Transacting business in today’s global risk environment is becoming increasingly more common. The world is becoming more and more connected by the day with the introduction of new technologies and advance infrastructures. Whether managing established foreign operations or venturing overseas for the first time, multinational organizations are vulnerable to a variety of global risk not typically insured under a domestic insurance program.
Companies may enjoy the competitive advantage of doing business in a globalized marketplace, but you may find yourself asking, how will my company consistently manage and measure global risk across several different countries? Such companies may be faced with the following risks:
- Relocation. Having employees either permanently or temporarily move to other countries as part of the business.
- Traveling overseas. This could include trade shows or other events. It also includes sponsored trips to other countries or trips in which business operations are performed.
- Import/export. This includes the holding of foreign licenses used to sell products or utilizing the services of suppliers who are located outside the United States.
- The use of foreign warehousing services. Domestic companies often purchase international goods which are then stored at a warehouse for before they are shipped to the United States.
- Crisis situations from political unrest and personal threats can happen anywhere and anytime in the world, putting employees at danger.
- Liabilities arising out of the operations or premises.
- Liability for bodily injury or product damage as a result of a defective product or installation.
A number of specialist carriers are able to handle international risk, but it can be very difficult trying to locate a carrier who is able to write full accounts across the globe. Trying to handle the risks in individual pieces can make everything overly complicated. Businesses that handle risk in this way are reliant on overseas carriers. Suddenly they find themselves dealing with multiple carriers and brokers, some local and some international, and ultimately unaware of whom they need to call when they need help.
Compounding that even further is the fact that many countries require a broker to be in the mix in some capacity, which often leads to confusion as to what the terms and conditions are, who to contact for claims, and what exactly is being covered. More often than not, that leads to coverage gaps and turns a normal process into a significantly more complicated one.
Dealing with local laws and regulations affects many facets of risk management, not only in the way that claims are handled but also in even knowing what claims can be made to begin with. What might be a standard phrase in the United States or something that is very typical might not be typical at all elsewhere.
A Master Controlled Program with a Single Point of Contact is the ideal and simplest solution to consistently manage global risk. A Master Controlled Program offers unique benefits over a fragmented policies approach. The advantages of a Master Controlled Program include:
- coordination of all multinational policies to eliminate coverage duplication, to reduce insurance cost, and to better control the Master Program to ensure consistency and continuity;
- ease of management for organizing important coverage to increase the flexibility of use and access to a diverse portfolio;
- compliance and understanding of local markets, regulation, and culture;
- obtaining seamless claims administration with worldwide claims coordination; and
- achieving worldwide loss control strategies in local regulations and US standards.
Structure your Master Controlled Program to protect your employees, reputation, and international assets with the following available coverages:
- Foreign Commercial General Liability
- Foreign Commercial Property
- Foreign Voluntary Compensation
- Foreign Auto Liability
- Kidnap and Ransom
- Political Risk
- Commercial Crime
- Directors and Officers
So, what are you waiting for? Go take advantage of the growth opportunities in the global marketplace, but remember to manage your global risk wisely!
By Gwen Luu, Director – Commercial Lines