Many of us service clients with overseas holdings that have traditionally been insured under a policy with worldwide jurisdiction, if at all. Few companies have purchased locally admitted policies, but this is changing as a result of problems with claims.

Non-admitted coverage often does not protect local directors or managers or managers sent overseas to work abroad from the parent company.

Many countries do not recognize certain aspects of a typical US issued policy. Corporate Indemnification, Legal Defense Costs, and Payment of Premium issues can vary widely from what the insured in the US would like their intended coverage response to be.

Market Trends

Over recent years, underwriters have recognized the need to offer more appropriate protection for their insureds, as local laws and litigation potential have evolved. One approach is to implement a combination of a master program and local underlying policies, similar to how a Property and Liability Controlled Master Program would be used. At the same time, a host of continuing changes are occurring at the local country level; the increase in local potential for claims, liability standards for Directors and Officers, tax issues of an offshore claim payment, and the ability to defend local directors. Each of these issues now requires a well-informed approach for each country involved.

In response to this landscape, Globex has developed a database to allow us to compare the current D&O environment, conditions, and insurance availability in more than three-dozen prominent markets against the different solutions available. This database is based on our own client centric view of the key issues for handling overseas D&O exposure.

It may differ from the underwriter-based view of the issues, which is naturally linked to their individual network and product capability. It makes available a quick insight into the differences between the corporate laws, the insurance laws, the practical situation, the underwriter capabilities both at home and abroad, and allows us to quickly work towards an optimal combination of coverage, pricing, and compliance with one or a combination of insurers.

Examples

Japan

A high percentage of publicly traded companies in Japan carry D&O insurance. The laws surrounding local directors, the ability of the corporations to indemnify them, and the admitted vs. non-admitted rules on insurance require a thorough review of exposure and a planned risk management response.

Germany

There are a number of high profile actions against senior management at German companies. The local view on the purchase of D&O insurance indicates that while individual directors wish to have the coverage, and do purchase it, collectively they do not involve the corporation as it often runs against corporate views. The insurers in Germany have varying responses to date.

European Union

A policy issued in one European Union country is considered admitted in all EU nations. However, differences in law and coverage may conflict and reduce or render coverage to be more limited than intended. In addition the issue of premium tax payment is of great concern, since the Kvaerner ruling was made.