NU Online News Service, Feb. 9, 2:38 p.m. EST

U.S.-based multinational companies will likely benefit from an ongoing soft insurance market, as competition for a range of coverages for these companies is expected to continue through 2011, Marsh said in a recent report.

Additionally, Marsh said the topic high up on the agenda for these multinational companies will continue to be regulatory compliance, as laws, regulations and legal activity around the world continue to evolve following the financial crisis.

Throughout 2010, the multinational insurance segment was competitive, but there was little movement of accounts from incumbents, Marsh said in its 2011 "Approach Your Risk With Clear Direction: Multinational Insurance Market Report." Accounts that did switch carriers in 2010, Marsh said, "typically did so for competitor pricing lower than the incumbent could match, accompanied by concessions on coverage."

Marsh said it expects this trend to continue in 2011, "barring an unforeseen market-shifting event."

In 2010, Marsh said rates for property, casualty and motor insurance for multinational companies ranged from flat to down 10 percent. For workers' compensation/employers liability, rates ranged from flat to down 5 percent.

For property, Marsh said competition and good loss history, combined with no major U.S. hurricanes for the last couple of years, have typically resulted in rate decreases. Barring a significant change in loss experience, capacity or exposure growth, Marsh said it expects the same trend to continue in 2011.

Excess capacity remains for casualty insurance for multinational companies, Marsh said, and the segment is expected to remain competitive in 2011. "At the same time," Marsh noted, "many clients are emerging from the financial crisis and reporting increased exposures."

Marsh said clients with good loss experience saw flat premiums, even if they had increases in exposures. Those with flat exposures saw premium reductions in 2010.

For workers' compensation and employers liability, Marsh said, "Some insurers are differentiating themselves in this niche by broadening coverage and expanding services." Marsh noted, for example, that some insurers are removing war and terrorism exclusions for multinational companies with "little to no effect on premium, and travel support services are being provided at no cost."

Demand for directors and officers insurance has grown as a result of the evolving legal and regulatory landscapes following the financial crisis. Shareholder lawsuits seeking to hold directors and officers responsible for losses suffered in the downturn are on the rise, and new legislation is making it easier to bring these lawsuits, Marsh noted. "This international trend of targeting directors and officers appears to be the result of mandatory corporate governance changes occurring across the globe, where regulators and shareholders seek to obtain increased disclosures regarding the independence of boards of directors," according to the report. Because of this, companies are "quickly realizing the fundamental importance" of D&O coverage.

Additionally, the changing regulatory and legal landscapes have led to companies seeking to gain a greater understanding of regulatory compliance and taxation of multicountry programs. This focus has been elevating risk managers' discussions into the C-suite, Marsh said.

Marsh added that compliance is expected to remain a focal point in 2011. "In recent memory, the global insurance community has not focused so clearly on insurance tax and regulatory compliance as it did in 2010," the report said. "Regulators have set a tone of multinational program refinement and underwriters appear to have followed suit judging by the emphasis they have given to compliance in the endorsements they have introduced to the market."

Special Reports /

Regulatory Concerns Linger, But Multinational Market Remains Competitive

Related Stories

Recommended For You