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Are You Global-Ready? Most Companies Underestimate Multinational Risks

Learn the questions you need to ask to obtain the right coverage.
By: | December 14, 2017 • 5 min read

Being multinational isn’t just for Fortune 500 companies anymore.

Technology and ease of travel have made the world smaller than ever, and thriving in a global economy demands following business opportunities everywhere, from Tennessee to Thailand. According to The Hartford’s Q2 2017 pulse survey, 80 percent of mid-to-large size companies in the U.S. are doing business overseas in one way or another.

But while companies must move to take advantage of opportunities, they don’t always realize the new world of legal and regulatory risk they enter when they do so — or the complexity of mitigating that risk.

“There’s no global, harmonized regulatory system,” said Alfred Bergbauer, head of Multinational Insurance, The Hartford. “You have to be mindful of the insurance laws and tax environments in each country. Many smaller organizations don’t realize the consequences of not complying with local regulations.”

Alfred Bergbauer, head of Multinational Insurance

Regulators routinely scrutinize the insurance of foreign operators — especially policies not issued locally.

“When businesses don’t buy local insurance, it deprives that country of tax revenue and robs regulators of oversight over the underwriting criteria and adherence to local law,” Bergbauer said.

Regulators are increasingly auditing brokers, insurers and insureds to identify unlicensed insurance, which can result in steep fines and other business risks that many smaller organizations may not be aware of, including payment of back taxes, fines and disruption of business if inventory is impounded.

In most cases, Bergbauer said, middle market companies are either uninsured, under-insured or improperly insured for multinational exposures. With so many middle market companies expanding their footprint, how can so many lack proper insurance?

“There is a gap in multinational solutions geared toward the middle market,” Bergbauer said. “And many brokers serving the middle market are not well-versed in the business activities that draw multinational exposure or in the solutions available.”

Three Levels of Multinational Risk

The level of multinational exposure — and the type of solution needed — varies depending on how a company operates abroad and how deeply they engage with foreign markets.

  1. Passport

These are companies that send representatives abroad to meet with potential clients, partners, suppliers or buyers, or to attend training seminars or conferences.

Companies in this segment aren’t buying or selling a product or service in a foreign country, and they don’t have any overseas locally insurable, foreign operations (permanent physical operations, local employees and/or registered entities). Their primary concern is travel risk.

“Many organizations assume their workers’ compensation policy will cover health and safety exposures, but most U.S-based coverage does not apply to all incidents abroad,” Bergbauer said.

In addition to a workers’ comp policy, companies may need coverage for death and dismemberment, kidnap and ransom, and access to a 24/7 crisis hotline and emergency medical assistance. Employers that lack these resources could face legal liability for not fulfilling their duty of care. But beyond legal obligation, it’s simply the right thing to do to provide these coverages and services to employees.

  1. Exporters

This segment includes businesses that not only send employees overseas but also sell products or engage in installation or repair work overseas.

For these activities general liability and/or product liability exposures increase. These companies are selling products or services abroad but don’t have a physical foreign location.

“A very high percentage of U.S. companies that don’t purchase a multinational policy believe that their domestic policy covers product liability risk around the world,” Bergbauer said. “But U.S. liability policies generally respond only to products manufactured or sold in the U.S. An injury that occurs overseas may not be covered by a domestic policy, even if the lawsuit is brought in U.S. court.”

To seal those gaps, exporters should supplement their domestic policies with a multinational solution that extends coverage to product and legal liability claims incurred overseas, regardless of where a triggering event occurs or where a lawsuit is filed.

  1. Controlled Master Program

In addition to sending employees overseas, selling products or performing installation and repair work abroad, clients in this segment also have foreign legal entities, local employees and/or fixed assets overseas as well.

As legal entities within foreign countries, they are required to purchase policies from the local market that are written in the local language and adhere to local laws and practice. Since no two countries’ regulatory frameworks are the same, understanding and complying with good local standards in multiple nations can be a liability-fraught headache for mid-size companies.

These entities can best mitigate their risk through a controlled master program, where a U.S. master contract acts as the backbone, supported by multiple locally admitted policies. Where local coverage falls short, the master policy fills in the gaps.

Asking the Right Questions

Large corporations fitted with risk management, legal and compliance teams may be aware of their multinational exposures and have the wherewithal to get a controlled master program in place.

For mid-size companies, these risks often go unaddressed.

“Forty-one percent of mid-to large-size companies have had no communication with their broker about international exposures1,” Bergbauer said.

There are five critical questions every company should answer to determine their level of multinational exposure and what type of solution they need:

  1. Do you have or send employees overseas?
  2. Do you sell products overseas?
  3. Do you have goods warehoused or equipment located overseas?
  4. Do you have international locations?
  5. Do you have foreign suppliers or customers?

“If you answer yes to any of these, find a carrier who can help,” Bergbauer said.

Solutions at Every Level

By asking the right questions, The Hartford works consultatively with clients to bring sophisticated multinational solutions to companies of all sizes.

“By understanding their specific business activities, we can shape a solution that meets clients’ needs, which can involve localizing an umbrella, increasing local limits or adjusting limits in the master policy,” Bergbauer said.

The Hartford is committed to helping customers meet their risk management needs globally.

To learn more, visit www.thehartford.com/multinational.

1 The Hartford’s Second Quarter 2017 Pulse Survey



This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with The Hartford. The editorial staff of Risk & Insurance had no role in its preparation.

The Hartford is a leader in property and casualty insurance, group benefits and mutual funds. With more than 200 years of expertise, The Hartford is widely recognized for its service excellence, sustainability practices, trust and integrity.

Absence Management

Establishing Balance With Volunteers

It’s good business to allow job-leave for volunteer emergency responders, whether or not state laws apply.
By: | January 10, 2018 • 7 min read

If 2017 had a moniker, it might be “the year of the natural disasters,” thanks to a phenomenal array of catastrophic or severe events— hurricanes, tornadoes, wildfires, ice storms and floods.


Combined with smaller-scale fires and other emergencies, these incidents tax the resources of local and state emergency services, often prompting the need to call volunteer emergency responders into action.

But as lean as most organizations are already running, volunteer activities can sometimes cause friction between employees and employers. Handling conflicts the wrong way can potentially lead to legal headaches, harm employee morale and batter a company’s reputation.

State by State Variations

Most employers are aware of the various federal and state leave laws protecting their employees, including family and medical leave, pregnancy leave and military leave. But leave laws that protect the livelihoods of volunteer emergency responders are more likely to fly under the radar of some HR managers and risk managers.

Such laws don’t exist in every state, but more than 20 states do have some type of law in place to protect volunteers including emergency responders, firefighters, disaster workers, medical responders, ambulance drivers or peace officers.

Marti Cardi, vice president of Product Compliance for Matrix Absence Management

The laws vary broadly. Nearly all specify that such leave be unpaid, and that employees disclose their volunteer status to employers and provide documentation for each leave. But there is a spectrum of variations in terms of what may trigger an eligible leave. Some, for instance, apply for any emergency that prompts a call from the volunteer’s affiliated responder group. Others may require a government declaration of emergency for the law to be triggered.

While many of the laws do not explicitly require employers to let employees leave work when called to an emergency during a shift, most specify that an employee may be late or even miss work entirely without facing termination or any other adverse employment action.

Some states mandate a maximum number of unpaid leave days that a volunteer can claim. But others may place more significant burdens on employers. In California, for instance, employers with 50 or more employees are required to grant up to 14 days of unpaid leave for training activities in addition to any leave taken to respond to emergency events. For multistate employers, keeping on top of what obligations may apply in each circumstance can be a challenge.

Significant Risks

Large or mid-sized employers may rely on absence management providers to keep them in compliance. For smaller employers though, it may be as simple as looking up a state’s law via Google to find out what’s required. However, checking in with the state department of labor or the company’s attorney may be the best way to get the correct facts.

“I would caution that just because you don’t find something [on the internet], it doesn’t mean it’s not there,” said absence management and employment law attorney Marti Cardi, vice president of Product Compliance for Matrix Absence Management.

For example, Cardi said, an obscure Texas law provides job-protected leave for volunteer ham radio operators called into service during an emergency.

Cardi said employers should task HR to investigate the laws in each state the company operates in, and to ensure that supervisors are educated about the existence of these laws.

“If a supervisor is told by one of his or her employees, ‘Sorry I’m not coming in today … I’ve been called to volunteer firefighter duty for the [nearby region] fire,’” she said, you want to be sure that the supervisor knows not to take action against the employee, and to contact HR for guidance.

“Training supervisors to be aware of this kind of absence is really important.”


An employer that does terminate a protected volunteer for responding to an emergency may be ordered to pay back wages and reinstate the employee. In some cases, the employee may also be able to sue for wrongful termination.

And of course, “you don’t want to be the company in the headlines that is getting sued because you fired the volunteer firefighter,” she added.

If an employer bars a volunteer from responding, the worst-case scenario may be a third-party claim. Failure to comply with the law could give rise to a claim along the lines of “‘If you had complied with your statutory obligation to give Jane Doe time to respond, my loved one would not have died,’” explained Philadelphia-based Jonathan Segal, partner at law firm Duane Morris and managing principal of the Duane Morris Institute.

“That’s the claim I think is the largest in terms of legal risk.”

Even if no one dies or is seriously injured, he added, “there could still be significant reputational risk if an individual were to go to the media and say, ‘Look, I got called by the fire department and I wasn’t allowed to go.’”

The Right Thing to Do

What employers should be thinking about, Segal said, is that whether or not you have a legal obligation to provide job-protected leave for volunteer responders, “there’s still the question of what are the consequences if you don’t?”

Employee morale should be factored in, he said. The last thing any company wants is for employees to perceive it as insensitive to their interests or the interests of the community at large.

“Sometimes employers need to go beyond the law, and this is one of those times,” — Jonathan Segal, partner, Duane Morris; managing principal, Duane Morris Institute

“How is this going to resonate with my employees, with my workforce, how are people going to see this? These are all relevant factors to consider,” he said.

There’s an argument to be made for employers to look at the bigger picture when it comes to any volunteer responders on their payroll, said Segal.

“Sometimes employers need to go beyond the law, and this is one of those times,” he said. “Think about the case where’s there’s not a specific state law [for emergency responders] and you say to a volunteer, ‘No, you can’t leave to deal with this fire’ and then people die. You as an employer have potentially played a role, indirectly, because you didn’t allow the first responder or responders to go,” he said.

The bottom line is that “it’s the right thing to do, even if it’s not required by law,” agreed Cardi.

“I feel that companies should have a policy that they’re not going to discipline or discharge someone for absences due to this kind of civic service, subject to verification of course.”

Clear Policy

While most employers do strive to be good corporate citizens, it goes without question that employers need to guard their own interests. It’s not especially likely that volunteer responders will try to take advantage of the unpaid leave allowed them, but of course, it could happen.

That’s why it’s important to have policies that are aligned with state laws. Those policies could include:

  • Notifying the company of any volunteer affiliations either upon hire or as soon they are activated as volunteers.
  • Requiring that employees notify a supervisor as soon as possible if called to an emergency (state requirements vary).
  • Requiring documentation after the event from the head of the entity supervising the volunteer’s activities.

If at some point it becomes excessive – someone has responded to emergencies five times in nine weeks, then it’s time to examine the specifics of the law and have a discussion with the employee about what’s reasonable, said Segal. It may also be time to ask specifics about whether the person is volunteering each time, or are they being called.


In some cases, the discussion may need to be about finding a middle ground, especially if an employee has taken on an excessively demanding volunteer role.

“We encourage volunteers to pick the style that best fits their schedule,” said Greta Gustafson, a representative of the American Red Cross. “Disaster volunteers can elect to respond to disasters locally, nationally, or even virtually, and each assignment varies in length — from responding overnight to a home fire in your community to deploying across the country for several weeks following a hurricane.

“The Red Cross encourages all volunteers to talk with their employers to determine their availability and to communicate this with their local Red Cross chapter.”

Segal suggests approaching it as an interactive dialogue — borrowing from the ADA. “Employers may need to open a discussion along the lines of ‘I need you here this week because this week we have a deliverable on Friday and you’re critical to that client deliverable,’” he said, but also identify when the employee’s absence would be less critical.

No doubt there will be tough calls. An employer may have its hands full just trying to meet basic customer needs and need all hands on deck.

“That may be a situation where you say, ‘First let me check the law,’” said Segal. If there’s a leave law that applies, “then I’m going to need to comply with it. If there’s not, then you may need to balance competing interests and say, ‘We need you here.’” &

Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]