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Managing Growing International Motor Programs

The motor fleet segment is seeing expansion, bringing with it a new set of exposures.
By: | November 3, 2014

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As U.S.-based companies expand operations abroad and leverage new markets and growth opportunities in the global economic landscape, the need to move products or deliver services in multiple countries will often correspond with the need to find solutions to complex international motor fleet exposures.

Whether operating passenger vehicles, delivery trucks, long-haul trucks or heavy commercial vehicles, U.S. multinationals are indeed expanding motor fleets deployed overseas. And where there are vehicles, there will be fleet exposures as well as the need for proven, controlled international casualty motor fleet insurance solutions.

“This particular segment is a significant international growth area,” said Larry Boyk, head of International Programs, Casualty, Zurich Global Corporate in North America. “Most of our Fortune 500 clients already have or are expanding international operations, meaning that they are also expanding a host of casualty exposures, including motor fleet liability. So it’s important that they have a relationship with an insurance carrier that has the global scope and local capabilities to be able to accommodate these growing customer needs.”

Boyk explained that all international casualty motor fleet program components — including policy terms and conditions, premium allocations, risk engineering services, claims procedures and other essential components — must comply with all relevant local insurance regulations and tax laws, factors that can vary from country to country.

“International motor programs can be complicated, time consuming to manage, and deal with a myriad of tax and regulatory requirements,” Boyk said. “Our primary objective at Zurich is to take the complexity out of the implementation of international motor programs.”

In fact, Boyk added that many potential customers see international motor exposures as risks they don’t want to tackle under a master program. Instead, they may trust country managers to place these policies locally. While that may seem to be the most expedient approach, it fails to provide the customer with the centralization and control necessary to ensure consistent pricing and program management. In addition, allowing local contacts to place motor coverages themselves can leave potentially serious gaps in coverage, compliance, or both.

“International motor programs can be complicated, time consuming to manage, and deal with a myriad of tax and regulatory requirements.”
— Larry Boyk, head of International Programs, Casualty, Zurich Global Corporate in North America

“The insurance regulations and tax guidelines governing motor fleet and other lines of business will differ on a country-by-country basis,” Boyk said. “If coverages are placed with markets that are not up to speed with local requirements, there could be issues once a claim occurs. Also, buying coverage on a local basis could result in doing business with a local provider whose claims handling, risk engineering, or financial resources may not be up to par.”

According to Andrew Smith, International Programs Regional Manager, Casualty, Zurich Global Corporate in North America, Zurich has established itself as a leading player in the international motor program segment as its book of business has expanded.

“International motor can be difficult to do well and Zurich is one of the markets that is recognized for our global capabilities in meeting complex multinational needs,” Smith said. “We offer risk managers a value proposition that we believe is a major marketplace differentiator.”

Smith added that controlled motor programs provided by a single carrier are relatively recent phenomena, offering significant benefits such as ease of doing business.

“With Zurich, customers get consistency of pricing and coverage from a single carrier with demonstrated financial stability and global presence,” he said. “That is, as opposed to local managers purchasing local policies from several carriers, whereby risk managers may not know the local insurer’s ratings, stability, etc.”

Also, a controlled international motor program offers the customer consolidated loss data, policy and invoice tracking, as well as confirmation of premium payment. A controlled program also provides a single underwriting point of contact through which stewardship meetings, renewal strategy meetings and negotiations with the risk manager can take place.

Smith explained that international casualty motor fleet programs feature many “moving parts,” including various risk managers or country managers, or may have no local management at all. In addition to the possibility of multiple brokers, there could be leasing companies using different coverage methods, which means a lot of different individuals with existing broker and carrier relationships.

“It can be very tough to move those countries into the program,” he said.

Boyk noted that global brokers trying to bring multiple countries into a single controlled program can face challenges when trying to work with local brokers.

“In some of these situations, brokers handling the controlled motor programs can have difficulty getting the information they need on local policies,” he said. “This can be especially true when we are talking about very large, multinational fleets. Brokers and customers need a carrier with the infrastructure to handle a potential influx of claims. The broker and customer will also want to improve program performance, so we give them the necessary risk engineering support.”

Boyk points out that few markets have Zurich’s breadth of capabilities for casualty motor coverages. Headquartered in Switzerland with major operations located around the globe, Zurich insures millions of fleet vehicles worldwide. In addition, Zurich offers thousands of claims professionals and more than 900 risk engineers around the world, all of whom share information and risk insights with clients one on one and through symposiums, such as one recently held in Cameroon.

“We distinguish ourselves through our service and our network,” Boyk said. “When a risk manager looks at auto expenses on a global basis, he or she knows it can be costly. So when we deliver a fleet program, we can offer local and centralized service coordination as well as aggregated customer data as a value-added piece helpful in benchmarking and assessing program performance.”

In fact, Zurich’s innovative technology tools include a new web-based system empowering risk managers to access not only motor loss data, but also risk engineering data, safe driving information, local policies, local invoices, and local country tax and compliance information.

Boyk noted that complexity is a hallmark of international motor fleet coverage. In fact, motor coverage can be a constantly moving target from a compliance standpoint. Hence, Zurich closely monitors evolving local regulations with specialized attorneys to provide greater certainty to customers that their international motor programs will be compliant.

“No corporation wants to make headlines for violating regulations or tax laws,” Boyk said. “We offer an array of resources and tools — we call it Zurich’s Multinational Insurance Application — that can be effectively used on a country-by-country basis to stay on top of evolving insurance regulations and tax laws.”

Ultimately, given the sophisticated data tools, claims, and risk engineering services Zurich provides, risk managers can make significant progress in learning where motor losses are coming from, what can be done to improve loss frequency and severity, and how to produce sustainable, positive results in a particular country or geographic region.

Learn more about Zurich’s International Casualty Motor Solutions at zurichna.com.

Larry Boyk can be reached at [email protected].

This is intended as a general description of certain types of insurance and services available to qualified customers through the companies of Zurich in North America, provided solely for informational purposes. Nothing herein should be construed as a solicitation, offer, advice, recommendation, or any other service with regard to any type of insurance product underwritten by individual member companies of Zurich in North America, including Zurich American Insurance Company. Your policy is the contract that specifically and fully describes your coverage, terms and conditions. The description of the policy provisions gives a broad overview of coverages and does not revise or amend the policy. Coverages and rates are subject to individual insured meeting our underwriting qualifications and product availability in applicable states. Some coverages may be written on a nonadmitted basis through licensed surplus lines brokers.

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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 Zurich. The editorial staff of Risk & Insurance had no role in its preparation.

Zurich Insurance Group, Ltd is an insurance-based financial services provider with a global network of subsidiaries and offices in North America and Europe as well as in Asia Pacific, Latin America and other markets.

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