Property Fronting Empowers Risk Managers in an Evolving Trade World
Climate and EnergyPropertyArticleJuly 9, 2025
In recent times, a multinational beverage company, monitoring the uphill march of insurance rates and restrictions in a hardening property insurance environment, decided to move its property insurance coverage out of the traditional insurance market and into its captive insurer. A captive is essentially an insurance company owned entirely by the company or companies it insures.
This was not the only company known to have modified its risk management strategy during historic hard markets for commercial property insurance. Today, as property rates and capacity have begun to moderate, many multinational companies may continue to retain some or all of their property risks in their captives, seeking greater control over future movement in property insurance costs as well as tools to help buffer the effects of an increasingly unsettled global trade environment.
Multinationals need fronting arrangements for effective property risk management
Multinational companies can’t do it alone. In many countries, they need to provide a certificate of insurance from a carrier licensed in that jurisdiction. They may need help with claims handling, risk control, and excess risk transfer. So their risk manager may seek a fronting arrangement with an insurance provider that has extensive multinational capabilities and experience customizing global programs and services, one that can help ensure compliance with tax laws and other insurance regulations that vary country to country. Fronting arrangements are helping to make a shift in property risk management strategy possible — and in some ways preferable — for the businesses involved.
"The trend right now in commercial large property comes down to this: more people have skin in the game,” said Joffre Mishall, Head of Property for U.S. National Accounts at Zurich North America. “That can be a good thing, because it means everyone has a stake in managing property risks well and taking proactive steps to build resilience. And given today’s uncertainties in global trade, multinational companies with captives need to work with an experienced fronting partner with global knowledge and experience.”
Evolving tariff regimes may affect valuations
Among the impacts of tariff hikes by the US and other nations will be increases in the costs of raw materials, parts and equipment needed by the manufacturing and construction sectors. From an insurance standpoint, increases in the cost of materials will raise the insured value of projects under construction or those requiring repairs or reconstruction after a loss. This, in turn, will almost certainly affect the scope of many property claims.
Multinational businesses feeling the impacts of increasing tariffs may look to their captives to help deliver greater stability in an evolving global trade environment. It’s a move more likely to deliver desired results when teamed up with the capabilities of an experienced, global property fronting partner.
This is where a risk management approach involving a fronting arrangement can help simplify matters. With a front, one insurer may implement the foreign local policies through its network of local affiliates or vetted partners, then cedes the global exposure to a panel of reinsurers. If a captive is involved, then the fronting company cedes all or a portion of the risk to the insured’s captive reinsurer.
“Companies that pursue sophisticated property strategies such as a captive or a fronting carrier need to vet the carrier to ensure it can provide the service types and levels needed,” Mishall said. “I’m proud to say Zurich is a recognized leader in multinational programs, captives, and compliance.”
Seven points to seek in a fronting carrier
What should a multinational company seek in terms of fronting companies? Here are seven points to keep in mind.
1. A global network with local knowledge
It helps to work with a fronting carrier who has people on the ground within the countries where you’re operating. Local knowledge matters for many reasons, one of which is that certain countries have requirements that may diverge from what is on the Master Policy. For example, the Philippines requires mandatory percent deductibles for natural catastrophes that are typically lower than the master policy.
Zurich has people in over 200 countries and jurisdictions globally and has been underwriting multinational insurance programs for about 50 years.
Zurich's robust global network includes more than 50 Zurich-owned offices managing 90% of premiums and claims. In addition to those offices, there are five Zurich-owned hub offices to manage a strong network of partners in any other country where issuance of a local policy is needed.
2. Clarity and consistency in policy language
Finding a seasoned multinational carrier that offers a property policy that has been adapted for use in multiple countries can save significant time for a multinational company. Otherwise, the risk management team and broker must vet local policies in each country with an eye for differing definitions, limits, terms, and conditions that can introduce interpretation issues, inconsistent coverages, and new requirements.
Zurich’s Prime property damage and business interruption policy has been translated, adapted, and filed throughout the Zurich Multinational Programs network in nearly 100 countries and more than 15 languages.
“This means our customers are going to get an integrated and globally consistent set of coverages, extensions, definitions, and specifications aligning the master and their local policies,” Mishall said. “This aligns with what a global risk manager would expect to have and helps simplify, which is what we strive for at Zurich.”
3. Expeditious claims payments
Working with a fronting carrier that can issue policies and pay claims locally in various countries can expedite both timelines.
“If you have a fragmented program, you might have to go through many people for a claim to be paid,” said Kay Eisenstein, Captive and Reinsurance Manager at Zurich North America. “With a fronted program, Zurich is able to issue local policies as well as pay claims locally and then seek reimbursement from the panel of reinsurers.”
Paying claims and premiums locally also can simplify the customer’s compliance with tax obligations. It helps that Zurich has more than 7,000 claims professionals in over 30 countries.
4. Holistic, customizable solutions
While an integrated multinational program can deliver efficiencies, consistency and peace of mind, some customers don’t want a global program with a master policy in the U.S. They prefer to have non-integrated policies issued in some countries where they have operations or substantial assets.
One dynamic that can influence this approach is that property rates in some countries haven’t increased to the same extent as in the U.S. Another factor is capacity constraints for catastrophe coverages. Some multinational companies choose to carve out certain types of coverage or certain regions from their multinational program.
Zurich’s breadth and depth of solutions enable the design and delivery of property protection and services in many ways, whether it’s through market-leading captive services, award-winning multinational programs, or its extensive global network of local offices and relationships
5. Dedicated multinational specialists
Sometimes, reading the fine print of the policy language can reveal compliance gaps and coverage contradictions between the master policy and local policies or the reinsurance panel’s terms and exclusions. Multinational expertise is required to spot potential problem areas.
“Full concurrency can be challenging to achieve, but it’s important to be aware of non-concurrencies and the potential impact to the program,” said Stephen Penwright, Property Technical Director for U.S. National Accounts at Zurich North America. “The fronting carrier’s underwriter should work with the broker early to speak directly to the global brokers who access European and Asian markets and discuss any exclusions.”
Zurich has 2,500 professionals globally who are certified to manage multinational programs and more than 75 multinational servicing specialists in the U.S. who help ensure the policy structure and language deliver a reliable, compliant solution and contract certainty for the customer.
6. Digital tools
Companies vetting a fronting carrier may want to ask whether the provider has digital tools that can simplify access to information about their program anytime and anywhere in the world.
Zurich set out to be a digital leader in multinational insurance and provides customers and brokers 24/7 access to MyZurich for their portfolio details. A proprietary digital tool called Global Program System (GPS) helps customers identify and comply with local tax requirements and regulations in all the jurisdictions where they operate. Zurich Risk Room is another analytical tool with risk data and conditions in more than 170 countries to model scenarios and provide insights for the customer’s decision making.
7. Resilience services
Insurance is only one piece of a property risk management strategy. For added value, a company should seek a fronting carrier with additional capabilities such as reputable, extensive risk engineering services.
Zurich Resilience Solutions, which includes 850 Risk Engineers with offices in 40 countries, provides a range of advisory services related to loss prevention, safety, sustainability, and ESG (environmental, social, and governance) issues. These include climate advisory services to help businesses identify the biggest climate- and weather-related threats in the regions where they operate, with recommendations to mitigate the risks.