Questions for middle market companies to ask when building a multinational insurance program

When businesses expand across borders for the first time, they face new risks and may require additional insurance coverage for each new market. Here is a series of questions to help risk managers and other decision-makers identify new exposures and prepare for discussions with agents, brokers, and insurers about building a multinational insurance program.

The first step in planning a new multinational insurance program is to determine what risks will emerge when your business begins operations in one or more new nations or jurisdictions. You can start to identify specific exposures by answering these questions:

• What products or services will my company be providing?
• What types of facilities will my company operate; e.g., manufacturing, warehousing, sales office, etc.?
• What property and equipment will my company own or lease?
• Will I have local employees and company officers?
• How will my company’s operations depend on local vendors, suppliers, and other contractors?
• What new contracts will be signed?
• Will employees from my company’s home country travel frequently to other nations?

Your knowledge of your business’s operations will help you identify and mitigate key risks. You’ll also want to turn to your insurance advisors to better understand risks associated with each new location. Here are questions to discuss with insurance agents, brokers, and carriers:

• What are the regulatory and tax requirements for insurance for each new location where my company will operate?
• Are there differences in limits and conditions for policies in the new locations?
• What are the risks associated with climate change in each new market?
• How will inflation impact insurance rates and property valuation in each new market?
• Is political instability a significant risk factor in my company’s new locations?

When you establish a multinational insurance program for your business, you’ll want to be sure that any prospective insurer can meet the needs of your growing business. Here are some questions to ask:

• Does an insurer have dedicated offices or strong network partnerships in all of your new and planned locations or geographic exposures?
• Does an insurer have the technical underwriting expertise to provide risk assessment and policy requirements in all of your new and planned locations and geographic exposures?
• How timely is an insurer’s policy issuance and renewal service?
• How timely is an insurer’s claims response?
• Are local claims services available when an incident occurs?
• Does a prospective carrier provide risk engineering services in your new international locations?
• What digital tools does an insurer provide to help manage risk?

Once you’ve identified exposures specific to your business and new locations, consider each of the following options for your multinational insurance program:

• A single global policy — Depending on the nature and reach of your business, a single policy originating in your company’s home nation and covering limited operations worldwide may provide sufficient coverage.
• Separate local policies — Maintaining separate local policies for each country where your business operates can provide several advantages over a single global policy. This option can help you meet local regulatory requirements and contractual obligations.
• Controlled master program (CMP) — This type of program provides the benefits of both local and global policies. It includes a global policy originating in your home country and local policies in other countries. The global policy helps fill gaps in local policies as well as offering coverage in countries without local policies.
  

When considering your insurance program options, factor in the type of coverage you’ll need as well. For instance, if you plan on operating a vehicle fleet in a new location, you’ll likely need local commercial auto coverage. In this case, a single global policy likely will not provide adequate coverage.

Once you’ve answered the questions above, reach out to a broker or agent with multinational experience to discuss your coverage options. When evaluating insurers, holistically consider pricing, coverage, and services.