GENERAL INDUSTRIES | CLIENT RESOURCE
An overview of the unique coverages, safety and exposures for multinational businesses
February 2021 | General Industries
BY JOHN LOPES AND BILL SKAPOF
Businesses may secure separate, local insurance policies in each country where they have exposures
Businesses may utilize a global or master insurance policy, which may be issued in the business’s home country and account for worldwide exposures/coverages
Businesses may utilize what’s known as a controlled master program, which combines multiple local policies issued in various countries with a global master policy that sits over the local policies
International markets provide ample opportunities for global business expansion for U.S. companies. Additionally, given advances in technology, reduced barriers to entry and the ease of travel (in a post-pandemic world), becoming an international organization has become easier than ever and is no longer exclusive to large, multinational organizations.
However, a business expansion across international borders can expose operations to potential exposures that are easy to overlook ― and that are not covered by traditional domestic insurance policies. Businesses must realize that selling products in another country means substantial risks to consider, underscoring the importance of proactive loss control measures.
This article provides an overview of international business exposures, highlighting considerations organizations must keep in mind.
Organizations must have the proper international business insurance in place if they are to protect themselves from exposures associated with conducting business outside of the U.S. However, it’s important to remember that as organizations do business abroad, their insurance doesn’t often travel with them. For instance, just because a company has domestic workers’ compensation insurance in place doesn’t mean their employees are covered if they become sick or hurt themselves abroad.
Therefore, organizations need to evaluate their exposures and ensure they have the proper international business insurance coverage in place ― one that will respond to claims that may arise abroad. This is particularly important when you consider that every country regulates insurance differently, and various terms and conditions may be easy to overlook. Limits on policies that are sufficient stateside might not provide ample coverage in foreign countries. Given how language barriers, local laws, customs and norms differ from country to country, it’s little wonder that insurance claims for international businesses can be complex and difficult to navigate.
International businesses can help mitigate their risks in one of the following ways:
Regardless of how a business structures its insurance programs, it’s important to remember that no two organizations are alike, and there is no one-size-fits-all approach to managing international risks. Before purchasing a policy, companies should examine their business and personnel to select the right coverage options. The types of events businesses may want to plan for — in addition to the traditional property and casualty coverages — include kidnappings, hostage and ransom crises, assaults with weapons, extortion threats, evacuations and medical care/repatriation.
For international organizations, many tasks require employees to travel abroad, whether it be to meet or work with potential clients, partners, suppliers or buyers, or to attend training seminars or conferences. While the COVID-19 pandemic has limited this type of travel, businesses will eventually resume normal operations, and firms need to have a plan in place to keep their employees safe.
This is especially important when you consider that, at any point when traveling abroad, employees can injure themselves or become ill. Kidnapping, ransom and extortion may sound like a fictional thriller, but they are very real concerns for organizations of all kinds.
To protect their employees abroad, employers will need to take the following into account:
When conducting business abroad, most companies focus on an overall business expansion strategy — especially how to increase sales and market share while limiting costs. While moving into different markets can be lucrative and creates growth opportunities for an organization, it does open businesses up to unique exposures. The following are a few examples of the increasing challenges facing international business expansion1 2:
The type and potential impact of political risk varies by country. It’s important to remember that some countries are more stable than others, and political risk tends to be greater in developing regions.
While international businesses have their own set of unique exposures, these challenges shouldn't scare businesses away from international expansion. Instead, to capitalize on growth opportunities, businesses should work with experienced insurance professionals who can help them navigate the risks associated with international operations.
Above all, organizations should partner with a producer and insurer that not only has experience in this space but will also work closely with the business to assess its risks and create a plan tailored to its needs.
Learn more about multinational solutions through Nationwide’s innovative joint venture with Generali Global Corporate & Commercial, a top global insurance company based in Italy. In 2020, the two companies announced the creation of N2G Worldwide Insurance Services LLC (N2G) to support multinational solutions for international commercial clients. If you're an agent interested in growing your commercial book of business, please go to nationwide.com/agents.