International insurance programs becoming more complex

Brokers should look for unified global service standard across insurer network: Zurich

Leszek Bialy of Zurich Canada, speaking at the Worldwide Broker Network conference in Vancouver, BC, April 29, 2011.

The recent economic crisis will ensure that regulatory scrutiny of international insurance programs will remain high for the foreseeable future, says a specialist in global programs at Zurich.

Leszek Bialy, vice president, global corporate and head of customer and distribution management at Zurich Insurance Canada, said that more stringent oversight and capital requirements will pose new barriers for insurers, brokers and their clients. Bialy’s observations were part of a presentation on the future of international insurance programs at the Worldwide Broker Network conference held last week in Vancouver, BC.

Bialy noted that in the last few years, regulators in several countries have entered into memorandums of understanding that would permit the sharing of insurance information across borders.

“In the US recently in certain states, regulators have been corresponding with Japan, Taiwan, China, Germany, the UK and even such countries as Iraq,” said Bialy. “It is therefore important that we need to be able to manage a compliant global system to ensure that we can provide the due diligence and compliance across our operations.”

The benefits to global brokers include the mitigation of potential E and O issues associated with arranging non-compliant structures, and “demonstrating that you as the broker have addressed the governance, compliance and quality issues relative to putting that structure together for your customer,” said Bialy.

He also provided examples of how serious the penalties for non-compliant insurance programs are in certain jurisdictions, such as Italy, where the insurance code recommends prison terms of two to four years for abusive non-admitted placements. In Argentina, the penalties for non-admitted placements have gone as high as 23 times the amount of the premium. However, the range of penalties applied is not well documented because the majority of cases are settled out of court, said Bialy.

Global Insurer Networks

When choosing insurers to work with for building international programs, Bialy suggested that the uniformity of the global operating standard was more important than the number of owned operations the insurer has in other countries.

“Owned operations may not have the network connections” just because they are owned, he said.

“I would look to the service standard as being the key that the global network, be it owned or non-owned, can deliver on the foundation of what it’s expected to deliver to you the broker as well as the customer.”

The Worldwide Broker Network conference was hosted by HUB International at the Fairmont Pacific Rim Hotel in Vancouver, BC from April 27-30 during the lead up to the 2011 RIMS Conference. Over 140 delegates from 53 brokerage firms in 28 countries attended the event.

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