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U.S.-based multinational companies are expected to benefit from a continued soft commercial insurance market in 2011 but face growing regulatory compliance and taxation challenges, according Marsh.

While intense competition, abundant capacity and relatively few insured catastrophe losses kept insurance rates lower in 2010, the global regulatory environment changed substantially, particularly in relation to insurance requirements and premium taxes changes, Marsh said in its report, Approach Your Risk with Clear Direction: Multinational Insurance Market Report 2011. The annual report provides information on commercial insurance market trends and conditions for all major classes of business globally.

Though commercial insurance rates remained generally favorable to buyers, multinational risk managers face growing regulatory and compliance challenges, Marsh said. These include:

    * A growing international trend of shareholder lawsuits targeting directors and officers of public companies;
    * Significant regulatory changes in the health care marketplace which, despite significant attention being given to the United States, are occurring in virtually every region;
    * The introduction, in several countries, of rules similar to the United States’ Sarbanes-Oxley Act of 2002;
    * Insurance premium tax-related changes in several countries, including Australia, Bulgaria, Canada, Finland, Greece, Malaysia, the Netherlands, Portugal, South Africa, the United Kingdom, and Zambia; and
    * The ongoing implications of the landmark Kvaerner case in the European Union, which clarified that premium tax is due in the member state in which the risk is located regardless of who arranges or pays for the insurance contract.

"The global insurance community has not previously focused so clearly on insurance tax and regulatory compliance as it did in 2010," says Hank Allen, President, Marsh Multinational. "Regulators want to see greater insurance program refinement in multinational companies. Underwriters are also placing increased emphasis on compliance. This increased regulatory scrutiny will require risk managers to become more visible in their firms, as it will impact companies’ insurance buying decisions and require greater accountability for their financial and hazard risks."

Allen notes that in addition to heightened regulatory scrutiny, global risk managers continue to feel the impact of the economic downturn and remain focused on insurer security, spread of risk, and balance sheet transparency. 

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