As multinational companies expand globally, managing property risk becomes a crucial aspect of their operations. Effective risk mitigation strategies and strong insurance partnerships are essential in ensuring the safety and security of their assets across different regions.
The Commercial Property Insurance Market: A Changing Landscape
In recent years, the commercial property insurance market has faced significant challenges, from natural disasters to economic inflation pressures. For multinational corporations with assets in diverse locations, developing robust risk management plans has become more important than ever.
While some stability is being observed following necessary rate hikes, businesses cannot afford to become complacent. The need for continuous improvement in risk strategies is clear. Michele Sansone, Chief Underwriting Officer (CUO) for Property and Multinational Solutions at AXA XL, emphasized, “The outlook for the commercial property insurance market remains cautious. Insurers need to strike a balance between rate pressures and responsible underwriting practices. Multinational businesses must continue focusing on risk mitigation and property risk engineering.”
Mitigating Property Risks: A Global Strategy
One of the most effective ways to address property risks is through a multinational property program. This approach allows businesses and insurers to collaborate on a comprehensive risk management plan tailored to address challenges on a global scale.
As Sansone explains, the value of a multinational property program lies in its ability to standardize risk management practices, providing consistency across operations while also offering a centralized view of data and risk analysis. This can lead to better decision-making, enhanced cost efficiency, and the reduction of redundancies across the company’s global operations.
Ongoing Risks: Natural Disasters and Geopolitical Tensions
Despite some market stabilization, property risks continue to escalate. Natural disasters such as hurricanes, wildfires, and floods are major concerns for the commercial property market. In 2024 alone, the U.S. experienced 24 natural disaster events, each causing losses exceeding $1 billion.
Sansone also noted that other events, like wildfires in Chile and floods in Hungary, have exacerbated the global risk landscape. “The primary challenge now is the cost of transporting goods and the potential for business interruptions, rather than the supply chain itself,” she said.
In addition to natural catastrophes, geopolitical issues, such as Russia’s ongoing invasion of Ukraine, and economic pressures like inflation, have further complicated risk management for multinational corporations.
The Benefits of a Multinational Property Program
A multinational property program helps organizations address the rising costs and risks associated with global operations. Although establishing such a program can be complex, the long-term benefits are significant.
A global program offers businesses a standardized approach to risk management, ensuring uniformity across various operations. This framework allows companies to collect valuable data, improving risk assessment and decision-making. Additionally, multinational programs leverage global purchasing power, reducing costs and eliminating redundancies.
Local Expertise in Managing Global Risks
Multinational property programs often rely on local insurers to issue policies in each country, with the multinational company retaining the risk. This structure helps businesses comply with local regulations while maintaining control over their global risk strategy.
By partnering with local insurers, companies gain insights into regional risks and regulatory environments, which is crucial for tailoring insurance coverage. Sansone emphasizes the importance of local expertise in navigating cultural differences, building relationships with stakeholders, and facilitating effective claims resolution.
Collaboration is Key to Successful Risk Management
To effectively manage global property risks, strong collaboration between multinational companies and insurers is essential. It’s not just about the underwriters but also involves claims and risk engineering teams.
“As clients pay premiums for potential claims, they must understand how policies will be interpreted,” Sansone explained. Risk engineering plays a crucial role in helping companies mitigate risks and reduce potential costs.
Sansone also highlighted that access to claims teams is vital for ongoing collaboration. “Having a dedicated point of contact for claims ensures that clients can quickly resolve issues and address concerns,” she said.
AXA XL’s Global Support for Multinational Property Programs
At AXA XL, the team understands the complexities of managing property risk across borders and works closely with clients to provide tailored coverage that meets the unique needs of multinational operations.
To support these efforts, AXA XL launched the Multinational Solutions Portal, a centralized platform that simplifies the administration and reporting of global property insurance programs. This portal offers clients a clear overview of their insurance programs, policy issuance statuses, and other key details in one place.
“By offering this level of transparency and control, we help our clients manage their multinational programs with confidence,” Sansone said.
Through thorough analysis and localized policy solutions, AXA XL ensures that multinational businesses are fully compliant with regulations and receive the appropriate coverage for their global operations.
In conclusion, as multinational companies navigate the complexities of operating in diverse markets, effective property risk management strategies and strong insurance partnerships are essential for safeguarding assets and ensuring long-term success.
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