More complex risk landscape drives new focus on ART: Allianz
Some of the biggest coverage gaps emerging in the current risk landscape revolve around ESG, supply chain exposures and AI. But they can also be seen at a local level when multinational programmes are in place, Luke Baker, director UK global and specialty, Allianz Commercial, told AIRMIC Today.
On the ESG side, he said gaps can be found around climate-related exposures, with climate change litigation, greenwashing liability and mandatory reporting requirements creating new uninsured or underinsured risks.
On the supply chain side, business interruption exposures are becoming more acute as global interdependencies between suppliers, customers and business partners can leave businesses facing losses that exceed available policy sub-limits.
Finally, he stresses that emerging risks linked to AI are also not yet fully understood, particularly given the variation in regulatory frameworks globally, making this a key area of focus both in terms of how the technology is being used and the new risks it creates for insureds. He also notes that coverage gaps also remain at a local level within multinational programmes, where structures cannot always fully bridge the gap between local policy limits and the master cover scope.
Against this dynamic backdrop, he said the role of the risk manager has never been more in the spotlight. “Companies are moving towards more centralised approaches to risk control and management. Boards expect comprehensively managed solutions that combine global protection with local delivery, not just policies, but also risk intelligence and advisory services,” he noted.
“There is growing pressure to improve the efficiency and effectiveness of risk management, with insurance expected to be part of a broader financial framework. Boards increasingly demand transparency, corporate governance, and proactive risk identification, not reactive coverage placement.”
He also noted that nearly 45% of FTSE 100 companies have linked executive pay to ESG targets, signalling that risk and sustainability are now board-level strategic priorities.
“Around 85% of companies say compliance has become more complex in the last three years, while fragmented regulatory landscapes are forcing some multinationals to move away from centralised policy structures.”
Against this backdrop of increasingly complex and evolving risks, he noted that carriers are also adapting by offering more sophisticated solutions, tailored to individual needs. Some of these might be on a packaged basis across multiple lines of business or merged into a true multi-line (and multi-year) placement with shared limits and aggregates across those lines.
But structuring multinational programmes can also be challenging. He said navigating the myriad regulatory and compliance hurdles across every jurisdiction where a business operates remains the core challenge. “This is further exacerbated by increasing geopolitical fragmentation, the impact of tariffs and diverging regulatory frameworks.”
He continued: “This challenge is intensifying. Around 85% of companies say compliance has become more complex in the last three years, while fragmented regulatory landscapes are forcing some multinationals to move away from centralised policy structures out of necessity.
“As a result, isolated insurance solutions that have traditionally served corporations well are increasingly struggling to deliver the productivity, economies of scale and risk oversight needed in a more fragmented environment. In addition, growing bilateralism is adding further pressure by increasing risks to value chains and key trading relationships.”
But he said increased demand for its ART segment can also be seen, despite the softening market conditions. “Part of this trend is likely due to the increasingly interconnected nature of the risks facing clients in today’s world,” he added.
In 2024, he said that Allianz Commercial's ART line wrote more than €2 billion in GWP, including fronting premiums, with rising demand from clients looking to supplement traditional programmes with non-traditional solutions.
“Captives can encourage strong risk management, as clients can directly control costs while retaining and managing risk. Such placements also allow for different approaches at a subsidiary level. While a parent company may have the appetite to retain a significant amount of risk, smaller entities may not have sufficiently strong balance sheets.”
He added that demand is also growing even in the midcorp segment, with solutions including structured insurance, captive fronting, parametrics and sustainable solutions.
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