As global trade tensions rise and tariff policies remain uncertain, multinational corporations are increasingly diversifying their supply chains, embracing nearshoring and “friend-shoring” to enhance their resilience.
While these strategies help reduce companies’ dependence on specific regions, entering new markets or expanding in existing ones can also bring a host of new risks.
“The recent tariff volatility has definitely caught the attention of multinationals,” said William Porter (pictured), head of international programs – Americas at Swiss Re Corporate Solutions. He noted that multinational clients are seeking out markets with favorable trade agreements, not just with the US, but globally.
“These strategies are not panic driven,” Porter told Insurance Business. “It’s about optimizing global manufacturing and distribution for trade efficiency and risk resilience.”
Nearshoring is the practice of relocating manufacturing or business operations closer to a company’s primary market, typically to neighboring or nearby countries. A US-based company moving production from China to Mexico is an example of nearshoring.
In contrast, friend-shoring, also called ally-shoring, involves shifting operations or sourcing to countries that have strong political, economic, and diplomatic ties with the company’s home base. This approach reduces reliance on nations seen as geopolitical or economic risks.
The current trade environment is not the only reason multinationals are embracing nearshoring and friend-shoring. According to Porter, such decisions are the result of years of learning and adaptation, catalyzed by the supply chain shocks of the pandemic.
“COVID was the big wake-up call,” said Porter. “Because of the groundwork companies laid during that time, we’ve seen more agility recently as new tariff questions and trade issues have emerged. Companies already thinking about supply chain resilience are now building on that foundation.”
That foundation is now paying dividends, he added. When evaluating a new site, businesses are digging deeper than ever, especially as they consider potential catastrophe and regulatory risks in unfamiliar jurisdictions.
“We’re seeing much more detailed inquiries,” Porter said. “What’s the specific risk in this region, at this site? Customers, brokers, and other partners are involving us earlier in the decision process. That’s a shift from even five to 10 years ago, when insurers often only found out after the expansion. Now we’re part of the planning, and that’s a great change.”
One of the most common, and potentially costly, misconceptions is the belief that a single insurance policy can offer seamless global coverage. “In theory, a home-country policy might say it’s worldwide,” Porter explained, “but in practice, that doesn’t hold up.”
Many countries have strict restrictions on claims payments crossing borders. Moreover, inspections, loss adjustment, and servicing are often not feasible without a local, in-country policy.
Having an insurance policy in each country of operation makes claims processing easier for multinationals, as payments can be made locally, and engineering or loss prevention support is immediately accessible.
Multinationals operating in several countries also face another invisible risk: currency fluctuations.
“A client might request a $100-million policy in a local currency, but if that currency devalues, the real coverage could shrink significantly, to, say, $80 million at the time of the claim,” Porter said.
On the premium side, mismatches between payment and reimbursement currencies can result in financial loss. Porter said clients are increasingly seeking solutions that limit their exposure to currency volatility.
“Where possible, we offer to transact entirely in stable currencies like USD,” he noted. “It’s not always an option, depending on local regulations, but when it is, it brings real clarity and stability.”
Swiss Re Corporate Solutions also helps minimize currency risk by shortening payment cycles, reducing the window for exchange rate shifts to impact the transaction. The company launched its international programs business in 2019. One of its key offerings is a centralized digital portal that gives brokers and clients real-time access to the same data that Swiss Re’s internal teams use.
“We designed (the platform) with efficiency and transparency in mind,” said Porter.
As geopolitical dynamics continue to evolve, so too will the complexity of global supply chains. Multinational firms will increasingly need to balance cost-efficiency with resilience, and flexibility with risk mitigation. This makes the insurer-broker-client relationship more important than ever.
Porter’s message to brokers? Be transparent and proactive.
“We’re all working toward the same goal: giving clients the right coverage with the most efficient program possible. The more we share — between brokers, carriers, and clients — the better the outcomes. That includes underwriting details, regulatory nuances, or exposure changes.
“Full collaboration is how we deliver the best service and make sure the client gets the protection and clarity they need.”
