Shiwei Jin, AXA XL’s Global Programs & Captives Regional Director for Asia-Pacific, highlights three ways global insurance programs have helped companies protect their employees and either sustain or grow their businesses during the pandemic.
During the pandemic, companies worldwide—from the largest multinationals to local family-run businesses—face two fundamental imperatives: protecting their employees; and, depending on their circumstances, either keeping their enterprises afloat or scaling them up to meet a surge in demand.
These challenges—and in some cases, opportunities—have been particularly pronounced for multinational companies where the course of the pandemic and responses to it have varied considerably across different countries and regions. Companies with operations in multiple countries have had to respond and adapt very quickly to radically different market conditions and working patterns, as well as to altered sets of risks.
In my view, the global program structure, which international insurers first introduced in the 1980s, has proven even more beneficial during today’s massive changes and uncertainty. Global insurance programs have helped multinational companies protect their employees and either sustain or grow their businesses in the following three different ways during the pandemic.
Global Employee Benefit programs: stability and flexibility in uncertain times
According to my colleague Juliet Kwek, Regional Director, Asia Pacific, MAXIS Global Benefits Network, “multinationals with strong employee benefits (EB) programs have fared better during this challenging year, and those with centralised global EB programs were able to adjust more quickly to the challenges posed by the COVID-19 pandemic”.
Juliet cites several factors to support her point. One is greater stability. While the virus has affected countries worldwide, some have suffered more than others. When EB coverages are consolidated into a comprehensive, global program, the impacts in less-affected places often will offset those from countries where the pandemic has exacted a greater toll.
The pandemic has also shown how multinationals with highly integrated EB programs have more control over the programs’ designs. In particular, although pandemics are commonly excluded from virtually all traditional insurance policies, organisations that also own captives possibly could strike pandemic exclusions from local policies, as long as there are no regulatory constraints. However, since this option has not been applied widely, it currently is unclear how many jurisdictions would permit this approach.
Finally, Juliet notes that global EB programs provide a comprehensive overview of the entire workforce, including the way vulnerable groups are distributed throughout the employee population. While there is much we still don’t know about COVID-19, clearly the risks are greater among older people and/or those with pre-existing medical conditions. Sophisticated medical reporting, like that that provided by MAXIS Global Benefits Network, can help companies categorise employees by their susceptibility. This knowledge enables employers to design better EB plans and proactively offer wellness initiatives where they are most needed.
Cyber: a continuously evolving threat
According to Accenture, the rush to remote working meant:
• More employees using their own devices—e.g., printers, monitors and USB devices—to supplement those provided by employers.
• More unprotected desktop protocol connections lacking multi-factor authentication.
• More stress on people working remotely as they cope with new systems and protocols.
Given all this, the fact that cyberattacks are increasing dramatically isn’t surprising. According to a recent global survey of Chief Technology Officers, for instance, 90 percent reported that their companies had experienced an increase in cyberattacks during the pandemic. Moreover, 93 percent said the demands of transitioning to remote work led to delays in implementing key security projects.
At the same time, cybercriminals are becoming more experienced in exploiting vulnerabilities in automated systems and internet-of-thing (IoT) devices, which are often installed with little or no built-in security. Since more and more manufacturers rely on IoT devices to monitor/control their operations, the incidence of cyberattacks in the manufacturing sector is growing rapidly.
There are several reasons that underscore why it makes sense to manage and mitigate cyber-risk in a global program. First and foremost, cyberattacks are borderless. In many cases, once attackers access a company’s systems in one country, they can quickly infiltrate its worldwide operations. For instance, a major multinational company was attacked not long ago, most likely by state actors. Although the attack happened in Ukraine, it shut down the company’s entire global network. Also, when a company buys a standalone cyber policy for its operations in a country, the terms and conditions—and the capacity provided—will be based only on the risk in that particular jurisdiction. Moreover, unlike general property and casualty coverages, standard cyber policy wordings aren’t widely available in many places. In sum, a global master policy for cyber offers clients greater transparency, certainty and consistency.
While access to an insurer’s best expertise and resources is an overall benefit of global programs, it is particularly relevant with cyber. With this relatively new, complex and continuously evolving threat, local capabilities for assessing, underwriting and helping prevent it vary considerably.
Clients insuring cyber in a global program, on the other hand, will typically work with highly skilled underwriters who understand cyber risk in different parts of the world. Also, in the event of a severe hack or breach, the carrier’s designated response team can mobilise specialised resources from all over the world and not rely solely on those available wherever the attack occurred.
Remote risk consulting: preparing, exchanging, sharing
Global programs often lead to deeper, more effective partnerships between clients and the risk engineering consultants who focus on assessing, monitoring and minimising risks, particularly at major locations in different parts of the world. They also promote a more efficient risk assessment process. For instance, if we conduct a comprehensive inspection at one site, the findings and recommendations for the client’s other facilities where the operational and risk profiles are similar will generally still apply.
During the pandemic, however, field risk engineers generally haven’t been able to conduct onsite inspections. That, in turn, has accelerated the deployment of new, more sophisticated virtualisation and visualisation tools that enable us to assess facilities around the world remotely. These have been even more critical during the pandemic as clients in diverse sectors variously confront such new and unusual challenges as protecting unoccupied industrial facilities, repurposing operations to support COVID-19 relief efforts, and restarting idled facilities.
A final thought: As multinational companies today focus on protecting their employees and either weathering the pandemic or ramping up to meet increasing demand, their tolerance level for surprises has nearly vanished. Every local operation needs to understand and act on this imperative: no surprises. As I scan the landscape, the evidence suggests that companies with global programs are better positioned to respond and adapt quickly to different market conditions and working patterns and a changing risk landscape.
Shiwei Jin is AXA XL’s Regional Director for Global Programs and Captives for the Asia-Pacific region. She is based in Hong Kong and can be reached at shiwei.jin@axaxl.com
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