Insurance Strategies for Multinational Operations Go Global or Buy Local
Speakers:
Dave Arick, Global Risk Management, International Paper Company
Petra Riga, Head International Sales & Distribution, Zurich Insurance
Learning Objectives
At the end of this session, you will: • Distinguish coverage, administrative burdens and corporate
support for local versus global programs • Create a framework for deciding which approach is best for
your company in different circumstances
• Be prepared to earn corporate support from management and local operations for your chosen approach
Agenda
Introduction Risk manager view and thoughts • Brief description of International Paper • Risk philosophy regarding global programs vs. local programs • Experience with property, liability, D&O - similarities, issues • Broker and insurer resources/support Zurich view and thoughts • Understanding Customer risk strategy and exposure • Country regulatory and tax considerations • Coverage and claims needs • Supporting tools • Proposal of best options Conclusion & Wrap up
International Paper Overview • World’s largest paper and packaging company
• Industrial packaging - containerboard, corrugated boxes • Printing papers - copy paper, envelopes, business forms, file folders • Pulp - used in tissue, towels, diapers, cosmetics, hygiene products • Consumer packaging - packaging for food, cosmetics, pharma; cups, lids, food containers, plates
• Manufacturing operations in over 20 countries • $23.6 Billion in global sales for 2014 • 58,000 employees (24,000 outside the U.S.)
Global, Local, or “Glocal”? Company risk philosophy dependent upon firm’s structure and practices
• Centralized oversight/control vs. regional or local autonomy • Focus on cost reduction vs. ensuring compliance • Senior management support • Importance of global consistency throughout firm’s practices • Company history and evolution • Insurance/risk expertise, awareness, resources throughout the world
All of these factors influence the decision process…
Experience with Various Programs • Property & Business Interruption
• Global program, but with exceptions • Global insurer partner • No broker, except where required
• Casualty • Global program, but with exceptions • Global insurer partner • Global broker partner
• Directors’ & Officers’ Liability • Started out as individual local placements - evolving into global program • Now a global insurer partner • Leverage expertise of corporate D&O broker to coordinate globally
Broker/Insurer Support Items to consider before engaging partners to build a global program: • Local/global expertise and track record in coverage contemplated • Geographic footprint matches your firm • Strong coordination team to support you (prefer in home country) • Willingness to research and answer tough questions about local issues like compliance & regulations, tax considerations, transfer pricing • Expertise in managing (and for insurers, paying) local claims • Technology to administer program (policies, premium movement, claims data)
Who can best provide what you need? Insurer, broker, or combination of the two?
Building the Picture
Understand customer’s risk strategy
and exposure
Understand country regulatory and
tax requirements Implement Solution
Consider & propose the best solution for the customer
Coverage & Claims Requirements
Understand Customer Risk Strategy
1 What is the customer’s Risk Management Strategy?
2 How is the customer structured?
3 What are the risks associated with their business?
4 How much risk does the customer want to retain?
5 What needs and service requirements does the customer have?
Regulation & Tax
240+ jurisdictions Sometimes multiple provinces per country Licensing requirements Premium tax requirements Varying definitions for
Non-admitted business Lines of Business
Conflicts of laws Insurer, Broker and other Regulations Varying business practices
Increased attention to corporate governance issues around the world
Increased shareholder demands to demonstrate good corporate governance standards
Increased awareness of prohibited nature of non-admitted business in many territories
Increased scrutiny and tax audits on foreign corporations and insurers
Reputation of Insurer, Broker and Customer
Regulation & Tax
Customers expect their international programs to satisfy multiple requirements. For local regulation we need to understand what is conduct of insurance.
So what does Conduct of Insurance
mean?
The answer varies country
by country
Zurich has the information not only for ‘risk coverage’ but for a variety of other insurance activities in our
Zurich MIA tool
Marketing?
Negotiation?
Loss adjustment?
Claim payment?
Risk coverage?
Risk engineering?
Premium payments?
Our Customers Footprint
Austria Hong Kong Greece Peru Sweden
Turkey
Luxembourg
Trinidad & Tobago
Liechtenstein France
Cyprus
South Africa Australia
Japan Mex. N'Lands, Ger., Switz. Panama, Portugal
Australia Colombia
Republic of Korea
Canada (Various Provinces) Costa Rica
Croatia
Canada (Yukon)
Czech Republic
New Zealand Norway Chile Israel
Finland
Iceland
Bulgaria Paraguay Hungary Estonia Spain Italy
France
Belgium
Lithuania
Denmark
Malta
Bulgaria
Mexico Japan Netherlands Panama
Canada (Ontario)
New Zealand Norway
Pakistan
China
Series1
Canada (Quebec) Canada (New Brunswick) Canada (BC, Alberta)
Series1
Austria
Romania
Slovakia
Slovenia
Poland Series1 Latvia
Ireland
United Kingdom
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Varia
tions
Per
mitt
ed (%
)
Business Scenarios Permitted (%)
Mapping Country Regulations
• Data for 180+ jurisdictions • Per 42 Lines of Business • Per 5 Business Scenarios
• Variations on Risk Engineering, Premium Payment, Loss Adjusting, Claims Payments
• Dedicated Legal Department managing 140+ law firms around the globe
• Details on out of territory and applicable FoS taxes • Zurich Underwriters, by using MIA can ensure that out of
territory taxes are accounted for and disbursed
• Zurich has tax representatives globally to ensure out of territory taxes are properly handled
Coverage & Claims
Understanding the legal and tax situation in a country tells one part of the story.
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1.00
2.00
3.00
4.00
5.00
6.00
7.00
• Locations with large exposures may require different levels of protection
• Manufacturing/Sales/R&D sites drive different service requirements/coverage
Overlaying the customer’s specific situation & expectations allows us to propose appropriate solutions.
Proposal for Best Solution
Belg
ium
, Fin
land
, Fra
nce,
Ital
y, P
olan
d,
Spai
n, U
K
Cze
ch R
epub
lic, G
erm
any
& H
unga
ry
Can
ada
Chi
le
DIC
/DIL
Chi
na
USA
Mor
occo
Indi
a FI
nC
Indo
nesi
a
Japa
n FI
nC
Mal
aysi
a
Hon
g Ko
ng
DIC
/DIL
Mex
ico
FInC
Rus
sian
Fed
erat
ion
FInC
Sing
apor
e
Switz
erla
nd
FInC
Turk
ey
Implementation is Important
Subsidiary Receiving Broker Receiving Zurich
Producing Zurich Customer Parent Producing Broker Program size of 23 receiving countries
Mul=plied across 3 networks Factor in language, culture and local market standards & this presents a significant communica=on challenge
This communica=on does not only happen once during the program lifecycle but at mul=ple points in the process :
Submission & Info Gathering Analysis & Structuring
Quota=on & Nego=a=on Implementa=on & Servicing
Transparency of Information
CLAIMS Review the complete claims history of your organization, from a global overview right down to specific claims detail.
RISK ENGINEERING Helping you manage various risk improvement actions relating to your business.
INSURANCE PROGRAMS All your global Insurance Programs at your fingertips - drill down to review specific policy details with real-time portfolio overviews.
ZURICH MIA Access our unique database on local regulations and taxes.
Your Global Risk Management center providing essential real time information related to your insurance solutions with Zurich
Conclusion
Advantages of International Program:
• Transparent, integrated mul=na=onal insurance structure
• Consistency of global coverage • Local claims and other servicing needs can be met
• Interna=onal insurance solu=on in best alignment with local regulatory & tax requirements
Considerations:
• Local policy versus providing central cover into ‘non-‐admiWed permiWed’ countries
• Providing cover for the adequate interest of the customer (local exposures-‐ vs. central balance sheet protec=on)
• Premium reimbursement • Costs • Best fit into your companies culture
Thank you !
This is intended as a general descrip=on of certain types of insurance and services available to qualified customers through the companies of Zurich in North America, provided solely for informa=onal purposes. Nothing herein should be construed as a solicita=on, offer, advice, recommenda=on, or any other service with regard to any type of insurance product underwriWen by individual member companies of Zurich in North America, including Zurich American Insurance Company. Your policy is the contract that specifically and fully describes your coverage, terms and condi=ons. The descrip=on of the policy provisions gives a broad overview of coverages and does not revise or amend the policy. Coverages and rates are subject to individual insured mee=ng our underwri=ng qualifica=ons and product availability in applicable states. Some coverages may be wriWen on a nonadmiWed basis through
licensed surplus lines brokers.