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 Implement Solution Understand country regulatory and tax requirements 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?
Customers Footprint
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 Marketing? Negotiation? Loss adjustment? Claim payment? Risk engineering? Premium payments? Risk coverage? Zurich has the information not only for risk coverage but for a variety of other insurance activities in our Zurich MIA tool
Our Customers Footprint Variations Permitted (%) 100 90 80 70 60 50 40 30 20 10 0 Austria Series1 Series1 France Bulgaria Bulgaria Paraguay Hungary Estonia Spain Italy Belgium Trinidad & Tobago Series1 Cyprus South Africa Australia Mexico Japan Netherlands Panama China Malta Slovenia Turkey Canada (Yukon) New Zealand Norway Ireland Canada (Quebec) Canada (New Brunswick) Canada (BC, Alberta) Australia Colombia Poland Lithuania Iceland Austria Hong Kong Greece Peru Sweden Czech Republic Canada (Ontario) Romania Denmark Republic of Korea Luxembourg Liechtenstein Finland France Japan Canada (Various Provinces) Mex. Costa Rica N'Lands, Ger., Switz. Panama, Portugal Slovakia Pakistan United Kingdom Croatia New Zealand Norway Chile Israel 0 10 20 30 40 50 60 70 80 90 100 Business Scenarios Permitted (%) Latvia
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. Overlaying the customer s specific situation & expectations allows us to propose appropriate solutions. 7.00 6.00 5.00 Locations with large exposures may require different levels of protection Manufacturing/Sales/R&D sites drive different service requirements/coverage 4.00 3.00 2.00 1.00 0.00
Proposal for Best Solution USA Czech Republic, Germany & Hungary Belgium, Finland, France, Italy, Poland, Spain, UK Canada Chile DIC/DIL China Hong Kong DIC/DIL India FInC Indonesia Japan FInC Malaysia Mexico FInC Morocco Russian Federation FInC Singapore Switzerland FInC Turkey
Implementation is Important Customer Parent Producing Broker Producing Zurich Program size of 23 receiving countries Mul=plied across 3 networks Factor in language, culture and local market standards & Subsidiary Receiving Broker Receiving Zurich 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. Your Global Risk Management center providing essential real time information related to your insurance solutions with Zurich 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.
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
Questions?
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