New lines of business for global programmes – Karen Gorman, JLT Specialty

Coupled with this, we are seeing more countries enforcing their insurance regulations in terms of non-admitted insurance.

Risk managers more often need to be able to assure their board and shareholders that any insurance programmes purchased are compliant and that they will not be caught out with fines, penalties, or a large tax bill on a claim payment.

We began a few years ago seeing Directors & Officers Liability (D&O) programmes moving from the dated non-admitted versions to becoming admitted. No longer is D&O seen as purely protection for the board at the parent company, but more focused on protecting all those directors, officers and managers making decisions for companies around the world. Many countries are putting more onus on directors, and those directors, at local level, are increasingly asking for evidence of D&O cover before accepting positions. After all, isn’t it more important to protect people in a compliant way than assets?

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Recently, more insurers are offering admitted programmes for personal accident & travel – local policies are sometimes required for visa applications, as travelling around the world is more frequent and necessary in this world of globalisation, and more companies wish to protect their employees, and themselves, from the risks that travelling involves.

Speaking with a legal firm a few months ago, we learnt that employment law is also evolving in many countries that do not allow non-admitted insurance, such as China. In the near future, Chinese employees will begin to have the same rights of recourse against their employer as we do in the West. Does this mean we will see true global admitted employment practices programmes?

Most now are restricted to issuing local paper in those countries with a track record of employment practice liability claims, such as France, the UK and the US. As the law develops in each country, local insurers will begin to respond with products such as employment practices liability, begin to file wordings locally, and thus pave the way to admitted programmes.

More of our insured’s are beginning to expand into areas of the world such as the Middle East and Africa, in particular in the telecom sector. They are bringing technology and connectivity to those countries which have been fairly isolated, war torn or formerly under dictatorships. Many of our clients purchase political violence coverage for these areas of the world – after all, this could be their biggest risk to both their assets and people!

Many of the countries with a history of political violence are in Francophone Africa and fall within the CIMA code (Conference Interafricaine des Marches d’Assurances). The CIMA code states that, in most cases, 25% of any risk must be insured locally, and non-admitted insurance is not permitted.

Political violence coverage tends to be placed in London, mostly with the Lloyd’s Markets, who do not have the capability of admitting the programmes in many of the countries where it is required. We are finding the need to obtain individual fronting solutions to ensure compliance. Will we begin to see European insurers offering more admitted political violence programmes, or will some of the French/African insurers seize the opportunity to fill a gap in the market?

Considering all of the above what will the future hold? I believe that any class of insurance, if insured under a global programme, should be as compliant as possible. Whether this is property, crime, liability, professional indemnity or other covers usually bought on a global basis, they should always be reviewed to ensure that any decision on whether to admit the programme is an informed one, with the insured understanding the pitfalls of non-compliance. The insurance market will move towards solutions with demand as it has in the past, and I suspect we will see more insurers offering true global solutions within the next few years.