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Risk Scenario

Missed Signals

Conflict in a foreign supplier's country exposes holes in one company's risk management strategy.
By: | June 2, 2014 • 7 min read
Risk Scenarios are created by Risk & Insurance editors along with leading industry partners. The hypothetical, yet realistic stories, showcase emerging risks that can result in significant losses if not properly addressed.

Disclaimer: The events depicted in this scenario are fictitious. Any similarity to any corporation or person, living or dead, is merely coincidental.

An Act of Violence

Alex Block settled down on a sunny afternoon in May of 2015 at the counter of Presto, a regionally famous sandwich shop in Pittsburgh, and hungrily eyed the pastrami sandwich on his plate.

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Thick slices of white Italian bread stuffed with French fries, coleslaw and sweet-spicy, aromatic meat shaved super-thin. This was not the time to second-guess on the calories. This moment called for just diving right in.

Block’s self-indulgence felt justified. Three years ago, he’d returned to this former mill town, his bank accounts bulging with cash from a 14-year career as a Wall Street investment banker.

What he did with about $4 million of that cash got tongues wagging. It even got him a headline on the front page of the local business paper.

Block invested in his grandfather’s former aluminum fabrication company in nearby Lawrenceville with the idea of bringing it back as an aluminum decking company, dubbed Sarachelle Decking, Inc. The first word of the company name was a combination of the names of Alex’s two daughters, Sara and Rochelle.

Some online commentators greeted the news with ridicule. Block’s business looked to some like a bone-headed move spurred by nostalgia.

“This ain’t the Steel City no more, buddy,” grumbled an out-of-work ironworker, commenting on the online news story about the launch of this small to mid-sized company. Many in the Pittsburgh manufacturing community thought that Block would never make it in manufacturing.

Scenario Partner

Scenario Partner

But Block was no bonehead. He put his Wharton MBA and his curiosity to good use, researching South American bauxite production to identify lesser known suppliers who would give him a price advantage over larger companies.

It was in Guyana that he found the bauxite producer that made the whole thing click for his company. He added to that advantage by lining up a local smelter that he found through his business school contacts.

Now, three years later, the glimmer of real gold was appearing. Just this spring, Force-Tek, one of the publicly traded railroad and highway infrastructure companies, picked up his product in a seven-figure contract. Who was laughing now?

What better way to toast his success than with a stuffed sandwich at Presto’s? That form of celebration was a personal tradition that dated back to his high school days when Alex’s father would proudly treat him when he won wrestling matches.

Block made short work of the French fry-stuffed pastrami sandwich. As he finished off his diet cream soda, his eyes settled on the television set above the lunch counter. A news report showed footage of Venezuelan troops pouring over the Guyanese border. A long-simmering border dispute was erupting into armed conflict.

The operation providing Block’s bauxite was located a mere 200 miles to the east of the Venezuelan border incursion. The image of the Venezuelan troops stopped Block cold.

In an instant Block’s mind ran through the possibilities.

The degree to which the bauxite plant itself was threatened was one area of concern. But Block’s Guyanese producer was also heavily dependent on labor from the neighboring country of Suriname.

Even if the bauxite plant wasn’t captured or otherwise affected, it could suffer business interruption if its labor supply was blocked.

“How long the dispute will last and to what degree it will embroil neighboring Suriname are unknowns,” said the British-accented broadcaster.

“But one thing is certain,” he continued. “Business and personal travel in this area of the world will be inadvisable for weeks, possibly months to come.”

“No kidding,” Block said out loud to himself, eliciting a sharp, critical glance from a co-ed sitting on the next stool, apparently peeved that Block had interrupted her concentration as she thumbed through her iPhone.

In one afternoon, Alex Block’s bright business prospects darkened considerably. The pastrami sandwich that he’d rationalized as an earned indulgence now sat heavy in his stomach.

Poll Question

Has your company conducted a supply chain risk assessment for all known factors, including but not limited to weather-related catastrophes or business interruptions?

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Outflanked

The Venezuelan incursion accomplished just what Block feared it would do.

Scenario_MissedSignals

Officials in Suriname tightened down their borders, blocking the movement of workers into Guyana for three months.

A months-long military border dispute between Venezuela and Guyana claimed dozens of lives per week. The fighting never escalated to a country-wide engagement, but the damage to the sustainability of Sarachelle Decking was done. Block’s Guyanese bauxite producer was forced to cease production until the situation stabilized.

Block moved quickly to identify another bauxite producer but he was outflanked.

He was forced to compete with larger aluminum makers and fabricators for bauxite from their existing suppliers. The higher price from those bauxite producers erased a key business advantage.

In a meeting with his CFO, Block faced the music.

“We’ve got margin erosion here that worries me greatly,” said the CFO, Kristian Moorehead.

The company was meeting its production obligations to Force-Tek and other key customers, but it was looking at an operating loss within one more quarter if it couldn’t cut costs.

Even with a full order book, Block did what he felt he had to do and laid off a shift. Maybe the layoff was too much too soon, an over-reaction, but Block was Wall Street trained. You didn’t wait, you acted.

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The news sent ripples through the Pittsburgh manufacturing community and was gleefully picked up on by Block’s competitors.

“They’re not going to be around long,” was what a salesmen for one of the company’s competitors told a customer in the Midwest, where Sarachelle Decking did most of its business.

“Why do you say that?” said the customer.

“For one, they source from Guyana, which is under attack from Venezuela if you haven’t noticed,” the salesman said.

“Secondly, they’ve only been in business four years and they just laid off an entire shift last month,” the salesman said.

“I think you better ask yourself what it’s going to do to your business if you buy from them and they go under,” he added.

“I guess I’ll have to take that under advisement,” the customer said.

***

Alex Block was not an insurance naïf. His due diligence work as an investment banker gave him more than a passing acquaintance with products such as property insurance, D&O insurance, workers’ compensation, environmental insurance and other coverages.

As he scrambled to save his company and the prolonged Guyana-Venezuela strife played out, Block and his CFO examined their coverages to see if they could find relief.

They did not find relief. What they found were gaps, not only in their coverage but in their risk management strategy.

Poll Question

Does your company have a contingency plan for circumstances in which a key supplier or customer suffers significant business interruption?

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Back to the Drawing Board

As an event beyond his control, Alex Block couldn’t help but think that the conflict in South America that deprived him of a key supplier should have been compensable from an insurance standpoint.

Scenario_MissedSignals

After all, wasn’t it comparable to a storm or flood knocking out his factory for a few weeks or even longer? The answer was that it was, and it wasn’t.

Supply-chain insurance that would have provided a payout on the clear supply-chain disruption that Sarachelle Decking suffered wasn’t in place.

On the risk mitigation end, Block was so enamored of the business advantage his Guyanese bauxite supplier gave him that he didn’t look at the flip side. He failed to imagine what losing it would do to him and failed to arrange for back-up low-cost suppliers.

Over drinks with a pal from his Wharton days, Block got the lowdown on what he should have known and done going in.

“I mean the supply chain cover is something you arguably might not have been able to get to begin with,” his friend said between sips of his vodka martini.

“It’s not like there’s that much coverage out there and with your limits the carriers that handle that might have passed on you,” he said.

“But the supply chain analysis, you should have done and could have done,” he said. “It would have pointed out that your strength and your weakness were both coming from the same supplier,” he said.

“And a contingency plan?” his friend said.

“If I’d known …” Alex began.

“If you’d known. But good to have in any event,” his friend said.

With no end to the South American conflict in sight, Sarachelle Decking was locked into a bauxite price that gradually undermined its ability to compete.

The company was able to function for a full two years beyond the day that Block first axed one of the production shifts.

But in 2017, the day came when Alex Block’s dream of resurrecting his grandfather’s company came to an end. The same reporter that wrote a front page business journal story on him in 2012 visited him to write the epitaph on Sarachelle Decking.

In the five years he’d been in Pittsburgh, Alex Block had gotten used to the feel of a smaller town. His New York days seemed like a distant memory. This was his hometown after all.

But something told him he’d be back in that rat race before long.

Poll Question

When is the last time you examined the market for supply chain insurance and determined whether it might be a fit for your company?

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Poll Question

What level of professional leads risk management for your company?

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Bar-Lessons-Learned---Partner's-Content-V1b

Risk & Insurance partnered with the Society of Actuaries (SOA) to produce this scenario. Below are perspectives from an actuary on ways to prevent losses presented in the scenario. This perspective is not an editorial opinion of Risk & Insurance.

1. Analyze and prioritize risks: All business prospects need to be analyzed for potential pitfalls, as the business owner in the scenario did not prepare for unexpected events, such as labor shortages from regional instability or the unavailability of a critical supply point that impacted his entire supply chain.

The 2014 Emerging Risks Survey from the Joint Risk Management Section, of which the SOA is a sponsor, identifies emerging risks ranging from environmental to geopolitical. Key geopolitical risks can include:

  • Interstate and civil wars
  • Failed and failing states
  • Regional instability
  • International terrorism
  • Retrenchment from globalization

The businessperson in the scenario should have considered various geopolitical risks, among other risks that impact the company. Another set of emerging risks to consider include societal:

  • Pandemics and infectious disease
  • Regime liability and regulatory framework issues
  • Demographic shifts

2. Create relevant and actionable contingency plans: While it is important to research and identify potential shortfalls or risks presented from working with suppliers, vendors or other partners, it is also necessary to take action with this information. The loss of a key supplier, such as in this scenario, must be met with immediate action or dire consequences can occur. Planning ahead is necessary, so backup suppliers and sources of materials should be in place for the company. It is also vital to understand what risks may affect the suppliers’ business, which can ultimately impact the company too. For example, there are currency risks when dealing with suppliers based in another country, such as fluctuations in the economy, changes with the interest rates or issues with foreign exchanges.

3. Understand coverages: The risk exposures, a company’s appetite for risk and several other factors should weigh in to the decision of insurance coverage. Even if a company doesn’t have a chief risk officer, who that responsibility lies with needs to be identified and their knowledge of coverages and coverage limitations needs to be comprehensive.

4. Harness your consultants’ knowledge: The businessperson in this scenario depended too much on his own knowledge and did not seek counsel from insurance consultants or an insurance carrier, which was a vast oversight on his part. It is important to have a clear understanding of coverages and risk mitigation processes through tapping into the valuable insights of available resources and experts.

Partner Resources

For more information about SOA, please visit www.soa.org/impact


Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at dreynolds@lrp.com.
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Risk Scenario

It Happened Here

An ill-advised merger sparks shareholder lawsuits and major losses.
By: | April 22, 2014 • 8 min read
Risk Scenarios are created by Risk & Insurance editors along with leading industry partners. The hypothetical, yet realistic stories, showcase emerging risks that can result in significant losses if not properly addressed.

Disclaimer: The events depicted in this scenario are fictitious. Any similarity to any corporation or person, living or dead, is merely coincidental.

A Promising Prospect

Hal Landis walked into the boardroom at Stratton Bank headquarters in Chesapeake, Va. with a glow building inside of him.

Scenario_ItHappenedHere

The chairman and CEO of the bank, he carried in his briefcase paperwork that detailed the possible acquisition of Stratton by Manhattan-based Global Corp.

Global Corp., with about $100 billion in assets, liked the look of the mid-sized Stratton, which held about $30 billion in assets.

With its roots as a lender to the conservative farmers and fishermen of the Middle Atlantic, Stratton had a reputation for producing modest, steady returns and never taking unnecessary risks.

“Shall we get started everyone?” Landis said with a confident grin.

At 63, Landis was in good shape physically and financially, and with what Global was offering on a per-share basis, he couldn’t help but fantasize about the sort of retirement he might now be able to afford if this deal went through.

Scenario_Aon

Scenario Partner

Two hours later, the rest of the board of directors was won over. They voted to accept Global’s offer, conditional on the approval of that corporation’s board of directors.

The Global board meeting to discuss the Stratton acquisition did not go quite as smoothly.

The audit committee had barely completed its report on Stratton’s financials when Augie Desmond, a junior staffer in the bank’s risk management department, spoke up.

“Mr. Bedford,” Desmond began, addressing the bank’s chairman, the formidable Alan Bedford.

Eyebrows were raised. It wasn’t common for junior employees to punctuate Global meetings with unsolicited remarks or questions.

“Nice working with you kid,” the CFO said to himself.

“Yes, Mr. …” Bedford began.

“Desmond, sir, Augie Desmond, from risk management,” Desmond said.

“Yes, Mr. Desmond?” Bedford said, throwing a questioning look at Desmond’s boss, CRO John Fairmount.

“I have serious concerns about this acquisition, sir,” Desmond said.

“There was a piece in the Journal today on a steam-generating solar plant in Nevada,” Desmond said.

Fairmount shot Desmond a look.

“Sorry John,” Desmond said. “I didn’t have time to tell you.”

Desmond continued.

“According to a report from Stanford, the heat from the plant is killing wildlife — lots of it — including the state bird,” Desmond said.

“Wha….?” Bedford began.

“The solar company, Daedalus, is based in Virginia,” Desmond said. “Stratton is the primary advisor on the company’s upcoming IPO. Daedalus is applying for a second permit, an even bigger plant with about $30 million in investment. If the politicians get hold of this thing, and they will …”

“What thing?” Bedford said.

“The bluebird thing sir, that’s the state bird. If this second plant application goes south, that solar company is at serious risk and so is Stratton — I don’t like it sir … I don’t like it one bit.”

“Mr. Desmond what is your background?” Bedford asked.

“I have a Master’s Degree in astrophysics from MIT,” Desmond said.

“And how long have you been in the banking industry?” Bradford said.

“Three months sir,” Desmond said.

“I’ll take that under advisement,” Bedford said.

Without much further debate, they followed the recommendation of the audit committee and approved the Stratton acquisition.

Poll Question

How frequently does your organization assess operational risk exposures?

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Nevada Down

The meeting of the Stratton Bank stockholders to vote on the approval of the Global Corp. offer was held in the conference rooms at the Chesapeake Madison Hotel. Before the vote, the floor was opened up for discussion.

Scenario_ItHappenedHere

As he was at every meeting, Smitty Ackles, a shareholder and crabber from Havre de Grace, was first to the mike.

With his enormous gut protruding from between the bands of his cherry red suspenders, Ackles stood at the mike, smiling with wizened eyes at Hal Landis.

“Good afternoon, Mr. Landis,” Smitty said.

“Good afternoon, Mr. Ackles,” Landis said in what the audience recognizes as their standard opening schtick.

There are chuckles throughout the room.

“What I’d like to know, Mr. Landis, is why in the world the shareholders should accept this deal? We have been doin’ alright for 35 years, nobody’s complainin’ about their returns. Why do it?”

“Well, a 20 percent premium on our shares is one reason,” Landis said.

“Not worth it,” countered Ackles. “These boys from New York will bring more trouble than they’re worth, I guarantee you.”

“I’ve known you since you were a boy, Hal Landis, and I’m here to tell you, you’re making a mistake,” Smitty said before ambling away from the mike.

There are more chuckles, but nobody really listens to Smitty. Stratton shareholders approve the deal 2,010 to 15.

Not even a week later, the Nevada Department of Environmental Protection issues a surprise ruling that condemns the second Daedalus plant.

A study from the University of Nevada confirms what the Stanford researchers found. The plant is linked to the deaths of 1,000 Mountain Bluebirds, the state bird. Deaths of other birds number in multiples of that.

Geddy Hayes, an influential Nevada State Senator from Sparks, picked up the football and ran with it. Hayes, a gifted speaker, worked his magic from the Senate floor and killed any remaining chance the second Daedalus plant had.

The application for the plant, which the solar company spent millions on, went under.

Hayes wasn’t done with Daedalus. He pressured state regulators into burdening the existing plant with new regulations — to the point that it began to lose money.

On a Monday afternoon, Hal Landis sat in his office with CFO Dylan Reed, watching a cable news financial report.

The Daedalus IPO launched the previous week and did fairly well, with the share price rising 17 percent by week’s end. The following week was a different story.

Losses suffered by the Daedalus plant are being reported, along with the losses from the failed application for the second plant.

One week after the IPO launch, Daedalus shares are down 30 percent and are in freefall.

“How bad do you think this is for us?” Landis asked Reed.

“I don’t know, I’ve never been in this position before,” Reed said.

“None of us have,” Landis said.

Within two days, Stratton is set upon in a class action by attorneys for disgruntled Daedalus shareholders, who report millions in investment losses.

Poll Question

Who within your company has input on the topic of risk management?

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Damages

The acquisition of Stratton by Global is set to close in the third quarter. In its second quarter financials, Stratton reports a multimillion dollar write down in connection with the Daedalus fiasco.

Scenario_ItHappenedHere

Weakened by the reputational hit of the Daedalus shareholder class actions, Stratton also begins to notice some alarming revenue declines.

This time, at the Global board meeting where the decision to follow through on the Stratton acquisition will be made, it’s Augie Desmond’s boss, John Fairmount, who speaks first for the risk management department.

“Mr. Bradford, it’s our opinion that we should absorb any frictional costs and abandon this acquisition,” Fairmount said.

“Based on what data?” asked Global’s CFO, Daniel Silberstein, who championed the acquisition from day one.

Fairmount turned to Desmond.

“We’ve run an algorithm that ties share price to reputational damage. Call it a reputational risk index, if you will,” Desmond said.

“Based on what we’re seeing with Stratton, we see share price deterioration tied to reputational problems plaguing the bank for at least the next six quarters,” Desmond said.

Bradford shot Fairmount a look that said, “Again with this kid?”

Bradford and Silberstein aren’t swayed. They like Stratton’s basic book of business a lot. The bank hasn’t had a quarter in 20 years when it didn’t return a dividend.

Global’s board votes 13 to 4 to go ahead with the acquisition.

In the first six months following the acquisition year, Stratton shows a revenue decline of 20 percent over the previous year.

The solar deal in Nevada that went sour is poisoning the bank’s brand with its largely conservative retail banking customers.

A sizable chunk of Global shareholders are fed up. Rather than start an internecine war with their own management, they take action against Stratton.

The allegations are that Stratton failed to disclose the risk of the Daedalus exposure to the Global board and bungled the crisis management of the failed IPO.

———-

Two years ago, if you’d asked Hal Landis who his insurance broker was, he couldn’t have told you. Now he knows him very well.

“You have $10 million in general liability coverage,” the broker explained to Landis over the phone.

“Right,” Landis said.

“Between the Daedalus IPO shareholder actions and the Global shareholder actions, you’re looking at $15 million in potential liability,” the broker said.

“Do you see any indications that your own shareholders could take action against the board?” he asked.

“Not to date,” Landis said.

“You have that much in your favor,” he said. “For the time being.”

“Well, we can self-insure the $5 million on top of the policy if we have to,” Landis said.

“Sure,” the broker said. “But I can’t think of an admitted carrier who will even talk to us next year.”

“What’s an admitted carrier?” Landis said.

“It’s a carrier who’s not going to charge you your right arm in premium,” said the broker.

No longer fantasizing about a rosy retirement, Landis wonders how long he’ll have a job.

Poll Question

How is your company managing increasing operational exposures from regulatory oversight?

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Bar-Lessons-Learned---Partner's-Content-V1b

Risk & Insurance partnered with Aon to produce this scenario. Below are Aon’s recommendations on how to prevent the losses presented in the scenario. These lessons learned are not the editorial opinion of Risk & Insurance.

1. Risk management requires an open mind: Ignoring stakeholders that voice legitimate concerns carries a double-edged risk. The first risk is the magnitude of the exposure brought up by a colleague or shareholder that’s being overlooked. The second is the fact that an issue was raised publicly, thereby documenting a concern that went unheeded by management.

2. Risk by association: Operational risk is such a pressing risk for financial institutions in part because of the number and variety of business partners and clients they take on as part of their basic operation. An inadequate knowledge of the technology, practices and risk exposures of any given business partner can result in reputational and other damages should that business partner fail or incur a sizable liability.

3. Transparency: Companies that fail to properly assess their risk and report it to business partners face increasingly painful regulatory sanctions. A blunt assessment of an organization’s exposures is the first step in that process. Being forthright in communicating risk factors is the second.

4. Analyze cover: Regulatory pressures and a rapidly changing business environment necessitate that financial institutions assess their insurance coverage more frequently than ever before.

5. Risk management is a process, not a program: There is nothing static about risk management. New processes, products and distribution channels in the financial services industry mean that the nature of operational risk is changing constantly. Risk management needs to keep pace with that change or risk losing relevance and value.

Partner Resources

Operational Risk Solutions

Regulation and the Financial Industry


Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at dreynolds@lrp.com.
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Sponsored Content by AIG

Global Program Premium Allocation: Why It Matters More Than You Think

Addressing the key challenges of global premium allocation is critical for all parties.
By: | June 2, 2014 • 5 min read

SponsoredContent_AIG
Ten years after starting her medium-sized Greek yogurt manufacturing and distribution business in Chicago, Nancy is looking to open new facilities in Frankfurt, Germany and Seoul, South Korea. She has determined the company needs to have separate insurance policies for each location. Enter “premium allocation,” the process through which insurance premiums, fees and other charges are properly allocated among participants and geographies.

Experts say that the ideal premium allocation strategy is about balance. On one hand, it needs to appropriately reflect the risk being insured. On the other, it must satisfy the client’s objectives, as well as those of regulators, local subsidiaries, insurers and brokers., Ensuring that premium allocation is done appropriately and on a timely basis can make a multinational program run much smoother for everyone.

At first blush, premium allocation for a global insurance program is hardly buzzworthy. But as with our expanding hypothetical company, accurate, equitable premium allocation is a critical starting point. All parties have a vested interest in seeing that the allocation is done correctly and efficiently.

SponsoredContent_AIG“This rather prosaic topic affects everyone … brokers, clients and carriers. Many risk managers with global experience understand how critical it is to get the premium allocation right. But for those new to foreign markets, they may not understand the intricacies of why it matters.”

– Marty Scherzer, President of Global Risk Solutions, AIG

Basic goals of key players include:

  • Buyer – corporate office: Wants to ensure that the organization is adequately covered while engineering an optimal financial structure. The optimized structure is dependent on balancing local regulatory, tax and market conditions while providing for the appropriate premium to cover the risk.
  • Buyer – local offices: Needs to have justification that the internal allocations of the premium expense fairly represent the local office’s risk exposure.
  • Broker: The resources that are assigned to manage the program in a local country need to be appropriately compensated. Their compensation is often determined by the premium allocated to their country. A premium allocation that does not effectively correlate to the needs of the local office has the potential to under- or over-compensate these resources.
  • Insurer: Needs to satisfy regulators that oversee the insurer’s local insurance operations that the premiums are fair, reasonable and commensurate with the risks being covered.

According to Marty Scherzer, President of Global Risk Solutions at AIG, as globalization continues to drive U.S. companies of varying sizes to expand their markets beyond domestic borders, premium allocation “needs to be done appropriately and timely; delay or get it wrong and it could prove costly.”

“This rather prosaic topic affects everyone … brokers, clients and carriers,” Scherzer says. “Many risk managers with global experience understand how critical it is to get the premium allocation right. But for those new to foreign markets, they may not understand the intricacies of why it matters.”

SponsoredContent_AIGThere are four critical challenges that need to be balanced if an allocation is to satisfy all parties, he says:

Tax considerations

Across the globe, tax rates for insurance premiums vary widely. While a company will want to structure allocations to attain its financial objectives, the methodology employed needs to be reasonable and appropriate in the eyes of the carrier, broker, insured and regulator. Similarly, and in conjunction with tax and transfer pricing considerations, companies need to make sure that their premiums properly reflect the risk in each country. Even companies with the best intentions to allocate premiums appropriately are facing greater scrutiny. To properly address this issue, Scherzer recommends that companies maintain a well documented and justifiable rationale for their premium allocation in the event of a regulatory inquiry.

Prudent premiums

Insurance regulators worldwide seek to ensure that the carriers in their countries have both the capital and the ability to pay losses. Accordingly, they don’t want a premium being allocated to their country to be too low relative to the corresponding level of risk.

Data accuracy

Without accurate data, premium allocation can be difficult, at best. Choosing to allocate premium based on sales in a given country or in a given time period, for example, can work. But if you don’t have that data for every subsidiary in a given country, the allocation will not be accurate. The key to appropriately allocating premium is to gather the required data well in advance of the program’s inception and scrub it for accuracy.

Critical timing

When creating an optimal multinational insurance program, premium allocation needs to be done quickly, but accurately. Without careful attention and planning, the process can easily become derailed.

Scherzer compares it to getting a little bit off course at the beginning of a long journey. A small deviation at the outset will have a magnified effect later on, landing you even farther away from your intended destination.

Figuring it all out

AIG has created the award-winning Multinational Program Design Tool to help companies decide whether (and where) to place local policies. The tool uses information that covers more than 200 countries, and provides results after answers to a few basic questions.

SponsoredContent_AIG

This interactive tool — iPad and PC-ready — requires just 10-15 minutes to complete in one of four languages (English, Spanish, Chinese and Japanese). The tool evaluates user feedback on exposures, geographies, risk sensitivities, preferences and needs against AIG’s knowledge of local regulatory, business and market factors and trends to produce a detailed report that can be used in the next level of discussion with brokers and AIG on a global insurance strategy, including premium allocation.

“The hope is that decision-makers partner with their broker and carrier to get premium allocation done early, accurately and right the first time,” Scherzer says.

For more information about AIG and its award-winning application, visit aig.com/multinational.

This article was produced by AIG and not the Risk & Insurance® editorial team.
SponsoredContent_AIG


AIG is a leading international insurance organization serving customers in more than 130 countries.
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