Brokers operating in the international marketplace know that placing insurance policies for their clients’ global multinational risks is not easy. Brokers and insurers often run up against confusing and conflicting country insurance rules. What’s admitted, what’s non-admitted and how to pay premium and other taxes are common questions that arise with each transaction.
If the placement is not done correctly, the broker and insurer may face fines and penalties, while the client may be exposed to double taxation, a void insurance policy and coverage gaps.
Brokers and insurers either obtain stand-alone policies locally for the parent company’s affiliates and subsidiaries, or they can use a master policy along with local policies. The master policy is intended to fill in coverage gaps resulting from limitations in local policies and to protect the parent’s interests in its local affiliates. It is an efficient method for creating a global insurance program, but it must be carefully crafted to meet the client’s needs and comply with multi-jurisdictional laws and regulations.