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We Have a Plant There? u Managing International Property Insurance and Claims. Denver – April 28, 2014. Presenters. Office: +1 (412) 394-7930 Email: pdlaun@jonesday.com. Peter Laun Partner Jones Day Ron Hajjar Managing Director, Claims Preparation Practice Aon Risk Solutions

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we have a plant there u managing international property insurance and claims

We Have a Plant There?uManaging International Property Insurance and Claims

Denver – April 28, 2014

slide2

Presenters

Office: +1 (412) 394-7930

Email: pdlaun@jonesday.com

  • Peter Laun

Partner

Jones Day

  • Ron Hajjar

Managing Director,

Claims Preparation Practice

Aon Risk Solutions

  • Jose Heftye

Senior Director,

Global Risk Management

Flextronics

Office: +1 (972) 403-3334

Email: ron.hajjar@aon.com

Office: +1 (408) 576-3726

Email: jose.heftye@Flextronics.com

what to expect
What to Expect
  • Transform lessons learned from past claims experience to:
  • Design an efficient international property insurance program.
  • Develop a claim management plan before loss occur.
  • Better loss quantification to maximize recovery minimize delay.
typical structures of international property insurance programs
Typical Structures of International Property Insurance Programs
  • Worldwide, no local insurers (not allowed in some jurisdictions)
  • Global master with local admitted insurers
  • Individual domestic placements
  • Government-required reinsurance and effect
issues relating to possible program structures
Issues Relating to PossibleProgram Structures
  • Local objectives and needs versus corporate objectives and needs (e.g., deductible structures)
  • Captive to cover deductible and protect BU P&L
one insurer versus quota share or layered programs
One Insurer Versus Quota-Shareor Layered Programs

One Insurer

Multiple Insurers

Advantages

  • Claims Negotiation
  • Renewal Process
  • Bigger relationship
  • Pricing Stability
  • Capacity Stability
  • Counter Party Exposure
  • Claims Negotiation
  • Renewal Process
  • Smaller relationship

Disadvantages

  • Pricing Stability
  • Capacity Stability
  • Counter Party Exposure
dic coverage
DIC Coverage
  • May be critical coverage for global program
  • How it works
  • Key issues
      • Substantive Language, Coverage or Limits issue vs. interpretation issue
      • DIC coverage may not protect local balance sheet—can money be repatriated?
legal program structure issues
Legal Program Structure Issues
  • Choice of Law (local, defined state)
  • Choice of Forum
  • Arbitration vs. Litigation
  • Policy Construction Clauses (anti contra proferentem)
possible structures for claim preparation
Possible Structures for Claim Preparation
  • Local team
  • Non-local team
  • Hybrid
  • Broker involvement—varies by country
  • Does insurer have local adjuster
possible claim scenarios
POSSIBLE CLAIM SCENARIOS
  • Local only
  • Multi-location: different countries and policies (inter-dependencies)
  • DIC claims (local claim, global policy responds)
claims adjustment process
CLAIMS ADJUSTMENT PROCESS
  • Depends greatly on structure of program and claim
  • Global program may lead to hybrid claims adjustment process—local and global/DIC
  • Local policy—local norms and adjustment practices
key issues
Key Issues

Program Structure

  • Declared values for BI and PD (more common outside US) —inflation skews values
  • Leased property vs. owned property
  • Local adjustment practices or policy language may result in coverage gaps
  • BI coverage (e.g., budget vs. revised market)
  • Code upgrade coverage
  • Disputes over what is damaged and extent of damage
  • Professional fees—covering forensic accountants; rates; local versus international accountants
key issues1
Key Issues

Cultural and Logistics

  • Currency exchange
  • Timing—can be a much slower process
  • Audit detail level—can be higher
  • Cultural; language (e.g., policy and contract translations)
  • Local expectations vs. corporate views
  • Time zones
  • Access to local resources
key issues2
Key Issues

Legal and Regulatory

  • Legal regime differences (effective access to courts, pro-policyholder orientation, etc.) – ipsa dixit problem
  • Tax implications of global vs. local payment
  • Government reinsurance involvement and effect
  • Contractual obligations to 3rd parties (e.g. customers and suppliers)
in summary
In Summary
  • Multiple variables will influence the outcome of a claim
  • Pre-loss work will help you identify those variables and prepare to successfully adjust future claims:
      • Loss quantification
      • Coverage identification
      • Execution and project management
keep this slide for evaluation information mobile app etc
KEEP THIS SLIDE FOR EVALUATION INFORMATION/MOBILE APP ETC.

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