Speaking the right language on multinational cover

A properly crafted international insurance programme can save time and reduce uncertainty; but if you get it wrong, it can cost you in terms of fines issued and leave policies void and useless. The question that companies and their brokers need to ask is, ‘where do you want a claim to be paid?’ The answer we frequently we hear is ‘where the claim occurs’, in which case it’s really important that companies are aware of the local regulations.

To give an example of the complexity of dealing with local regulatory requirements, some countries do not allow non-admitted insurers to provide important insurance-related activities, such as claim payment, risk engineering services and loss adjustment activities. In certain countries, policies cannot be backdated, while others require cash before cover; in fact, many countries are now imposing additional minimum premium requirements. Tax is becoming an increasingly important consideration.

International programmes offer the convenience of pulling together insurance under centralised control with uniform policies for every country where subsidiaries operate or have exposure to risks. This brings greater certainty and transparency, but requires detailed understanding of myriad local regulations.

A carefully planned international programme that runs smoothly provides greater certainty of cover you can rely on. From the start, clear channels of communications need to exist between the insured, the broker and the insurer. Even administrative errors can delay matters, so standardising processes can reduce errors. Other useful actions include ensuring local contacts are aware that a program is in place; keeping abreast of changes in local conditions, policy restrictions and limits on cover; ensuring minimum premium requirements and tax liabilities are adhered to; making sure you understand cash before cover requirements and whether backdating cover is permissible; and ensuring necessary documentation for particular countries is prepared – for example to meet anti-money laundering regulations.

Companies looking to effectively protect their business overseas would be wise to choose an insurer with an international network of offices and local experts who understand local issues and policies. Organisations should choose insurers that offer tools that provide a comprehensive oversight of their risks across the world through tracking of insurance policies and coverage, and knowing the status of claims, documents, tax liabilities, risk assessments and actions. This gives companies the best chance of protecting their business, not falling foul of local regulations, avoiding fines and policies being declared void, and actually getting the claim paid where they need it to be paid.