Buyer-broker-insurer communication in global programs is essential

The importance of discussion among the buyer, broker and insurer when global programs are constructed cannot be overstated.

“The tripartite relationship is important because premium allocation information comes from the client and broker,” said Vinko Markovina, New York-based global practice leader for international insurance solutions for Allianz Global Corporate & Specialty.

“An insurance program should provide flexibility for growth,” so a broker must know where the client is headed, said Tim Higgins, executive vice president of international at Lockton Cos. L.L.C. in Kansas City, Mo.

Mark DeMartine, president of global markets at American International Group Inc.'s property/casualty unit, said buyers must consider each country in which they do business and examine their products, physical presence, contractual obligations, the local subsidiary's importance to the entire organization, directors and officers exposures as well as regulatory and tax considerations.

“Get an overall view to make a credible management decision,” he said.

“What we see many times is the risk manager taking a stair-step approach over multiple years to identify risk and get coverage,” said Michael Furgueson, president of Ace Ltd.'s multinational client group. It can be a process to determine “what actions to take over time to get closer to the end goal.”

Communication is particularly essential if an insurance program is centralized. Such clients “want to know their insurance spend to the dollar and cents everywhere,” said Alban Laloum, Marsh Inc.'s multinational client services leader in New York. “Decentralized companies want to give their subsidiaries a framework or guidelines.”

Centralization, said Lance Becker, area president of Arthur J. Gallagher Risk Management Services in New York, requires “corporate buy-in at the very top level” to push the culture down to subsidiaries. While many companies that let their subsidiaries purchase insurance locally realize it is more cost-effective to buy coverage in a master policy when possible, “there can be lots of resistance locally,” he said.

Communication is the key to making centralized control work.

“We always start with an introduction of the local broker and the local CareFusion representative,” typically the financial representative,” said Roxsann Wilson, risk manager for medical device manufacturer CareFusion Corp. in San Diego.

That dialogue includes keeping the broker informed about the types of policies that the company purchases centrally, and keeping CareFusion representatives up to date in terms of insurance premium allocation.

The support for centralization comes from “showing the benefits, showing that it lessens their workload, lessens the cost and the coverage is as robust as it needs to be.” Ms. Wilson said.