Ms Hayden said that companies could do with more information on the workings of local insurance markets in countries across the world. “We need to know whether we have to talk to a local broker and how many big insurers we need to approach,” she said.

She added that information on terms, conditions and exclusions would also come in handy, as well as procedural information that could make the whole process flow more smoothly.

For instance, companies need to have data about where premiums have to be paid and who is responsible for paying any relevant taxes, she said. “I need to have access to data, and I want to be able to rely on an industry that can come together to deliver consistent data,” Ms Hayden concluded.

But risk managers were warned that it is not possible to be completely sure that a global programme is fully compliant in all the countries it covers, and that they will always have to make choices.

“One needs to look at the problem from the commercial perspective first,” said Praveen Sharma, Global Leader of Insurance Regulation and Tax Consulting at Marsh. “Unfortunately, the compliance tail is wagging the dog. I feel that people need to refocus their energies on what exactly they need and why they need it in the first place.”

Mr Sharma stressed that fully compliant insurance policies are achievable, but they would likely not meet the needs of companies. For instance, companies can buy local policies with local insurers paying premiums directly with no excesses, DIC/DIL clauses or umbrella policies. “That is 100% compliant,” he said, but pointed out that the costs would be too high and coverages too limited.

Ms Hayden, however, noted that she would be happy to pay to have the certainty of a fully compliant global programme.

Martin Strnad, Legal Counsel at Zurich Financial Services, and Yves de Mestier du Bourg, Head of International Networks at AXA Corporate Solutions, presented the view of insurers during the debate. They argued that for global programmes to meet compliance requirements they need to be dealt with on a case-by-case basis and with the support of people with knowledge about the markets.

Mr Mestier du Bourg highlighted the importance of local expertise that goes beyond the awareness of written rules. He said that rules are changing all the time and it is not always clear how the authorities will apply them. To illustrate his argument he mentioned the case of Brazil, a traditional source of headaches for global programme owners, where local retention requirements for reinsurance contracts were recently raised to 40%. “This information will be in every database in the world, but nobody knows how to apply it,” he said.

The possible creation of a shared database of information for global insurance programmes that could be shared by the whole market provided the most animated exchanges in the session.

Mr Sharma complained that the same knowledge has been packaged and repackaged by insurers who could, instead, make more efficient use of their resources by joining forces in order to offer a common platform. “The only people currently making money out of databases are software providers, accountants and lawyers,” Mr Sharma said.

He raged against claims by insurance companies that their own interpretations on global programmes are ‘differentiators’ in the market place. “At the moment, unfortunately, ego is coming in the way of sharing that knowledge,” he said.

Mr Sharma argued that proprietary databases have not brought any more clients for those insurers who maintain them, as it is the basics of doing insurance, and not compliance, which entices buyers. “They say: we can make you compliant, we can issue local policies, we have a network in 200 countries...rubbish!” Mr Sharma said.

The most visible outcome of the existence of fragmented databases in the market today is a lack of consistency, he added. “Risk managers get frustrated when they have different views of the same legislation in the same country,” he said. “Sometimes two underwriters from the same insurer give them different views.”

But Mr Mestier du Bourg stressed that providing information on rules is not enough. It is also necessary to interpret those rules and their possible application, and that when such an exercise is undertaken someone needs to take responsibility for it, he argued.

Mr Strnad said that although information could be the same for everyone, there are nuances in interpretation, which can vary according to the level of knowledge that insurers have of each country.

Mr Sharma also said that compliance issues present several difficulties for risk managers and their partners, not least the definition of where the risk is located. “There is a misunderstanding in many meetings with risk managers as to where the risk is located. That drives the insurance arrangements and taxes. Compliance becomes a big issue because of the various sounds we hear from regulators and tax authorities,” he stated.

Interestingly insurance supervisors are taking steps to exchange information with each other about the activities of licensed insurers in each jurisdiction.

For their part tax authorities are under increasing pressure to raise more revenues, Mr Sharma said. All these factors mean extra amounts of pressure on insurers and, consequently, on the insurance programme purchased by their clients. “As a result, you could have a surprise unbudgeted cost of taxes that you have not planned,” he stated. “In Canada and in various parts of Europe the tax authorities have been very aggressive in targeting multinational companies.”

Please sign up here to our full-time mailing list to ensure that you receive our weekly newsletter.

• More FERMA News
• More Insurance News