As regulation, climate risk and captive demand reshape multinational insurance, HDI Global’s Phil McDowell explains why businesses need more than a patchwork of local policies – they need the consistency, control and reach that a truly global programme delivers.
Multinational businesses face a more complex insurance landscape than they did even a few years ago. Regulation is changing more frequently, natural catastrophe exposures are becoming harder to predict, and companies are looking again at the role of captives as part of their wider risk financing strategy.
For Phil McDowell, global sales and distribution lead, international programmes and captives at HDI Global, this does not mean the fundamentals of international programmes have changed. Instead, it means the details matter more.
The core question for risk managers is whether their structures can keep pace with accelerating regulatory change and local compliance demands.
REGULATION IS BECOMING MORE LOCAL
One of the biggest areas of change is the growing assertiveness of local markets. McDowell points to reinsurance rules, natural catastrophe pools and mandatory local requirements as areas risk managers need to monitor closely.
In some markets, regulators are putting more emphasis on locally domiciled and registered reinsurance companies. That can affect how premium flows, how reinsurance is placed and how efficiently capital can move back to a central insurer or captive.
McDowell says: “In Africa, a lot more countries are imposing more stringent reinsurance requirements. So, if you want to get money out of the territory, it is not going to be point-to-point from the local insurer to a European reinsurer. It is going to be via the reinsurance market, whatever those rules may be.”
Natural catastrophe risk is adding another layer. McDowell points to established schemes such as Consorcio in Spain, newer developments in France, and recent moves in Italy around mandatory natural catastrophe cover.
Risk managers must therefore evaluate whether local rules affect admitted cover, premium flows, tax reconciliation, or reinsurance routes.
CAPTIVES NEED INFRASTRUCTURE, NOT JUST AMBITION
Captives are often discussed separately from international programmes, but McDowell sees them as closely connected. Most captives, particularly outside the US, are used by large organisations with a multinational footprint. To work effectively, they need local compliance, policy issuance, claims handling, and reinsurance flows across multiple jurisdictions.
“The captive needs the infrastructure of the insurer that can provide the global footprint,” McDowell says. “There are costs and administration that come with having the local partner relationships and the simplified reinsurance arrangements.
“If you are a captive and you are just looking at your own risk, do you want to go through the cost and effort to create that for one policy? We are doing it for multiple policies, so there are economies of scale.”
The drivers for captive use vary. Some organisations have high claims volumes and want to retain more predictable layers of risk. Others use a captive where market appetite is limited, or where they believe their own risk management standards are better than the assumptions used by the wider market.
“You might create a captive because you have such a high volume of claims that you want to self-insure and come up with an attachment point that makes sense,” McDowell says.
“Or there might be a particular insurance product you want cover for and the appetite is not there in the market. By creating a captive, you put in place a buffer. If you are setting the price for your risk, you know your business better than anyone else. You know the risk management processes you have in place.”
That makes execution critical. Captive structures can involve local insurers, local reinsurers, central reinsurers, brokers and captive managers, creating multiple points where information or premium flows can slow down.
McDowell says HDI Global is investing in systems, bordereaux processes and operational efficiency to reduce that friction, including using technology such as AI to remove low-value manual work.
TURN SCALE INTO PRACTICAL VALUE
For risk managers, the value of a global programme is clearest when it helps the business operate more quickly or recover more effectively. McDowell gives the example of life sciences and clinical trials, where timely access to certificates of insurance can determine whether a company can begin work in a particular territory.
“If they do not have the evidence of insurance, they cannot start running their business, they cannot start their trials, they cannot start their contracts,” he says.
“That is something where, if you do not have a global programme and you are relying on a patchwork of local policies, you are limited in what you can leverage. If you are leveraging a multimillion-pound programme, with whatever influence that has, that is where the global programme provider can really help.”
Claims are another example. A local insurer may handle a claim compliantly, but a global programme can bring central expertise, supplier relationships and procurement strength.
McDowell gives the example of a wind turbine manufacturer with damage to blades at a wind farm in Brazil. A local provider might have access to a supplier, but a global programme may be able to use a preferred supplier under a centrally negotiated arrangement.
“Ultimately, you can settle the claim more efficiently because you are getting access to the parts that you want at a more reasonable cost, which helps to reduce the cost of the claim,” he says. “Having that central control, and having an insurance claims team with the knowledge and expertise to support procurement, can really help.”
THE NEXT PHASE IS MORE HOLISTIC
The direction of travel is towards more integrated risk financing. McDowell says multinational clients are not only interested in the mechanics of a global programme. They want insurers to understand their wider needs, including captives, alternative risk transfer, risk consulting, and market entry decisions.
“We try not to think in terms of products,” he says. “We try to think in terms of solutions. What is the problem that the customer needs solved?
“If a client moves into a new market or is thinking about moving into a new market, there can be a collaborative approach to say: if you move into that site you are looking at purchasing, here is what that exposure looks like. Is it in an earthquake zone? Is it in a flood zone? What are the rules, laws and regulations there?”
Ultimately, he argues that for risk managers, international programmes and captives are no longer just insurance structures. Used well, they can support compliance, capital efficiency, claims performance and strategic decision making.
Phil McDowell is global sales and distribution lead, international programmes and captives at HDI Global.
