Factors in choosing a broker for a global insurance programme

A multinational programme will generally be put together by the multinational company, together with its global broker. The programme itself may include local brokers in different countries who will need to work with the central broker. The choice of local broker may have been made by the local operation, while the central broker will be chosen by the parent company. The main criteria in the choice of central broker for a multinational programme include:

1. A strong global network
The central broker should preferably have representation in all, or as many as possible, of the major countries in which the multinational buyer operates. A programme can be more difficult to operate where there are a large number of brokers worldwide without any central coordination. However, there are many examples of correspondent brokers that have a good relationship with global brokers that can operate equally as well, if not better, than a branch operation of the global broker.

The broker’s network should ideally match the buyer’s operations. There is clearly little point in having a broker that has strong representation in the Far East but only contact offices in South America, when the buyer only has a sales office in the Far East, and a quarter of group profits come from the South American operations.

2. Multinational programme experience
Experience in putting together and operating a multinational insurance programme is crucial to its success, particularly when one is dealing with a large number of countries. The numerous tax and regulatory requirements around the world – combined with different legal systems, different cultures and different languages – mean that multinational insurance programmes are complex and time consuming to put together.

While every programme will be different and tailor-made to the individual company’s requirements, experience in the complex process of putting together such a programme should not be underestimated. It is equally important that the account executive assigned to the buyer and the programme is experienced in international insurance.

3. Claims assistance on a local and international level
The broker must be able to provide claims assistance both at the central international level and at the local domestic level. The claims handling must therefore cover the master programme covers such as DIC/DIL cover, and other excess covers, as well claims on the local policy from the local admitted insurer. The broker should also provide claims information and analysis at both levels.

4. Experience with risk financing programmes and captives
The broker must be able to advise the buyer on the various options for self-insurance, especially in relation to retentions and funding methods. Experience in dealing with a wide range of risk financing options, including captives, external funding, and other alternative risk financing methods is an important consideration when choosing a broker. Where a buyer has a captive or other offshore financing vehicle, the broker may be in a position to manage the captive.

5. Expert knowledge of excess covers and reinsurance
Any multinational programme will include excess covers of one sort or another, and reinsurance protection, and it is important that the broker has experience of arranging such covers and has access to the right markets and at the right level. Some multinationals will have very large excess of loss requirements and the broker must be able to put together the programme with the required capacity and at the right price.

6. Worldwide risk management resources
The central broker should ideally have the ability to provide risk management resources in all, or many, of the territories in which the buyer operates. These resources can include loss control surveyors and engineers that can carry out surveys and inspections at regular intervals. The broker may have experienced staff in a number of – or most – territories, capable of carrying out a variety of services such as risk identification, risk control surveys on both the property and liability sides, and claims analysis.

7. Adequacy and scope of errors and omissions cover
Multinational buyers should make sure that they have full information as to the adequacy and scope of the broker’s errors and omissions cover in the event that something goes wrong and, for example, the buyer is unable to collect due an error by the broker such as non-disclosure or misrepresentation.