Protecting companies against future risks
Companies globally face a multitude of risks, from the current volatile sociopolitical environment to the increased adoption of artificial intelligence (AI) and issues surrounding environment and social and governance (ESG). This has led to increased demand for insurance coverage from multinationals.
As the risk landscape continues to evolve, multinational programs are a way of protecting businesses now and against future risks. The increasing usage of AI, ESG, contract certainty post-Covid-19, the increasing popularity of captives, as well as regulatory challenges are all key trends in global programmes.
The multinational program offered by Allianz includes end-to-end captive solutions, programme design optimization and a digital customer interaction platform, which enables users to understand claims in greater detail and access full details of risks.
Today, cross-border exposures are more volatile than ever. The 2023 Allianz Risk Barometer predicts that businesses will continue to experience significant disruption around the world for some time yet, based on insight of more than 2,712 risk management experts from 94 countries and territories. Scenario planning is therefore crucial to protect against future risks, as well as ensuring businesses are not underinsured.
Now more than ever, ESG issues are a priority for risk managers when examining a company’s risk profile. Multinational companies are under pressure to improve their ESG credentials due to increasing interest and scrutiny from regulators, investors, customers, and employees.
For companies on a multinational insurance program, ESG is integrated into underwriting via industry-leading rules and tools, while technology and data analytics enable better insights into big, emerging risks such as climate change, cyber and global supply chain issues.
Another key trend in this space is the impact of digitalization on the way insurers operate global programs, speed up systems and improve data collection. Technology is enabling a more streamlined, real-time exchange of data between stakeholders. Digitalization is also helping to deliver a better understanding of risk, enabling risk managers to take an active role in risk management, so insurers and brokers can spend their time on client-focused activities.
The increasing use of AI also poses a threat to businesses. While AI offers increased efficiencies, new products and fewer repetitive tasks, engagement with the Metaverse, for instance, will result in new risks and potential liability scenarios to society. As AI continues to be explored in different ways, companies need to ensure its safe and secure use.
For many companies, contract certainty is a key priority following the Covid-19 pandemic. The pandemic created challenges around which risks were covered and which were not. This has led to a greater need for contract certainty and data analytics, as well as increasing interest in global programs, which can be an important tool for helping multinational companies tackle the ever-evolving risk landscape. In today’s fast-changing risk landscape there needs to be better greater clarity around what policy wordings actually mean in order to have a better understanding of what is and what isn’t covered.
The global programs market, currently estimated to be worth in the region of $50bn, is expected to grow as businesses continue to face significant disruption. Multinational companies are faced with complex risks and need to ensure they have the right cover in place for unexpected risks.