Matt Hoare
Hello, I'm Matt Hoare, Head of Multinational for Continental Europe at Sompo. I'm hosting this episode of the Redefining Risk with Sompo series and today I'm joined by Rene Huber, Head of Marine and Specialty for Continental Europe. We'll be discussing the dynamic world of marine insurance and multinational programmes. So join us for this episode and please subscribe via your preferred podcast platform.
I'm joined today by my colleague Rene Huber, head of Marine and Specialty for Continental Europe. Rene, welcome.
René Huber
Thank you, Matt. It's nice to join you. Matt, for those who are not really familiar with multinational programs, could you please explain what the multinational program is, how it, what that is?
Matt Hoare
Sure. Yeah, so clients typically have three options to cover their global exposures. They could issue a single master policy in their home country, but that would feature quite a lot of non, potentially a lot of non-admitted cover and in some jurisdictions that can be an issue and also not really very localised. And then a client can have their local subsidiaries by their own policies. So that does ensure they have local cover in place but can be very inconsistent in terms of what's covered, what's not covered, could be some gaps. and there's no real standardization or control. So we come to the third option, which is what we're here to talk about today, which is controlled master programs. So that's where we are kind of a one-stop shop where one insurer manages and issues coordinated local policies and a master that sits like an umbrella over the top of the local policies. So this gives the balance between local policies localized cover, ability to handle claims locally, but there's the standardization and control of the master policy tying it all into one program. So that's broadly what we mean. Renee, Marine has many different products, coverages. For those of us who are not familiar, can you give us an overview of Marine insurance and how it applies to multinational programs?
René Huber
The main product is marine cargo insurance, that means where we insure the shipments of the goods worldwide, where we also offer multinational programs, plus also sometimes an element of static risks, so warehousing, storage risks. That's definitely the biggest part. Then in addition, we have got freight forwarders and carriers liability insurance, including shippers interest coverages. It's more complex, I must admit. But that being said, we just implemented a program with more than 40 local policies, which is a great thing. Then we also have species. So in species, we ensure more luxury products like products from the watchmaking industry or jewelers block. And in addition, that's also where I have implemented programs is sometimes for ports and terminals risks or also for hull risks, so where we ensure the vessels, where we also need local policies sometimes. So that's more or less, I would say, the key products where we have in marine, where we offer multinational program solutions.
Matt Hoare
So we see a lot of global multinational programs, particularly in cargo. So maybe we focus on cargo for this discussion. And so what drives a client to buy a multinational program in the cargo space particularly?
René Huber
I would like to start with the following. First of all, we have to make a difference between an international client and a multinational client. So I think that's an important difference. So an international client has a lot of international shipments, but quite often does not have a physical presence in other countries. So if you take a commodity trader based in Switzerland, in Geneva, they've got shipments all around the world, but basically just sitting and organizing everything out of Geneva. So that's a typical international client, whereas A multinational client can be an industrial company with physical local presence in multiple countries all over the world, Europe, Asia, the Americas, and so on and so on. So I would say it's really to make the difference. And when we talk about multinational clients, then there are various aspects we have to look at it, definitely. We also make a differentiation between international shipments, quite often the local laws to exempt international shipments from local regulatory, let's say to have a local policy there, whereas for domestic shipments quite often the local law is saying you need to have a local policy in order to be compliant with the law. In addition then you also have to look at Other things like where's the client based? What is the strategic plan? Let's say you've got a client and they want to start in a new country. The question is, will they have a presence there just as a sales or representative office or do they intend to build up really a local presence, maybe including a production site. And in this case, it's important also that from the beginning, we make sure that there's also a local policy in place to be compliant with the law. So there are a lot of things to be considered, and it's really important that We, together with the client and the broker, really analyze the situation, what are the needs and so on, how they want to really, what is the best structure of a multinational program, a combination also of coverages out of the master policy, but also definitely with local policies.
Matt Hoare
Okay, and what are the main challenges for clients with marine programs?
René Huber
I think it's a bit independent of the programs. It's generally, let's say, apart from the traditional risks you see like thefts, accidents of conveyances, it's definitely all the complexity and the volatility of all additional risks coming in. So starting, of course, from new technologies, AI, cyber risks, geopolitical tensions, starting from sanctions to taxes, to war situations, of course, climate change, so net cap exposures, but also new transport routes like the Arctic. So there's a lot of things really influencing the day-to-day world of our clients, which is also really complex. And what we see is it's not just the complexity, it's also the speed. So there has always been a change, but nowadays you see it's everything much, much quicker changing. You have to really arrange yourself. For instance, if you take the situation in the Middle East, so what we have seen, and I think it's important for a risk manager of where the headquarter is, What we have seen that network partners cancelled their war coverages. It was a local market practice. There was even not a reinstatement because they were saying there's no coverage in the market or let's say, yeah, it's a market situation. But that's good when you've got the multinational program. So we still were able to provide cover out of the master policy. So the client was covered. That's an example. So it's really important that Overall, really close with the client, with the broker in contact and really trying to find the best solution for them.
Matt Hoare
Yeah, I think that... that Middle East example where the partners cancelled cover is a really great example of, as you said, the backstop of the master with the difference in conditions, difference in limit comes into play.
René Huber
Definitely. I mean, I think our multinational clients, they are aware of the local specifics, basically. And that's definitely something, but you have to take into consideration. It's about compliance, legal tax, but also when it comes to market specific market, let's say, actions. As a risk manager, then you know that's my coverage, what I have agreed with the master insurer. So that gives you really confident, how to say, confidence that really basically you're covered what you have agreed.
Matt Hoare
Yeah, absolutely.
René Huber
How do you approach a client or how do you make sure that our clients do have tailor-made insurance solutions from your perspective with your experience?
Matt Hoare
So I think first of all, as you said earlier, we need to understand the client's exposures and what the client is trying to achieve. You know, sales office, two-person sales office versus production site. And and what to cover under a local policy versus under the master and what are the local rules and regulations in terms of insurance, tax and how does that influence what we cover under the master versus local policy. So for instance, some countries do not allow non-admitted cover You can potentially cover under financial interest clause under the master, but that has some limitations, and in the event in the existence of significant exposure, we may suggest a local policy is. is the right solution. So that's the thought process that we have to go through. And then, the client may have some specific requirements around coverage within local policies, could have some contractual requirements requiring particular clauses or the need to evidence cover via a certificate. So understanding where they have that sort of critical need. And then What are their requirements in terms of claims handling, reporting? Do they have any TPAs that they want to work with so we can tailor that accordingly? And then you need a strong network. You've got to make sure you have the capabilities in all of the countries to deliver what the client is asking for.
René Huber
Good. Do you see any changes in the attitude of the client, let's say, or the expectations in the recent years, more or less.
Matt Hoare
Yeah, sure. I think we've seen over the last 10, 15 years, more business going into captives, more lines of business going into captives, and often they have a multinational programme. But I think there's growing expectation around service efficiency access to accurate real-time data reporting. There's a loss in Holland today. I don't want to hear about it in a month's time. I want to hear about it today. So I think that the expectations around servicing and technology are much higher. I think there's expectations around Having a sort of single point of contact, somebody who's responsible for your program, dealing with somebody who understands your program and you're not just kind of a face in the crowd, also really important. And it's a soft market, right? So which favours the buyer and we see that influencing what clients are asking for and their expectations in terms of service excellence. So Rene, in your decades of experience in marine and multinational, what in your view makes or breaks marine multinational programme?
René Huber
Well, definitely it's important to have a strong local market knowledge. So what is happening, especially in the key markets, I would say the top 50 countries that you are more or less up to speed about, what is requested, what is market standards, what is the compliance situation, and so on and so on. Important is definitely a very close cooperation with the clients and the brokers. And I'm always saying, find the client is in the driver's seat. It's really up to the broker and to us as insurers really to advise, to tell them that's the best solution, but finds really the client deciding. So it's really a cooperation together. Apart from that, I would also say marine risk engineering is a very important topic both for the client and for us to have a centralized approach to avoid, to manage risks really proactive and not afterwards after a claim sometimes as well. Claims handling is another topic that's very important that we are able to manage and handle especially traditional claims in a very efficient and whenever possible, more or less automatic manner. Whereas for large losses, as you mentioned beforehand, it's important that it's about communication, that we make the client, the broker, aware of immediately, that we really take actions. And those when it comes to, especially marine, for recovery actions, recovery management actions, that's the most important part. So I would say, so all this about being together with the client and the broker, find the right solution. And for us, the nature means that we stay agile, that really up to speed when it comes also to technology. So that's also important. Maybe I've forgotten strong network, definitely we need. So having strong Sompa offices in the key markets, but also working with, let's say, really good local network partners, normally number one, two, three in the market, they've got the knowledge. And definitely a strong technology platform which enables all the three partners, brokers, clients and us to really manage and control a program. So that's definitely important for us and it's a fascinating area. I like it. It's really where the vibe is. What do you see as an outlook for multinational programs if you look ahead?
Matt Hoare
Certainly continued relevance, I would say. we see tech companies are increasingly vulnerable to global cyber risks, energy clients are facing challenges of climate change, and as we've seen recently in the Middle East, geopolitical events causing supply chains to get disrupted, which ripples out globally. And the example we spoke about earlier in the Middle East with the cancellation of war cover by the partners, that's a good example of why these programmes are important and having the master and local structure. So I think they will continue to be relevant and I think we shouldn't underestimate the power of doing the basics well, issuing the correct correctly structured local cover, handling claims, managing premium, providing real-time data is what our clients really want and this will continue to be the case.
René Huber
Thank you, Matt.
Matt Hoare
Thank you.
René Huber
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