompo-intl.com/.
This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Sompo International. The editorial staff of Risk & Insurance had no role in its preparation.