Companies increasing global operations must realize that their expansion will require greater understanding and knowledge of local insurance needs overseas, according to brokers at a Web seminar.

Their observations came during a seminar titled, "Insurance and Risk Management Challenges Facing International Operations," hosted by executives from Aon.

Philip Gawthorpe, managing director of Aon Global Business Units and Japan Group, and Clyde Ebanks, managing director of Aon Global Business Units, mid-America region, talked about the reasons why companies are becoming more global and the challenges they face handling overseas risks.

Mr. Gawthorpe noted there is greater market opportunity for companies outside of the U.S.

"The world is global and everyone is moving in that direction," he added.

However, the thought process needs to get beyond the U.S. mindset about risk, said Mr. Ebanks, and companies must realize there are many objectives that need to be met in the global marketplace.

Mr. Ebanks noted there is not one answer addressing risk financing overseas, and in fact, the solution may mean multiple solutions depending upon location and regulations.

In some countries, for instance, auto liability coverage must be purchased from admitted carriers. This would mean a corporation's master policy would be ineffective there.

Mr. Ebanks said the pooling of insurance coverage leaves the risk of gaps in coverage from country to country.

Mr. Gawthorpe said that among the challenges being faced in the global market is the reduction of providers as more and more carriers seek consolidation. He cautioned that when it comes to global risk, a client should only be dealing with financially stable companies.

While some companies may prefer to be dictatorial in their placement of risk, and choose a master plan, Mr. Gawthorpe noted there may be a number of good reasons why the placement should be done at the local level instead.

He added that in some cases the local placement could be cheaper, or deductibles lower, but relationships are a key component to understand one another's risk needs.

Special Reports /

Global Firms Need New Risk Outlook: Brokers

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