Navigating the Complicated Multinational Regulatory Landscape

Although efforts are underway to harmonize certain areas of insurance regulation, such as solvency margins and the regulation of control and management, until there is overall harmonization of international insurance laws, sellers, producers and buyers of multinational programs face certain challenges. So says Suresh Krishnan, general counsel, Multinational Client Group at the ACE Group of insurance and reinsurance companies, in a new report.  The challenges, says Krishnan, involve making sure companies are not inadvertently assuming risks under local insurance and tax laws in the various jurisdictions implicated by their programs.

The report, “Beyond Non-Admitted: A Closer Look at Trends Affecting Today’s Multinational Insurance Programs,” outlines the challenges, implications, and risk management considerations that should be taken into account when designing and implementing a compliant multinational insurance program.
Krishnan examines the motivations behind purchasing and selling multinational programs, and identifies many of the trends, issues, and inconsistencies in today’s international insurance regulatory environment that affect many of the assumptions behind multinational programs.

In his discussion, Krishnan provides an overview of the laws of the major countries in which multinational business is regularly conducted. Additionally, he analyzes the current multinational market offerings and how they are affected by current international insurance laws, and how insurance regulatory trends may affect those products in the future.

His analysis includes a discussion of the various international regulatory and tax risks that may unknowingly be assumed by buyers, producers, and sellers of multinational insurance.

Finally, he concludes by outlining a rational approach to conducting multinational insurance business. Krishnan advocates improving the current master policy arrangement so it is flexible and assures seamlessness in an uncertain and complicated regulatory environment.

“The globalization of the economy and corporations,” observed Krishnan, “demand the globalization of insurance programs, even though global regulatory regimes have traditionally impeded the development of seamless, marketable insurance structures that might respond to demands from multinational enterprises.”

This problem of regulatory impedance is especially acute when it comes to the insurance of large organizations that seek coverage across national borders, added Krishnan.