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Peeling Back the Layers of Risk for U.S. Companies on the Global Stage

Multinational companies need programs tailored to their unique exposures.
By: | April 9, 2018 • 6 min read

U.S.-based companies of every size have compelling reasons to take their business abroad. This especially holds true as global expansion is no longer exclusive to Fortune 500 corporations.

“The primary driver of international expansion is economic opportunity,” said Jonathon Fanti, Senior Vice President and Underwriting Leader, Public Company Management Liability, QBE North America.

“Though the U.S. economy continues to recover, tapping into the resources, workforces and consumer bases of other nations represents big growth potential for American organizations.”

Technology has been a key driver to increasing international commerce. Companies are able to easily communicate and conduct transactions from thousands of miles away.

“The internet has made it easier for U.S. companies of all sizes to sell their products and services overseas than it was 20 years ago. It allows for 24/7 communication,” said Harpreet Mann, Vice President, QBE North America.

But going international doesn’t always mean building factories or brick-and-mortar offices abroad. It could also mean selling a product overseas without having any physical location there, sourcing supplies from foreign firms, or it could mean international executive travel.

Different layers of global involvement bring increased multinational risks, requiring global expertise and protection.

Travel Risk

With increasing frequency, regardless of company size, employees often travel outside the U.S. to seek business in a new market; research potential suppliers; or scout possible locations for a new facility, shop or office. For these companies, the primary level of overseas exposure involves international travel.

Standard travel insurance typically covers cancellations and delays, lost baggage, medical expenses, evacuations and a 24/7 assistance hotline. Such coverage may not be enough to mitigate an employer’s risk.

“Employers have a duty to care for the health and well-being of employees, especially when they are halfway around the globe,” said Richard Friesenhahn, Head of Multinational, QBE North America.

However, “a domestic workers’ compensation policy may not cover incidents that happen abroad,” Friesenhahn said. “Consequently, it is imperative companies have a global policy that will take care of employees no matter where they are.”

The most diligent employers will partner with insurers to provide pretravel risk assessments in various regions worldwide and develop plans to reduce potential risks. They also offer real-time security updates for specific regions, and trustworthy local medical providers to help workers who become ill or injured.

Working with a company that provides expertise is key, as the extension of coverage outside the U.S. for domestic workers’ compensation varies by state and may not cover accidents that happen abroad. In addition, employers may need multiple coverages to cover all the risks a traveler could be exposed to.

Risks to Companies’ Receivables

As companies increasingly sell their goods overseas, they are often required to extend credit to their buyers to remain competitive and make the sale. By extending credit, the company selling its products overseas is assuming risks that could result in nonpayment by the buyer. It is crucial such companies protect one of their most valuable assets — their receivables — which involves understanding the risks that may trigger non-payment.

By allowing a buyer to pay in the future for goods delivered, the company selling the goods is assuming credit risk. Specifically, such a company is exposing itself to the possibility that the buyer’s financial condition may deteriorate and impact its ability to pay. If a buyer does not make payment, the company supplying the goods will certainly incur a financial loss.

Another risk arises from the increasing trend toward companies selling to fewer and fewer entities. As a result, companies’ sales are concentrated in a few large buyers. The failure, therefore, of one buyer to pay can significantly impair the financial condition of the company supplying goods.

Companies may be exposed to political risks, as well as concentration risks, when selling goods outside the United States. A recent report by the Department of Commerce noted that Mexico, Canada, China, Japan and the UK were the top five markets for SME’s exporting overseas.

It is important for companies to understand how geopolitical risks may impact a buyer’s ability to make payment.

With the recent political discourse around exiting or renegotiating, international trade agreements may further increase political risks for companies selling overseas. The increased political risk could be in the form of sanctions, embargoes, license cancellations or other retaliatory measures taken if international relations sour. Such changes could block a company’s access to profitable markets and disrupt supply chains.

Brick-and-Mortar Risk

One of the most critical risks faced by a company is the threat to their physical locations outside the United States, whether it is a production facility, warehouse, office or retail distributor.

A traditional global master policy encompassing property/casualty, workers’ comp and auto liabilities may not provide enough coverage or even be considered legal in some countries. Some jurisdictions require that foreign companies purchase local policies from a locally-licensed admitted carrier.

“When you get down to it, the countries want the tax,” Fanti said. “Requiring local policies by law is about supporting their local economy.”

Such requirements vary by coverage and country. Local property, casualty, auto and workers’ comp policies are usually compulsory, but others like management and professional liability coverage may not be required by local regulators. Failure to get local coverage can result in steep fines and prevent claims from getting paid.

“Non-licensed, non-admitted carriers are not legally allowed to send funds into some regions where local policies are required by law,” Fanti said. “If your master policy isn’t recognized, you need to find an insurance carrier who will legally be able to pay your claim.”

Global Expertise

QBE North America, an integrated specialist insurer, recently expanded its multinational offering with QBE Global Connect, a foreign casualty package comprised of General Liability, Excess Auto and Foreign Voluntary Compensation coverages, joining its existing multinational Directors’ and Officers’ liability insurance offering. The company’s Global Credit & Surety business also offers solutions for multinational companies worldwide.

“QBE is offering an integrated multinational solution in the marketplace by connecting a strong management liability solution with our property and casualty expertise and multinational coverage. As a multinational insurer with offices and expertise around the globe, we are uniquely positioned in the market to satisfy the growing need for multinational expertise and coverage,” Friesenhahn said.

QBE’s Multinational Client Centers help domestic clients identify global risks and implement a comprehensive program tailored to their specific needs.

“The centers address regulatory, compliance and tax needs while coordinating communications throughout our global network,” Fanti said. That network consists of 36 offices worldwide and a service team dedicated to ensuring product of local policies around the globe.

“QBE is truly global with on-the-ground teams who understand the local risks and local coverages. They can provide the network with up-to-date insights on regulatory changes, and the network is in constant communication with our brokers and underwriters,” Fanti said.

The QBE P&C and D&O multinational coverage solutions, QBE’s Multinational Client Centers and the integration of 36 QBE offices and partners around the world make QBE a leading insurer in the multinational space.

To learn more, visit QBE’s newly launched website at www.qbena.com.

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




QBE North America is a division of QBE Insurance Group Limited, one of the world's 20 largest insurance and reinsurance companies. We offer the unique integration of financial strength, a broad product set and sophisticated capabilities to deliver value for our partners and policyholders.

4 Companies That Rocked It by Treating Injured Workers as Equals; Not Adversaries

The 2018 Teddy Award winners built their programs around people, not claims, and offer proof that a worker-centric approach is a smarter way to operate.
By: | October 30, 2018 • 3 min read

Across the workers’ compensation industry, the concept of a worker advocacy model has been around for a while, but has only seen notable adoption in recent years.

Even among those not adopting a formal advocacy approach, mindsets are shifting. Formerly claims-centric programs are becoming worker-centric and it’s a win all around: better outcomes; greater productivity; safer, healthier employees and a stronger bottom line.

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That’s what you’ll see in this month’s issue of Risk & Insurance® when you read the profiles of the four recipients of the 2018 Theodore Roosevelt Workers’ Compensation and Disability Management Award, sponsored by PMA Companies. These four programs put workers front and center in everything they do.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top,” said Steve Legg, director of risk management for Starbucks.

Starbucks put claims reporting in the hands of its partners, an exemplary act of trust. The coffee company also put itself in workers’ shoes to identify and remove points of friction.

That led to a call center run by Starbucks’ TPA and a dedicated telephonic case management team so that partners can speak to a live person without the frustration of ‘phone tag’ and unanswered questions.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top.” — Steve Legg, director of risk management, Starbucks

Starbucks also implemented direct deposit for lost-time pay, eliminating stressful wait times for injured partners, and allowing them to focus on healing.

For Starbucks, as for all of the 2018 Teddy Award winners, the approach is netting measurable results. With higher partner satisfaction, it has seen a 50 percent decrease in litigation.

Teddy winner Main Line Health (MLH) adopted worker advocacy in a way that goes far beyond claims.

Employees who identify and report safety hazards can take credit for their actions by sending out a formal “Employee Safety Message” to nearly 11,000 mailboxes across the organization.

“The recognition is pretty cool,” said Steve Besack, system director, claims management and workers’ compensation for the health system.

MLH also takes a non-adversarial approach to workers with repeat injuries, seeing them as a resource for identifying areas of improvement.

“When you look at ‘repeat offenders’ in an unconventional way, they’re a great asset to the program, not a liability,” said Mike Miller, manager, workers’ compensation and employee safety for MLH.

Teddy winner Monmouth County, N.J. utilizes high-tech motion capture technology to reduce the chance of placing new hires in jobs that are likely to hurt them.

Monmouth County also adopted numerous wellness initiatives that help workers manage their weight and improve their wellbeing overall.

“You should see the looks on their faces when their cholesterol is down, they’ve lost weight and their blood sugar is better. We’ve had people lose 30 and 40 pounds,” said William McGuane, the county’s manager of benefits and workers’ compensation.

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Do these sound like minor program elements? The math says otherwise: Claims severity has plunged from $5.5 million in 2009 to $1.3 million in 2017.

At the University of Pennsylvania, putting workers first means getting out from behind the desk and finding out what each one of them is tasked with, day in, day out — and looking for ways to make each of those tasks safer.

Regular observations across the sprawling campus have resulted in a phenomenal number of process and equipment changes that seem simple on their own, but in combination have created a substantially safer, healthier campus and improved employee morale.

UPenn’s workers’ comp costs, in the seven-digit figures in 2009, have been virtually cut in half.

Risk & Insurance® is proud to honor the work of these four organizations. We hope their stories inspire other organizations to be true partners with the employees they depend on. &

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