One of the main considerations in placing international coverage is market access, said Dante A. Disparte, director of partner solutions for Clements International. Access to markets like the Lloyds of London syndicates is important since this is the most specialized of the existing insurance players. However, it's difficult for individuals to approach the market without some heft behind them.
Companies like Clements have access to London underwriters and can adapt coverage to a specific situation. Unlike the traditional wholesaler arrangement, which can offer agents existing products that vary only by price, Clements Partner Solutions examines broad customer segments, determines risks and approaches Lloyds collectively to get underwriting.
One example is a new life insurance product designed for employees of the United Nations, many of whom are in low-income countries and households. Through Lloyds, Clements was able to design a range of products for high-income earners as well as previously uninsurable classes. The United Nations Federal Credit Union (UNFCU) now offers full-fledged life coverage around the world to people who at one time were considered uninsurable.
Another issue is the divergence of regulations between countries. Regulatory compliance is critically important as insurance regulators around the world are increasingly focusing on insured, brokers and insurers to ensure they adhere to local tax, licensing insurance/reinsurance and fair and equitable premium allocation rules and regulations, said Bill Skapof, head of international commercial markets at Zurich North America Commercial. "Failure to comply can bring harsh penalties including fines and other punitive measures, up to and including suspension of business licenses," he said. "For agents, brokers and insurers who are held to an even higher level of compliance, penalties can include the loss of your insurance license in the country and criminal penalties."
Global business has its challenges and there is no one organization or government agency to go to and get information that can unravel all the pieces, but global business is not a mystery either, said Kathleen Ellis, senior vice president, worldwide manager at Chubb Multinational Solutions. "Doing business globally is here to stay. Large or small, agents and customers will continue to seek solutions for their businesses. It is critical that they have an agent to partner with and a multinational carrier that can make human and business connections around the world so they can comfortably expand. "
On the regulatory front, the climate is dynamic and ever changing. Anti-money laundering laws in many countries such as Japan and Mexico as well as premium tax issues within the European Union continue to percolate. Regulations can and do change overnight, Ellis warned, so it's important for the carrier to have "good lawyers and people on the ground" to help clients know the current conditions.
"Chubb, Chartis and others have teams of people who are very good at helping agents put together multinational programs that are compliant," said John Rodwell, vice president of international development for Assurex Global. "You could be breaking the laws of some countries if you rely on US policies to cover assets located outside of the US. For example, if a U.S. company acquires a French company and subsequently endorses a U.S. policy to insure the French business, that will be a violation of French law, since the French regulators require French assets to be insured by a policy issued in France. These types of rules apply in many countries around the world."
To help keep track of the laws and regulations, Assurex Global subscribes to Axco Insurance Information Services, which provides information on more than 180 countries' insurance requirements and regulations. "We recommend that Axco be the first place our agents look to find out about the law, then contact an Assurex Global partner in the country of interest to make sure they're understanding the laws correctly," Rodwell said.
Coletta Kemper, vice president of industry affairs for the Council of Insurance Agents and Brokers, pointed out that although 97 percent of U.S. exports are conducted by small and medium-sized businesses, only 1 percent of these businesses export to more than one foreign country. And although there is a lot of potential to expand their horizons, many businesses may be reluctant to do so in fear of conflicting laws and regulations, she said. And there are many challenges: "Most international large commercial business is placed in the international marketplace, not in the country of coverage. But sometimes the capacity of local insurers in the admitted market is limited, so one corporation can use up all of their capacity on just one policy," Kemper said. Agents must be sophisticated players to do this.
Taxation is also a huge issue because rates and requirements differ vastly from country to country, Kemper said. "Joint ventures and partnerships with brokers in that country is what most agents are doing when they need to service business for a client," she said.
In spite of the pitfalls, however, the multinational market isn't going away—and agents who are focused on servicing their customers must be able to deliver the goods. "Agents must part ways with the things that have made them successful domestically," said Disparte of Clements. "Instead of product menus, have open-ended questions and conversations. The power of listening when engaging with customers with international exposures can go far. When customers sense an opportunity abroad, they will have questions about the risks they face there. If the independent agent doesn't adapt to addressing the risk, they will become obsolete to customers and premium expenditure will go elsewhere."
Read Part 1: A booming market.
Read Part 2: Go along for the ride.
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