AXA XL: Building Strong Property Risk Strategies for Global Businesses
Multinational corporations require robust risk mitigation plans and dependable insurance partnerships, particularly when dealing with property risks. The commercial property insurance market has experienced volatility, driven by natural disasters, economic pressures, and inflation. Businesses with properties in multiple locations need solid risk management strategies.
While some areas of the market show signs of stabilization following rate adjustments, it remains critical for multinational companies to pursue the best risk strategies. This is where a multinational property program becomes invaluable.
“The outlook for the commercial property insurance market is still cautious, even with a sense of stabilization occurring. I believe, for multinationals, an emphasis on risk mitigation and property risk engineering will be essential,” says Michele Sansone, CUO Property and Multinational Solutions, AXA XL.
Such programs facilitate a comprehensive approach to risk management, addressing the varied challenges that persist globally. Let’s examine the strengths of a strong multinational property program and how businesses can best collaborate with their insurance partners.
Rising Property Risks
Even with market stabilization, the underlying risks continue to evolve. Natural disasters, such as hurricanes and wildfires, pose a constant challenge.
Last year, the U.S. alone faced 24 disaster events, each with over $1 billion in losses. Events like wildfires in Chile, floods in Hungary, and Cyclone Chido showcase the global impact of such catastrophes on how multinational business is conducted.
“The primary challenge lies in the cost of transporting goods from one location to another and understanding the potential business interruption,” says Sansone. “If equipment manufactured in Germany gets damaged by a fire in the U.S., we need to understand how long replacement will take and how much it will cost.”
Geopolitical events, like the ongoing conflict in Ukraine, represent additional disruptions. Furthermore, inflation significantly influences the commercial property insurance market.
Key Benefits of a Multinational Property Program
The main objective of a multinational property program is to manage escalating property risks that affect businesses worldwide. Though establishing and managing such a program can seem complex, a global system offers a comprehensive view of all operations, supporting effective mitigation strategies.
“A global program provides a standardized approach to risk management, ensuring consistency across all operations,” Sansone explains.
This consistency enables centralized data collection and analysis, leading to superior risk assessment and decision-making. Moreover, these programs improve cost efficiency by leveraging global purchasing power and reducing redundancy.
Local Insight for Managing Global Risk
Multinational property programs often rely on insurers to ‘front’ their operations by using a local insurer in each country to issue policies, with the multinational retaining the risks.
“This structure allows companies to comply with local regulations while maintaining control over their global risk strategy,” Sansone explains. “This is crucial for tailoring coverage.”
This strategy harnesses local insurance expertise to better understand regional risks and regulatory environments. Local teams can then build relationships with local stakeholders to facilitate claims resolution.
“Having a network with local expertise is crucial in providing valuable information to our clients,” Sansone concludes. “Our goal is to provide consultative advice when we review and offer insurance solutions.”
Collaborating for Effective Risk Management
Once a multinational operation decides to launch a global property program, it is important to consider the composition of its insurance team. A strong insurer will have the experience needed to manage risks across borders, and also the internal network to effectively work with the multinational.
“Effective collaboration between a carrier and an insured involves more than just the underwriter and the client; it also means involving claims and risk engineering teams as well. After all, the client is paying a premium for potential claims, so they need to understand how the policy will be interpreted,” said Sansone.
Risk engineering helps clients become better risks by delivering comprehensive risk assessments that can build risk mitigation strategies and reduce potential costs. The access to claims teams is essential for collaboration as insureds can inquire about past claims and raise concerns.
Under One Roof
At AXA XL, they understand that clients need strong support from their insurance partner to manage property risks. That’s why Sansone and her colleagues provide coverage to match the distinctive needs of its multinational partners.
“Clients are increasingly asking questions and seeking advice on their property insurance and risk management strategies,” Sansone said. “We leverage our local market knowledge and expertise to provide better risk assessments and management tailored to our clients’ specific regional needs.”
AXA XL has launched a Multinational Solutions Portal to simplify program administration and reporting through centralized management for programs. Users can get a clear worldwide picture of their property program including policy issuance, copies of issued policies, and the number of countries covered.
AXA XL’s multinational solutions aim to give businesses confidence as they navigate the complexity of the global markets.
“We examine the exposures in each country to determine the significance of having a local policy,” Sansone said. “It’s crucial to ensure that the policy issued in each country is compliant and has the appropriate limits, coverage, and premium charge.”
