Aon Global UK brokerage unit announced it was launching an advanced database Pre-Placement Tool (PPT) that can be used to check and ensure that elements of a global policy meet all regulatory requirements before cover is placed.

At the same time the firm's London office also released its Premium Allocation Tool (PAT) to ensure maximum compliance with local tax regulation.

Aon said that with PPT, a traffic light red warns if a policy is “nonadmitted” or must be placed by a local insurer, so clients can be advised accordingly. The firm said hotspots in global policies include:

o China, Brazil or India, for example, prohibit overseas or “nonadmitted” insurance for directors and officers, general liability, property.

o African countries that require local risks to be covered by local licensed insurers.

o Parts of Europe such as France, Italy and Spain that require local risks to be covered by EU licensed insurers.

Aon said the PAT tool allocates the global premiums on a just and reasonable basis according to where the risk is located, rather than countries with more favorable tax rules.

PAT determines the premium tax liability in each territory for either the insurer or the insured, the brokerage said.

The tools, it explained, are updated regularly for changes in worldwide regulatory and tax rules, such as the tax rate changes in the Netherlands and the new Australian Direct Offshore Foreign Insurers regulation in 2008.

According to the brokerage, tax compliance failure could lead to interest on unpaid balances and penalties for insurers, brokers and insureds.

It noted that in the United Kingdom, failure to notify the government makes the insurer liable to a penalty equal to 5 percent of the relevant tax.

Aon said that in the EU, an insurer or its fiscal representative is generally responsible for collecting and discharging the premium tax. But in the United States, Canada, Australia and New Zealand, the local insured or its broker is responsible.

Ken MacDonald, chief executive officer of Aon Global UK, said in a statement that it is “time for all organizations to demand greater compliance and insurer transparency.”

For the CEO, finance director or risk/insurance manager, he said insurance is “not just about achieving the best coverage at the highest security and lowest cost, but it is also a capital replacement tool that must respond and comply with local fiscal and regulatory realities.”

He related, “The good news is that companies are now finally switching on to the implications, while insurers are waking up to the issue. With the increased profile of fiscal and regulatory compliance risk, Aon is now raising the bar to help our clients be compliant.”

Aon said it recently held a conference on compliance for global companies and found a growing interest to ensure regulatory and tax compliance to support the efficacy of insurance programs and corporate governance.

Martin Massey, head of business development for Aon's actuarial and analytical services, said the firm's tools “place a spotlight on the territories that require special planning in the design of the insurance program” and “provide a complementary service to our existing corporate allocation modeling tools that aim to provide consistent service and benefits to our clients in three main areas of IT functionality, methodology and compliance.”

For firms that operate in multiple countries, global insurance programs offer premium savings, plus the knowledge and certainty at headquarters that there is consistency of protection globally. However, Aon said it is encouraging companies and insurers to monitor the compliance duties that come with global programs.

Special Reports /

New Aon Database Tool Helps With Global Compliance

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