We recently hosted “International Casualty 101” in conjunction with Chubb Insurance and together explored some of the risks and opportunities to make sure you are properly insured, wherever your business operates. Some of the most important topics our speakers and audience discussed are shared in this blog.
Why you need a Foreign Package and how you identify your International Exposures?
If you are running a global business, you have global risks. International insurance is often overlooked or ignored until a foreign suit is filed resulting in a costly claim, but securing your risks on an international level is paramount to your company’s success.
Your U.S. engineer attends a conference overseas. They hop in a taxi and while stepping out they forget to check if any other cars are coming. Fortunately, they don’t get injured, but the taxi door flies right off of the vehicle. The local taxi company now files suit against your engineer. This is just one example of the many types of claims that we come across. A Foreign Package policy would be the appropriate risk solution.
Not sure whether you are at risk? Here are a few considerations:
- Are you selling your products overseas?
- Do you sell a product that is a component part of another product that has global sales?
- Do you have executives traveling abroad for partnership meetings?
- Do you have an actual sales office outside of the U.S.?
If you’ve answered yes to any of these, then you have an exposure and should work with your broker to create a program that protects no matter where you do business.
Global Program Structures and Admitted vs. Non-Admitted Policies
Understanding the different way to structure policies is very important in the program implementation process. Often times, U.S. insurance buyers decide to have centralized control over their international insurance program. Consistency in coverage terms and conditions may be an important factor in this decision. This program is often referred to as a Controlled Master Program. Then there are instances when U.S. insurance buyers want the insurance purchasing be left to the local decision makers. This results in multiple polices with varying policy limits. These programs are often referred to as Uncontrolled Programs.
International insurance terminology can be perplexing but there are resources available to help navigate the terms. A couple key policies are defined here:
Non-Admitted Policy: A policy that is issued outside of the country where the exposure exists. The insurer may be authorized or unauthorized to insure operations in that country. For example, a U.S. policy issued to cover a risk in Japan.
Admitted Policy: A policy issued by a company who is licensed to write insurance in the country where the risk is located. The country regulators have approved the terms and conditions, and claims handling and settling procedures follow local customs. For example, a U.S. policy issued to cover a U.S. risk.
What do India, Israel and Brazil have in common? These countries are all hotspots for product innovation and technology, each of them essentially having their own Silicon Valleys. Paying for an insurance policy directly here in the U.S. within 30 days of the effective date is second nature. The rules vary overseas. Some countries mandate local premium collection, some do not. For example, it is important to understand the nuances in the cash remittance periods from country to country in order to be prepared to ensure timely payment. Communicating with your foreign entity contact is key to understand requirements and stay compliant.
ABD works with over 2,000 companies, majority of them with International operations. We have a dedicated International Practice Team, are a member of the Worldwide Broker Network and work with carriers like Chubb Insurance to help you navigate insurance around the globe. Please feel free to contact us if you have questions about your International Casualty Program and check back regularly for thought provoking seminars and informative content, we’re always ahead of the game to make sure you are too.