Multinational companies need programs tailored to their unique exposures.
Peeling Back the Layers of Risk for
U.S. Companies on the Global Stage
PERSPECTIVE ADVERTISING FEATURE
U.S.-based companies of every size have compelling reasons to take their business abroad. This especially holds true as global expansion is no longer
exclusive to Fortune 500 corporations.
“The primary driver of international
expansion is economic opportunity,” said
Jonathon Fanti, Senior Vice President
and Underwriting Leader, Public
Company Management Liability, QBE
“Though the U.S. economy continues
to recover, tapping into the resources,
workforces and consumer bases of other
nations represents big growth potential
for American organizations.”
Technology has been a key driver
to increasing international commerce.
Companies are able to easily
communicate and conduct transactions
from thousands of miles away.
“The internet has made it easier for
U.S. companies of all sizes to sell their
products and services overseas than
it was 20 years ago. It allows for 24/7
communication,” said Harpreet Mann,
Vice President, QBE North America.
But going international doesn’t always
mean building factories or brick-and-mortar offices abroad. It could also mean
selling a product overseas without having
any physical location there, sourcing
supplies from foreign firms, or it could
mean international executive travel.
Different layers of global involvement
bring increased multinational risks,
requiring global expertise and protection.
With increasing frequency, regardless
of company size, employees often travel
outside the U.S. to seek business in a new
market; research potential suppliers; or
scout possible locations for a new facility,
shop or office. For these companies,
the primary level of overseas exposure
involves international travel.
Standard travel insurance typically
covers cancellations and delays, lost
baggage, medical expenses, evacuations
and a 24/7 assistance hotline. Such
coverage may not be enough to mitigate
an employer’s risk.
“Employers have a duty to care for
the health and well-being of employees,
especially when they are halfway around
the globe,” said Richard Friesenhahn,
Head of Multinational, QBE North
However, “a domestic workers’
compensation policy may not cover
incidents that happen abroad,”
Friesenhahn said. “Consequently, it is
imperative companies have a global policy
that will take care of employees no matter
where they are.”
The most diligent employers will
partner with insurers to provide pre-
travel risk assessments in various regions
worldwide and develop plans to reduce
potential risks. They also offer real-time
security updates for specific regions and
trustworthy local medical providers to help
workers who become ill or injured.
Working with a company that provides
expertise is key, as the extension of
coverage outside the U.S. for domestic
workers’ compensation varies by state
and may not cover accidents that happen
abroad. In addition, employers may need
multiple coverages to cover all the risks a
traveler could be exposed to.
RISKS TO COMPANIES’ RECEIVABLES
As companies increasingly sell their
goods overseas, they are often required
to extend credit to their buyers to remain
competitive and make the sale. By
extending credit, the company selling
its products overseas is assuming risks
that could result in non-payment by
the buyer. It is crucial such companies
protect one of their most valuable assets
— their receivables — which involves
understanding the risks that may trigger
By allowing a buyer to pay in the
future for goods delivered, the company
selling the goods is assuming credit risk.
Specifically, such a company is exposing
itself to the possibility that the buyer’s
financial condition may deteriorate and
impact its ability to pay. If a buyer does not
make payment, the company supplying the
goods will certainly incur a financial loss.
Another risk arises from the increasing
trend toward companies selling to fewer
and fewer entities. As a result, companies’
sales are concentrated in a few large buyers.
The failure, therefore, of one buyer to
pay can significantly impair the financial
condition of the company supplying goods.
Companies may be exposed to political
risks, as well as concentration risks, when
selling goods outside the United States.
A recent report by the Department of
Commerce noted that Mexico, Canada,
China, Japan and the UK were the top five
markets for SMEs exporting overseas.
It is important for companies to
understand how geopolitical risks may
impact a buyer’s ability to make payment.
The recent political discourse, around
exiting or renegotiating international
trade agreements, may further increase
political risks for companies selling
overseas. The increased political risk
could be in the form of sanctions,
embargoes, license cancellations or other
retaliatory measures taken if international
relations sour. Such changes could block
a company’s access to profitable markets
and disrupt supply chains.
One of the most critical risks faced
by a company is the threat to their
physical locations outside the United
States, whether it is a production facility,
warehouse, office or retail distributor.
A traditional global master policy
workers’ comp and auto liabilities may
not provide enough coverage or even
be considered legal in some countries.
Some jurisdictions require that foreign
companies purchase local policies from a
locally-licensed admitted carrier.
“When you get down to it, the
countries want the tax,” Fanti said.
“Requiring local policies by law is about
supporting their local economy.”
Such requirements vary by coverage
and country. Local property, casualty, auto
and workers’ comp policies are usually
compulsory, but others like management
and professional liability coverage may not
be required by local regulators.
Failure to get local coverage can result
in steep fines and prevent claims from
“Non-licensed, non-admitted carriers
are not legally allowed to send funds
into some regions where local policies
are required by law,” Fanti said. “If your
master policy isn’t recognized, you need
to find an insurance carrier who will
legally be able to pay your claim.”
QBE North America, an integrated
specialist insurer, recently expanded
its multinational offering with QBE
Global Connect, a foreign casualty
package comprised of General Liability,
Excess Auto and Foreign Voluntary
Compensation coverages, joining its
existing multinational Directors’ and
Officers’ liability insurance offering.
The company’s Global Credit &
Surety business also offers solutions for
multinational companies worldwide.
“QBE is offering an integrated
multinational solution in the marketplace
by connecting a strong management
liability solution with our property and
casualty expertise and multinational
coverage. As a multinational insurer with
offices and expertise around the globe, we
are uniquely positioned in the market to
satisfy the growing need for multinational
expertise and coverage,” Friesenhahn said.
QBE’s Multinational Client Centers
help domestic clients identify global risks
and implement a comprehensive program
tailored to their specific needs.
“The centers address regulatory,
compliance and tax needs while
coordinating communications throughout
our global network,” Fanti said.
That network consists of 36 offices
worldwide and a service team dedicated to
ensuring local policies around the globe.
“QBE is truly global with on-the-ground teams who understand the local
risks and local coverages. They can
provide the network with up-to-date
insights on regulatory changes, and the
network is in constant communication
with our brokers and underwriters,”
The QBE P&C and D&O
multinational coverage solutions, QBE’s
Multinational Client Centers and the
integration of 36 QBE offices and
partners around the world make QBE a
leading insurer in the multinational space.
To learn more, visit QBE’s newly
launched website at www.qbena.com.