Crafting a global insurance program that meets local countries' stronger enforcement of their regulations and laws has become a greater challenge for risk managers overseeing more complex risks.
As a result, insurers, brokers and some risk management groups (see story, page 29) are rolling out portals and databases to aid risk mangers' efforts to make sure contract language, claims status and tax issues comply with local nations' rules.
“As with many things in the world, buying international insurance has become more complicated than it was in the past,” said Janice Ochenkowski, Chicago-based managing director at real estate investment management firm Jones Lang LaSalle Inc., citing shifting taxation and regulatory rules as a primary concern.
“Historically, we were able to purchase a U.S. policy with a global territory, and that was sufficient to insure all our risks. That isn't true any longer, because many countries now require that policies be purchased locally,” she said.
Vinko Markovina, New York-based senior vice president and global practice leader of international insurance solutions at Allianz Global Corporate & Specialty, said the financial crisis prompted regulators in mature markets to more strongly enforce regulations and those in developing countries to exert more control over their insurance markets.
“In the past, much of the talk was about cost, efficiency and optimization of the program,” Mr. Markovina said. “Now, compliance has taken over the conversation as the primary concern when structuring a program.”
David Bidmead, New York-based global multinational client service leader and chair of the multinational executive committee at Marsh L.L.C., said in addition to rules on allocating premium taxes, companies need to be mindful of rules concerning money laundering — particularly when expanding abroad.
“In recent years, anti-money laundering regulations have gathered strength and momentum,” Mr. Bidmead said. “So when you think about the complexity of the international landscape, there are traps for young players.”
So how should risk managers of companies eyeing international expansion avoid pitfalls when constructing an international insurance program?
“It's not necessarily the business size that dictates the insurance needs; it's the level of international activity,” said Alexis Studley, Boston-based underwriting man-ager of specialty lines and global casualty commercial markets at Liberty Mutual Holding Co. Inc. “A small-business owner that sources many of its materials from overseas could have greater level of exposure than a Fortune 500 company with just a few executives that travel overseas.”
Patrick Walker, Denver-based risk manager for mining firm Rio Tinto P.L.C., said risk managers can get help from an experienced global broker and, if necessary, a fronting partner as well as local legal and tax experts.
“In the end, a risk manager has to know these issues personally and understand at least the basics in every venue in which the company works,” Mr. Walker said. “I would feel very uncomfortable simply outsourcing compliance to third parties.”
Large insurers are investing heavily in developing online portals that give country-specific information for their multinational clients, Mr. Markovina said.
“Over the last two to three years, there's been a huge demand from the market in providing program information and things such as claims status,” he said.
Petra Riga, Zurich-based head of international program sales and distribution for Zurich Insurance Group Ltd., said the insurer is set to release version 2.0 of its risk management portal in August.
The portal fuses real-time data, market intelligence and analytics to help risk managers keep on top of their programs and claims. One module, the Multinational Insurance Application, features a database of nonadmitted insurance and premium-tax regulations in about 180 countries and territories for 41 lines of business.
“Risk managers are really keen on reviewing the complete claims history of a program from a global overview right down to a specific claim's detail,” Ms. Riga said.
“It's about bringing all the parties together,” said Andrew Zoller, Chicago-based associate vice president and director of international programs for Midwest middle markets at Zurich North America. “Now with tools that enable you to have access to real-time data, there is a tighter partnership between brokers, risk managers and insurers.”
Stephen Truono, Stamford, Connecticut-based vice president of global risk management and insurance for Starwood Hotels & Resorts Worldwide Inc., said getting timely claim information still can be a challenge, but the technology investments have paid off.
“Insurers are now doing a better job with providing you with claim information globally,” Mr. Truono said. “In the last few years, we've seen an aggressive move to mobile technology and a paperless office by insurers. It continues to get better, and that's the good news.”