Over half of European companies (52%) believe that doing international business has become more risky over the last five years, and 95% say their own company has become more concerned about multinational and export risk over the same period, according to new research published by ACE Group today.According to ACE’s research, the four key factors that have caused European companies to reassess their approach to multinational and export risk recently are disruption from catastrophes (42%), financial crises (38%), greater dependency on overseas earnings (37%), and international terrorist events (33%).
The research reveals that half of European companies feel either underprepared or completely unprepared to deal with multinational and export risk. When asked which particular areas they believe their multinational operations are most exposed to today, respondents highlight directors and officers (D&O) risk (46%), environmental risk (39%), reputational risk (38%) and liability risk (35%) as the top exposures.
Despite these concerns, only half of European businesses currently have a multinational insurance programme in place to cover their global risks. Overall, just 13% of companies believe they have an insurance programme that is well constructed for their multinational needs, with 50% of companies believing there are significant gaps in coverage and 41% saying there are significant gaps in compliance. When asked which areas of compliance concern them most, respondents identify local policy compliance (48%), claims settlements (40%) and consistency of coverage* (36%) as the top three issues.
Clive Hassett, Director of Multinational Services, ACE European Group, said:
“Since the onset of the global financial crisis, many businesses have increased their focus on growing overseas revenues at the same time as we have seen a sea-change in the global regulatory and compliance environment. So perhaps it isn’t surprising that nearly half European companies feel underprepared to deal with multinational risks.
More worryingly, 87% of European companies believe there are significant gaps in their current multinational insurance arrangements. With tax, regulatory and legal requirements varying widely from country to country, working with the right insurance partners to develop and implement a comprehensive, transparent and compliant multinational insurance programme has never been more important for globally-minded businesses.”
*Difference in Coverage (DIC)/ difference in limit (DIL) coverage.