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Global Programmes: Raising the Bar

Topic Multinationals


Carol Barton, of AIG, describes the steps the firm is taking to enhance their global programmes service offering.

As our new chief executive Brian Duperreault commits to a new era of growth, AIG is responding to the increasingly sophisticated needs of its multinational client base. Carol Barton, president of AIG Multinational, explains why AIG has been making significant investments in people, process and technology in order to set a new industry standard for delivery of global programmes to help clients meet their risk, governance and contract certainty objectives.

Many risk and insurance managers of large corporates will be familiar with the challenges around structuring optimal compliant multinational programmes and then fulfilling regulatory requirements to enable issuance of local policies. Policies can be days, weeks or even months late as multiple stakeholders chase after missing documentation. This leads to unnecessary frustration and unintended and redundant costs at a time when efficiency is of utmost importance in today’s globally competitive landscape. Additionally, financial and regulatory risks associated with not having a contract in place at coverage inception can have a devastating impact. What if there is a loss in the days following the effective date and the wording has not materialised? What if the claim occurs in a country where there is no coverage if the local policy has not been accepted and signed? Will the insurer be able to adjust the claim locally? Can the claim settlement be made locally? What penalties or fines may be incurred? 

These are just some of the concerns arising from the traditional way of working and have the potential to lead to some uncomfortable questions from the C-Suite at the time of a major event.

Scaling up to meet the challenge

In an increasingly global and interconnected world, the past decade has seen a steady shift towards multinational insurance programmes. And this is expected to continue, particularly with new growth in emerging markets. Forty per cent of Fortune’s Global 500 multinational companies are now headquartered in Asia Pacific, from only 24% in 2006. From an industry sector perspective, financial services institutions are leading the charge, according to research by Willis Towers Watson.

For large global corporate insurance buyers, the benefits are clear. They maximise global insurance capacity and minimise cost, while maintaining centralised control over risk management and risk transfer practices. And in an age of data and automation, they allow organisations to consolidate and analyse loss information, enabling them to strengthen resilience by identifying areas of weakness or potential vulnerability before they become an actual problem.

Larger clients with captives can take a more centralised approach to local risks and benefit from geographical diversification. Of course, captives also enable access to reinsurance markets that would not be available at a small, local level.

And, it’s not just large clients that benefit; more and more middle market companies expanding outside their borders are realising the value of a global approach and are looking to their brokers and insurers to assist.

As a result, our multinational business has been experiencing exponential growth in new clients and programmes year-on-year. The AIG Global Network comprised of strong local country operations and strategic network partners is committed to delivering world class expertise, solutions and service to clients in over 215 jurisdictions around the world. 

Re-engineering the process

In a significant effort to reshape how multinational business is conducted, AIG has spent the last two years re-engineering the process in collaboration with our broker partners and clients. And it is no mean feat to deliver all policies within a multinational programme by inception -- whether you have exposures in 10 countries, or 100. However, this has now been achieved on multiple occasions through close collaboration with all parties, including our broker partners and multinational clients.

Last year, we rolled out a globally consistent end to end process across the full breadth of AIG general insurance products delivered around the world. This new approach shifts all of the key activities from after the effective date to well in advance of inception. Several months later, for the first time in our company history, we were able to deliver all local policies for a major multinational client before the effective date, ensuring full contract certainty. Now this is not something that can be achieved in isolation; it is very much a collaborative process that relies on following pre-established timelines with effective stakeholder communication so roles and responsibilities are clear. Additionally, significant investments have been made in technology to deliver tools to both simplify and efficiently manage the process and advanced timeline.  

It is extremely encouraging to see both clients and broker partners getting excited about these capabilities and working together; our goal of full contract certainty at inception has now become a reality for multiple clients having programmes across all of our products.

Feedback has been extremely positive from those who have embarked on this journey. So much so that we are beginning to see contract certainty become an integral part of the renewal conversations with our multinational clients. For example, one company is currently restructuring its financial lines programmes with the intention of placing part of it out of the London market.  Part of the discussion as they went through this exercise was around who could deliver pre-inception policy issuance.

Another important part of the process involves scenario planning and testing, sitting around a table with all parties – including claims handlers – to consider how the programme would actually respond in the event of a major loss anywhere in the world. Such exercises challenge risk and insurance managers to think about what limits they really need, whether they require local policies or can replicate the master coverage everywhere. There is no one-size-fits-all, which is why it is essential to understand the client’s risk appetite, philosophy and multinational exposures.

Blockchain, automation and the missing link

Investment in technology and analytics has been the secret sauce in achieving contract certainty for multinational programmes.

Our award-winning MN Xpress tool enables the end to end process by standardising and automating the workflow process for our clients’ programmes, however global, however complex in nature. It provides territorial information and key documentation requirements upfront, rather than post-purchase. Customer requirements are communicated at the quotation stage well in advance of binding.

The myAIG Multinational Client Portal offers clients instant insight into their controlled master programme and specific policy details, such as key dates and premium amounts. We have taken our portal a step further than most, ensuring it captures information at a highly granular level, allowing clients to download policy documents and invoices and to tap into robust business intelligence.

Without these technology platforms to enable our process we would fail to be competitive in a rapidly-growing market. And as is always the case it is important to keep one eye on the future. Take our Blockchain pilot with IBM that successfully completed a multinational programme on behalf of Standard Chartered. The pioneering program uses blockchain to manage complex coverage across the UK, US, Singapore and Kenya for the bank, and is certainly indicative of further efficiencies that are likely to be brought to the process in the future.

Carol Barton is president of AIG Multinational. She is responsible for the worldwide leadership and strategic direction of AIG’s multinational business as well as a number of assigned countries around the world.

This article originally appeared in Captive Review.

Download a PDF of this article or read the full Captive Review Global Programmes Report