Among the facts risk managers with multinational operations should know when dealing with global D&O exposures, according to Willis:

o In common-law countries, nonadmitted policies are generally allowed. It doesn't matter where the policy is issued.

o In civil-law countries, nonadmitted coverage is generally prohibited. It may also be prohibited for a carrier to pay a claim locally.

How do you tell the difference?

Willis' Ann Longmore gives the following rule of thumb: If the British flag flew overhead at some point in the country's history, it's most likely a common-law country, while countries that were “conquered by Napoleon or settled by people conquered by Napoleon are more likely to be civil-law countries.”

o Common-law countries include the United Kingdom, the United States, Australia, Hong Kong and Canada.

o Civil-law countries include France, a lot of Europe, and much of Africa and Asia.

o In China, there is a strong policy prohibiting nonadmitted coverage.

o In France, nonadmitted coverage is prohibited except if a corporation with operations throughout Europe has a “Euro-policy” issued in the United Kingdom or the Netherlands, for example.

o In Canada, nonadmitted is allowed, but taxes have to paid to Canadian tax authorities based on insurance allocation to Canada.

Special Reports /

Must A D&O Policy Be Locally Issued?

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