For multinational companies concerned about risk, a global insurance platform is far more effective than purchasing individual insurance policies in individual countries, according to executives from Aon.

They gave that counsel during a Web seminar titled "Supply Chain Liability Risks in Emerging Markets."

The program was presented by Alejandro Marmorek, regional director for Aon Risk Services, and Larry Nelligan, director of the International Casualty Brokerage Group of Aon Risk Services. The seminar was moderated by Paul Graziano, executive vice president with Aon's national industry and product group.

With the expansion of outsourcing by multinational corporations, it is becoming increasingly important for such companies to ensure they have adequate coverage in place as part of an overall risk portfolio, Mr. Marmorek and Mr. Nelligan pointed out.

"This can reduce the cost of risk and offers predictability," said Mr. Nelligan.

Among some of the leading risk concerns multinationals have are damage to reputation, business interruption, third-party liability, and distribution and supply chain failures, noted Mr. Marmorek. A single platform program can ensure coverage for these and other events--something that individual policies cannot be certain to do, he said.

In emerging markets, the executives observed, indigenous insurance carriers are still developing programs and do not have the experience that insurance programs issued by developed nations have.

They observed that such programs may also lack the certainty of services that are provided under a global liability insurance program with top-rated carriers.

Questions persist, they said, over breadth of coverage and adequacy of terms and conditions with programs procured locally. A multinational corporation can also be certain the program is adequate to expectations and there is no question whether the policy applies outside of the insured's country.

Mr. Marmorek said another advantage to a global insurance program is that it has a worldwide application that is not limited to the nation it is issued in. From a cost standpoint, he said, coverage is extended to the supplier and the insurance costs can be shifted, either absorbed by the multinational or charged back to the supplier.

In response to a question about whether portions of the program should be put into a captive or not, the executives suggested that no portion of the risk should be placed into a captive for a couple of years until the risk bearing capacity is fully understood.

The global program, they noted, can be attached to the corporation's umbrella policy and serve as an excess under the program.

A rebroadcast of the Web seminar is available at www.aon.com/webseminars.

Special Reports /

Multinationals Need A Global Insurance Platform: Aon

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