Managing a Global Insurance Program 0 New Jersey RIMS January
14, 2014 Tracey Estes Regional Underwriting Manager AIG WorldSource
Bruce Wineman Sr. Managing Director Aon Risk Solutions
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1 Agenda Introduction What is the big deal about International?
Considerations - 5 key concepts Comparing insurance environment in
China and United Kingdom What can go wrong? Emerging trends
Framework and tools for making decisions
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2 Introduction Under the best of circumstances, arranging a
large insurance program presents a challenge to any Risk Manager,
broker or insurer alike. But when the development of a program
becomes or is complicated by foreign business customs, financial
regulations and language barriers, the matter can become
overwhelming.
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3 Whats the Big Deal about International? Obvious Economic EU,
NAFTA Currency Fluctuations/Devaluations Language 1,652 dialects in
India Political Socialist, Conservative Exposure Earthquake,
Cyclone, Flood Time Differences
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4 Whats the Big Deal about International? Not So Obvious Legal
Differences Napoleonic Code, Sharia Regulatory Environment Data
Collection Cultural/Distance Issues Attitude to Risk and Safety
Social Legislation Taxation
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5 Risk Spectrum Who needs a Global Program? BUSINESS ACTIVITIES
InternationalGlobalMultinational LESS COMPLEXMORE COMPLEX Limited
exposure to loss or liability outside of USA Exports, International
Travel, Foreign Suppliers Assets or operations outside of USA, but
not inextricably tied together Operations usually not heavily
interdependent, foreign operations may be material to the balance
sheet. International locations, Material to balance sheet,
Operations interdependent Recognizable name, target for lawsuits,
finances transcend borders, larger geographic spread
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6 Cant I Just Use My Domestic Program? Maybe but issues arise
with: Coverage Compliance Taxation Cost Markets Program
Management
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International Considerations 7
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8 Key Concept Number One Compulsory Insurance Compulsory
Insurance =Those lines of insurance that are required by law for
companies operating in a particular territory typically Automobile
Third Party Liability, Work Injury and some forms of Professional
Liability. Trend towards compulsory requirements for Environmental
and even D&O in certain countries.
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9 Key Concept Number Two Admitted Insurance Risk based in
Country A Policy issued by Insurer licensed or registered in
Country A Risk based in Country A Policy issued by Insurer NOT
licensed or registered in Country A Admitted Non-Admitted In over
85% of countries non-admitted cover is prohibited or
restricted
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10 Key Concept Number Three Tax Treatment of Non-Admitted Loss
Proceeds Parent Entity International Subsidiary Non- Admitted Loss
Proceeds Income Tax Capitalization (or Other) Tax plus Frictional
Costs
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11 Key Concept Number Four Excess/DIC Master Policy D I L D I C
Policy Limit Breadth of Cover Local Admitted Policies
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12 Key Concept Number Five Financial Interest Insures the
parents interest in a subsidiary located in a non-admitted country
local subsidiary is not an Insured Insures the balance sheet of the
parent, rather than a local asset/interest Settlement to the parent
only, no local servicing Policy wording developed and supported by
individual legal opinions Subsidiary Global Insurer Master Policy
Parent / Policyholder
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13 International Risk Considerations Other Particular
International Issues/Considerations: Role of Broker Cash before
Cover Taxes: - Premium - VAT/Goods & Services - Fire Brigade -
Catastrophe Pools Tacit Renewal Tariff Rating Premium Allocations
Underwriting Data Wording Differences in standard policies
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14 Communications Social and Geographic Considerations - Time
Zones - Hierarchy - Holidays - Sense of Urgency -
Acronyms/Terminology - Reliance on e-mail Managing Expectations -
Clear and concise communications - Timeline
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Insurance Environment in China and the UK 15
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Risk Review - China Regulatory Constraints Key Compulsory
Coverages WC/EL (State Plan), Motor Non-Admitted Insurance Position
Not permitted Tariff Rating national premium tariff as set by CIRC
applies to compulsory motor third party liability Wording
controlled by CIRC Cash before Cover - Advance premium payment
prior to binding risk required under certain policies by province
Market Features Brokers only engaged in