The Advantages of Placing U.S. and Global Business Insurance Policies with a Single Carrier
As an agent, your clients look to you for the most efficient and comprehensive insurance products and services. Because many companies have international exposures that can lead to coverage gaps, it’s important to consider the benefits of placing a client’s domestic and global policies with one carrier. A single point of contact, streamlined claim processing and simplified renewals are just some of the advantages of working with one insurer.
When claims occur, the benefits of coordinated coverages under one carrier can be even more significant. Policies written with several carriers can result in confusion over which insurer covers a loss, leading to service delays and frustrated clients. Here we take a closer look and explore coverage scenarios that illustrate why a single carrier approach can be an effective strategy for managing domestic and international risks.
U.S. and International Commercial Policies Are Better Together
In addition to providing clients with a holistic insurance solution, packaging policies with one carrier:
- Saves costs. Customers who obtain more than one policy from the same carrier are typically offered a multi-line discount.*
- Saves time. When domestic and international policies are written with one insurer, the renewal process is more streamlined, and billing and claim experiences are more convenient.
- Helps reduce coverage gaps. Gaps are easier to detect, and the potential for coverage confusion – and the resulting claim delays – are minimized.
- Increases client retention. The more policies a customer has in place with you, the more likely they are to stay with your agency.
- Means only one carrier to contact. Policies through a single carrier offers a more efficient communication stream with only one place to contact.
When Coverage Doesn’t Cover It: Learn from These 4 Hypothetical Claim Examples
These possible claim examples illustrate the pitfalls, including improper coordination of coverage, that can occur when domestic and international coverage is written by multiple insurers.
A Medical Emergency
A U.S.-based employee is stung by a swarm of killer bees while on business travel in Nicaragua. The employee is taken by ambulance to a local hospital, but the medical authorities there determine that the employee needs to be repatriated (sent) to another country for treatment. The company reports the matter to the carrier of its global foreign voluntary workers compensation (FVWC) policy for purposes of repatriation coverage. It also reports the matter under its domestic workers compensation (WC) policy that is written with another carrier for purposes of medical benefits coverage. Even though the cost of repatriating the employee is approved under the employer’s FVWC policy, it may be difficult to coordinate transport as well as medical care because it is typically managed by the insured’s domestic carrier. If the same carrier had also issued the domestic WC policy, coordination between the employee’s transport and the needed medical treatment would have likely been seamless.
A Manufacturing Defect
A U.S.-based multinational company manufactures special beverage cans in France sold throughout Norway by a Norwegian distributor. Due to a manufacturing defect, the cans explode and cause bodily injury to several U.S. citizens who bought the cans while traveling in Norway. Upon returning to the U.S., the injured customers sue the manufacturer in the United States. If the company’s U.S. commercial general liability (CGL) policy does not cover injury or damage arising out of its goods or products made or sold outside the U.S., Puerto Rico and Canada, the manufacturer would likely not be covered for this incident. This lack of coverage may occur because domestic policies often exclude claims that occur internationally, and likewise, international policies may exclude lawsuits brought domestically. When these policies are purchased from different carriers, coordinating the coverage gaps that can result from these types of exclusions can be more complex and confusing.
A Facility Fire
A U.S.-based company has multiple facilities in Australia that produce pre-manufactured in-ground pools. Once built, the pools are sent to the U.S. and stored in the company’s warehouses until they ship to clients and are available for purchase. One of the larger facilities in Australia sustains damage due to an equipment fire. This facility is operated by a different entity owned by the company that has a policy with “Carrier A.” Meanwhile, the U.S.-based company has a domestic policy with “Carrier B.” Both entities experience business income losses due to the fire. But a complication soon arises. It turns out that the domestic policy does not provide coverage for locations in Australia (since those locations are insured with Carrier A) and the Australian policy has limited business income coverage (which is not adequate to cover the claim for this loss.) The domestic policy would not have any differences in condition (DIC) to consider; thus, the business income loss would be covered only up to the Australian policy limit. However, if the insured had purchased a domestic policy alongside a global policy with DIC coverage, not only would additional business income coverage likely be available, but the company might also benefit from a streamlined claims process through one carrier, one vendor and one calculation.
A Directors and Officers Scenario
A private U.S. company and its directors and officers are the targets of years-long regulatory investigations across multiple countries. The company holds a single worldwide Directors & Officers (D&O) policy issued in the U.S. as well as stand-alone local D&O policies with separate carriers. The company faces several hurdles responding to the investigation, including complicated claims management across different teams, the incurred expense of triggering multiple retentions, and inconsistencies in coverage among the worldwide and local policies, leading to complications on whether coverage would be afforded in a particular jurisdiction. If the company had purchased its global program entirely through a single carrier, it would have likely experienced better claim coordination between the master program’s claim team and the local countries’ claim teams, as well as cost savings because only one retention would be generated. The company would also gain greater coverage certainty due to global liberalization, difference in conditions (DIC) and difference in limits (DIL) at the master policy level, as well as the advantages, including tax benefits, of local claim payments. Additionally, an overall smoother claims process would allow the company to stay focused on business activities.
Providing excellent service for clients is an agent’s ultimate goal. In an ever-changing global risk landscape, one of the best options for managing worldwide exposures includes placing policies with a single carrier.
Key Global Insurance Insurance-Related Terms
Business Income – Net income (net profit or loss) plus normal continuing operating expenses.
Controlled Master Program (CMP) – Coupled with local policies, a CMP addresses global exposures in a single, coordinated insurance program. Coverage is provided on a difference-in-conditions (DIC) and difference-in-limits (DIL) basis.
Coverage Territory – Generally refers to the geographical area where coverage applies.
Difference in Conditions (DIC) – A clause that enables the CMP to respond to a claim when a local policy is unable to.
Difference in Limits (DIL) – A clause that enables the CMP to provide additional limits by responding to a claim up to the amount stated in the DIL clause.
Repatriation – Under a global insurance plan, repatriation refers to returning an employee to their home country or another country, usually in the event of a medical emergency or emergency evacuation.