In a globalized world like the present one it is not difficult to find companies that have been pushed to expand into other countries, either by setting up a logistic warehouse or sales office, a production plant, or by acquiring companies already established outside Spain, which make it possible for the parent company to become more competitive.
Advice on business internationalisation
From O. Brokers we have been supporting medium and large companies in their expansion plans for years. Active listening to our clients is part of our DNA, which allows us to advance in the design of the best insurance solution for them, especially when starting the internationalization of the company.
What does an international insurance program do?
Having an international insurance program allows the parent company to:
- Ensure that all its subsidiaries have uniform insurance coverage according to their needs.
- Have the support and service of first world brokers, knowledgeable of the requirements of each local market, who will always act under the main broker
- To ensure regulatory and fiscal compliance in each country, which is key to the design of the programme.
How is an international insurance programme designed?
It is important to know that not all countries have the same insurance regulation. Knowing the information from the countries where we will have a presence and the type of activity that will be developed, we can design an international insurance program with the certainty of not incurring regulatory failures.
Design of international programmes for different branches
International insurance programmes can be designed for different branches: All Risk, Civil Liability, Transport, Managers’ Liability, Accidents… The most common solution is to have a policy called Master, which is the one that gives the capital, limits and guarantees contracted in full and to be accompanied by local policies in those countries where this is necessary for reasons of company operation or regulatory reasons.
Considerations on local policies
In the countries of the European Economic Area, it is permitted to establish insurance programmes by insurance companies authorized in any member state, so unless the operation of the company requires, No locally issued policy is required.
However, in other countries it will be mandatory to issue a local policy as it is not allowed or even prohibited that risks located or domiciled in that country are insured from outside the country.
Local policies, which will always be issued according to the insurer standards of each country, may have some limited guarantees and/or limit on compensation, which will lead to a reduction in the premium of the local policy. This does not mean that they will have less coverage than the matrix, since the Master policy will act in difference of limits (DIL) and/or difference of conditions (DIC) compared to the terms of such local policy. Thus, in the event of a claim that does not have local coverage or exceeds the local contracted limit, it will be covered by the Master policy.
It is also important to know that apart from the DIC/DIL clauses discussed, for countries whose legislation is more restrictive, the controversial FIC clause (financial interest clause) will have to be introduced by which the parent company is entitled to compensation in the event of a claim affecting the subsidiary located in that country, according to the conditions previously established in the contract.
Therefore, when a company is considering taking the step towards internationalization, it is essential to have the support of an insurance brokerage for professional companies such as O.Brokers, who will accompany you in the process providing peace of mind and the best insurance solutions.
