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.