Addressing Complexity and Compliance: COVID-19 Puts Spotlight on Global Casualty Risks
The global COVID-19 pandemic has shined a spotlight on the importance of a having a solid integrated risk management strategy in place. Further, global economic issues and continuing operational uncertainties continue to drive home the importance of having the proper protocols in place when the worst occurs. No matter what is going on in the world, a sound global risk strategy can be worth its weight in gold.
A key challenge for risk managers who oversee programs with multinational operations is assuring jurisdictional compliance. A global risk management program must include a carefully designed master policy underwritten for coverage consistency, which is essential to minimizing coverage gaps, regardless of jurisdiction. Addressing the interwoven drivers of global casualty exposures is complicated on its own, but the COVID-19 crisis has presented additional layers of coverage complexities. Even amid the uncertainty of an evolving pandemic, risk managers should keep the following in mind as they develop a risk management strategy. 

Complex Considerations 

Insurance requirements and claims payment stipulations vary from country to country. A globally controlled program issued in a company’s home country can incorporate coverage options to establish a uniform standard of protection worldwide. Moreover, specific country or jurisdictional mandates must be met for a global insurance program to perform optimally. If mandatory local coverage is not procured and a loss occurs in that jurisdiction, there would not be a proper policy in place to respond. Further, coverage under the multinational’s master policy may be contingent on the existence and coverage of a local policy, creating a potential coverage gap for claim resolution. 
Absence of mandatory local policy cover can result in an inability to pay resulting claims at the local, master, and excess policy levels. Repercussions and resultant financial loss could be significant – and could expose the multinational parent company to local fines and penalties. 

Evolving Regulations 

Multinational organizations must adhere to evolving regulatory directives and norms within differing operational jurisdictions. Further, as employers, they also are responsible for their employees’ well-being. As such, it is critical that program compliance address both new and existing country or territory health and safety mandates. 
Here’s just one example of why it is critical for multinational organizations to keep up with local rules and regulations: The Singapore Work Injury Compensation Act of 2019 stipulates that for policies effective on and after January 1, 2021, multinational insureds must submit detailed accounting of workers’ compensation claims within a strict timeline. Claims misrepresentation or noncompliance could result in work stoppage and financial penalties. Not being aware of rule changes could have drastic consequences for an insurer and their policyholders.

Collaboration is Key

Multinational companies are encouraged to collaborate with global insurance partners with existing in-country expertise and relationships to smoothly navigate prudent, responsible coverage anywhere in the world. A global risk management program equipped with comprehensive coverages can help pay a wide range of claims and having a presence in local markets ensures local laws, regulations, and customs are considered. 
Additionally, for risk managers, in-depth, timely data translates into knowledge. Given global coverage complexities, risk managers can be supported by sophisticated tools for access to real-time, interactive data to help manage and track every aspect of the multinational’s program. 

Preparing for the Future

Building a sustainable multinational casualty program in the face of global adversity, including pandemics, requires vigilance, collaboration, and ongoing risk assessment – that is the only way that coverage consistency and compliance can be assured. 
To learn more, read our advisory, Building a Better Multinational Casualty Program.

Laura Vest, CPCU, is Executive Vice President, Chubb Multinational.

The opinions and positions expressed are the authors’ own and not those of Chubb. The information and/ or data provided herein is for informational purposes only and is not a substitute for professional advice. Insurance coverage is subject to the language of the policies as issued.