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Do your foreign offices have the right insurance coverages?

If your foreign offices are purchasing insurance coverages with no oversight or reporting protocol, you may be vulnerable to a number of unnecessary costs—and risks.

When you assume your foreign offices are doing just fine with their insurance coverages, potential issues like the following are left unexplored—and unresolved:

  • Gaps in coverage: Are your foreign offices leaving themselves exposed by going without crucial coverages? And if they are, how would you ever know about it—until it’s too late?
  • Redundancies in coverage: Cyber, umbrella, ocean cargo, directors and officers—these are typical examples of liability insurance that usually cover both domestic and foreign offices. In other words, your foreign offices may be purchasing these coverages unnecessarily.
  • Higher premiums: When your foreign offices purchase insurance as individual entities, they don’t benefit from the economies that can come with being connected to the larger parent company’s policies and relationships.
  • No reporting: You have no idea what types of losses your foreign offices are having.
  • The quality of the local broker: Do you know the reputation and expertise of the local brokers your foreign offices are working with?

The Solution? A global master program

There’s a better alternative than having your foreign offices out there going it alone: a global master program. With a global master program, your foreign offices don’t give up control. They still have locally based brokers who represent them and know the local laws, pricing, exposures, coverage norms and market conditions.

The two-way communication that occurs under a global master program creates a host of benefits:

Coverage gaps and overlaps are prevented

When M3 acts as the managing broker, we provide the local brokers a summary of coverages purchased at the corporate level that extend to all entities, domestic and foreign. This enables the local brokers to know exactly what your foreign offices need or don’t need to purchase.

Everything is tied together

When it’s possible and the costs are competitive, your foreign offices should place their coverages with the same insurance company that you use. This ties all polices together.

Cost savings are created

Your foreign offices may discover they have access to more parent company coverage than they realized. And when redundancies are eliminated, money is saved. On top of that, your foreign offices are now purchasing insurance that reflects the economies that come with being part of, say, a $100 million company, rather than acting as individual entities that are worth much less. This also means your foreign offices can enjoy higher limits.

The big picture emerges and everybody wins

Obviously, the consequences of exposed liabilities in your foreign offices ultimately flow to you. With a global master program, you can know your foreign coverages with certainty. On top of that, your foreign offices benefit from having better information, as well as better pricing and service. Meanwhile, they can still have their say as they work with a reputable, directly compensated local broker.

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Jim Yeager is a Vice President at M3 Insurance. Jim works closely with clients to provide customized property and casualty insurance and risk management solutions. He serves as a strategic partner and advocate in the marketplace, providing specialized services and technical expertise, and designing coverage to meet clients’ specific needs.

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