When a multinational client implements a global insurance program, the outcomes they seek are a balance of several factors including:
- to maximise global insurance capacity ensuring all subsidiaries have the same coverage structure globally;
- to minimise the cost of premiums globally;
- to maintain centralised control over the programme; and
- to manage the total cost of risk
Sophisticated multinational buyers take advantage of their expertise within their business, by monitoring loss developments and the predictable nature of their loss profile. They structure their multinational insurance programs that keep much of the risk within the corporate umbrella structure. To do so, they leverage their company’s central control of insurance terms, limits and retentions.
Designing Multinational Insurance Programs
The multinational buyer relies heavily on their Insurance broker in the design of a suitable global insurance programme for cross boarder regulations, compliance and program administration
When designing multinational insurance programs it is important to address countries who impose restrictions of how insurance can be purchased. Some countries impose blanket prohibitions on local entities from purchasing insurance from anyone except an insurer which is locally established, locally authorised and locally licensed. These are referred to as ‘Admitted Insurers’. As well as these local country restrictions, the multinational buyer also relies heavily on their Insurance broker in the design of a suitable global insurance programme for cross boarder regulations, compliance and program administration. The role of the Producing Broker does not stop when designing a suitable Global Insurance program – they must ensure they focus on the multinational buyers interests of ALL of its worldwide operations and not just of the head office.
The Relationship Between the Producing Broker and the Local Broker
To do this well, the Producing Broker relies heavily of their collaboration with the Local Broker. This is true whether or not the Insurance Broker is one of the Global Brand names or an Independent Network name. Many global buyers value the quality of Insurance Broking service via the way in which brokers Collaborate in the provision of fast, friendly, efficient, accurate and effective insurance outcomes. Indeed, the true worth of a multinational insurance program is often measured when local service is delivered for:
- Contract certainty – the buyer receives local policies in the local language that complies with local insurance regulations and tax laws.
- Responsiveness —the buyer can appreciate how all Insurance Broker service levels respond to their needs efficiently and effectively.
- Superior claims handling — the local buyer have their claims administered with a dedicated single point of contact yet working in cooperation with their parent, global Insurers, adjusters and investigators from around the world.
Often the most challenges to a multinational insurance program comes from the Local Client to the Local Broker which might well be the smallest office within the client group, or from their most remote location, or from the most surprising situations (not expected or intended to occur but has just occurred) or even from the day to day dealings in local regions.
Challenges in the Asia Pacific
The Asia Pacific region is no different to any other parts of the globe and faces the same challenges. In administering global insurance programs or in providing local service our days are often filled with questions from clients about a big contract they are entering into and how the local policies within a global program responds to Indemnity and Insurance clauses within those contracts.
The more frequent questions our offices in Australia, New Zealand, Singapore, Malaysia and Vietnam receive from local clients include:
- Can we note the Principal under our insurance as a Named Insured or Additional Insured?
- Does our insurance policy include a Waiver of Subrogation?
- Can we extend our policy to include Cross Liability?
- We only have $1ml Public Liability local limit but the contract requires us to carry $10ml or $20ml – how do we comply with this request?
- What effect will the signing of a contract with a Hold Harmless Agreement have on our Insurance coverage?
- Does our Public Liability policy cover us for Consequential loss or damage?
- We are not really providing advice but the contract requires us to carry Professional Indemnity to $5ml – where is that covered?
Our depth of experience in providing insurance advice to multinational buyers for more than 25 years makes us a vital partner in the Asia Pacific region. Our membership of the Worldwide Broker Network (WBN) and International Benefits Network (IBN) provides us with the global relationships to correctly provide global service in the Property Casualty and Employee Benefits space in the region. But it is more than this that sets us apart. Our commitment in sending our staff to regional Property Casualty and Employee Benefit Conferences across the globe every six months and meeting clients face to face, collaborating with global brokers and strengthening relationships with Insurers / Carriers. By size of firm globally, few insurance brokers commit more time, more money and more effort to servicing the needs of multinational insurance buyers, than what Honan Insurance Group commits.