The world is becoming increasingly interconnected. Domestic and global operations are more intertwined than ever before, and businesses of all sizes are finding themselves operating on a global scale.
As businesses become more global, they take on many new and different insurance exposures. This creates an opportunity for independent agents to deliver broad solutions through partnerships with carriers that can offer controlled master programs—providing a total global solution.
Typically, international exposures are considered to be risks reserved for manufacturing companies. But the interconnectedness of the global economy means an increasing number of businesses now have international exposures.
Nearly 80% of The Hanover’s mid-size business customers have some form of foreign exposures, as do many other small businesses. Several elements may indicate a need for international insurance. These include:
- Permanent overseas operations. Employees are temporarily or permanently stationed in other countries.
- Overseas business travel, tradeshows or events. Employees travel outside the U.S.; sponsor trips, tours or study groups abroad; or perform service or repair work abroad.
- Importing and exporting activities. Includes holding foreign licensees to sell products or using suppliers located outside the U.S.
- Online advertising or selling. Where businesses cannot guarantee products sold online or ads placed online are not reaching international customers and audiences.
- Foreign warehousing. Where domestic companies that purchase international goods are stored in a warehouse before being shipped to the U.S.
Each business with international exposures is so unique that one-size-fits-all insurance solutions rarely suffice. Each business may have operations in a different country, leaving the customer and the agent to address compliance with local insurance laws and regulations. If a business has overseas risks in a variety of countries, this can become very complex, very quickly.
While there are specialist carriers that can write pieces of international risks, it can be difficult to find carriers that can write full accounts around the world. The practice of writing the business in pieces unnecessarily complicates things and leaves a business relying on local overseas insurance carriers and brokers or, a domestic policy with one carrier, a general liability policy with another, and a cyber policy with a separate broker in a different country. Uncontrolled programs like these can leave agents and customers unaware of how their exposures are covered and can leave agents with the burden of contacting multiple brokers in multiple countries to try to address their risks.
To make matters worse, some countries require a broker to be involved, which can lead to confusion over what coverage is being purchased, what the payment terms are and who to contact if there are issues or if a claim needs to be filed. This often results in coverage gaps but also makes what should be routine service labor-intensive for agents.
Relying on a centrally controlled U.S. master program can make a tremendous difference for independent agents who seek to manage the international risks of their U.S. business clients. These programs eliminate the stitching together of international coverages that often leaves clients and agents open to coverage gaps, compliance issues or coverage that does not fit the needs.
Controlled master programs provide access to networks of highly respected local insurers around the globe. These programs offer clients admitted solutions that are compliant with local laws and regulations, written in the local language and designed to effectively address clients’ risks. They also make programs easier for agents to administer by helping design, coordinate and implement an effective program.
Similarly, having one insurance carrier coordinate the placement of a client’s domestic and foreign insurance programs simplifies the process for both the client and the agent. With one controlled master program to help cover all international risks, clients can benefit from more cohesive insurance programs and single points of contact.
Local laws and regulations also can affect the way foreign claims are handled, so partnering with carriers that have local representatives managing foreign claims can help provide a quick and seamless experience. Moreover, if there are issues with claims, these carriers have complete oversight and can easily take control, stepping in to assist with denials of coverage and intermediating any conflicts, enhancing both the agent and customer experience.
With so many complex aspects of international coverage to consider, partnering with a carrier that has a controlled master program—staffed with experienced international teams—can make an important difference for clients. Additionally, larger controlled master programs are designed so they can be customized to meet the changing needs of a client. This consistency can improve renewal rate for agencies while simplifying their business.
With all the evolving complexities facing U.S. companies, the guidance and advice of an independent agent is invaluable. By partnering with carriers that offer customizable and robust controlled master programs, agents can help simplify the process for themselves, while providing a more comprehensive and cohesive experience for their clients with a total global solution.
Michael R. Keane is president, of core commercial at The Hanover Insurance Group, Inc.
This material is provided for informational purposes only and does not provide any coverage or guarantee loss prevention. The examples and circumstances included in the material are provided as hypotheticals and for illustration purposes only. Any recommendations, advice or suggestions provided are for informational purposes only. The Hanover makes no warranty on the accuracy of the information contained in the material and specifically disclaim any warranty that acceptance of any recommendations, advice or suggestions provided creates an obligation, guarantees loss prevention or compliance with any laws or regulations. By providing this information, The Hanover does not assume and specifically disclaims any duty, undertaking or responsibility to you. The decision to accept any recommendations, advice or suggestion must be made by you.
Coverage may not be available in all jurisdictions and is subject to The Hanover Insurance Company or its insuring company affiliates or subsidiaries (“The Hanover”) underwriting guidelines and the issued policy. Refer to the issued policy for any coverage provided.