This article was produced in partnership with Swiss Re Corporate Solutions.
Desmond Devoy, of Insurance Business Canada, sat down with William Porter, head of international programs, Americas, at Swiss Re Corporate Solutions, to discuss how programs can best protect clients with broad coverage that is also adaptable to local realities.
One world, one policy, ONE Form.
When it comes to international program coverage, Swiss Re has got all the continents covered.
“When we’re putting together international programs, what we’re looking to do is underwrite the risk, once, globally,” said William Porter (pictured), head of international programs, Americas, for Swiss Re Corporate Solutions, during a recent interview.
The lynchpin for these programs is the ONE Form contract, which brings certainty to international programs, with award-winning property and business interruption coverage which is consistent around the globe – with a local flair where necessary.
Porter identified that if a customer has international exposure, they tend to approach Swiss Re in their home country. Swiss Re looks at what coverage the client needs and it gets underwritten globally, and then it will issue a local policy for that customer as well.
“We look at where they have exposure around the world, outside of their home country,” said Porter. If it is a big enough exposure, or if the customer has a servicing need, Swiss Re will issue through its office, or through one of its partners, to get them local admitted coverage in the foreign country in question.
“Those local policies that we issue, they’re typically reinsured 100% back to the home country,” Porter explained. “Any claim that happens on the local policy is going to come back to the home country. And that is why we need to make sure we understand what policy language is being issued in these local countries. And that’s where the ONE Form comes in.”
ONE Form is available in more than 20 countries where Swiss Re has a local presence and is beginning to be offered by their network of trusted partners, which expands their reach to more than 150 countries. It was introduced in January of 2020. It is also available in several languages including English, Mandarin, French, German, Italian, Portuguese, Spanish and Japanese.
“The idea behind that is that that the ONE Form is the same policy, with very minor changes, that’s issued for us all over the world where we have Swiss Re offices, and even by some of our partners, so, when that claim comes in locally, it’s adjusted based on the local policy,” he explained. “And the coverage should match what the customer is expecting.”
It then goes through the adjustment process, and the client gets their claim paid back locally. It is then reinsured back through the company’s internal structure to the home country.
The policy typically applies to mid-size and larger corporate customers, usually those with more than $250 million in revenue, like service companies and manufacturers. The big benefit of the ONE Form is that “you know what the coverage is going to be,” said Porter, especially when it comes to contract certainty.
With the uncertainty around the world of late – conflict in the Middle East, tensions in Asia, the ongoing war in Ukraine, and elsewhere – insureds are going to be asking, whenever something bad happens, what the wording of their contract says.
For years in international programs, it all came back to the master policy in the home country, issued at headquarters.
“But often you didn’t know exactly what the local policy said,” said Porter. “Most carriers that are in this international program space, we use terms like good local standard or broad local standard, and it’s whatever is the norm in that insurance marketplace, in whatever country in the world you’re in. But it differs by every country, because what’s standard in one country is not standard in another.”
The idea behind ONE Form then was to take a broad, all-risk policy language that people would be familiar with from their master policy and have that issued all over the world. So the policy, with very minor local changes, is the same worldwide.
“That’s the number one benefit that we see for customers – they don’t have to guess,” he said. “They know what’s going to be issued.”
When Swiss Re invested in the international program space, it placed a heavy emphasis on making technology work for customers, and themselves. While the ONE Form is not yet an automatic process, it is by no means a manual process either.
“The underwriters and the assistants that work with them can choose the coverages that are provided, the limits and the deductibles,” said Porter. “And the system puts that together. It’s about as close as you can get to an automated policy issuance process right now, in the corporate space.”
The coverage around the world is going to be very similar to the master policy back home, and that essentially eliminates differences in limits and coverage.
“That is where a master policy would sometimes have to come in and provide coverage that isn’t provided on that old local standard,” he said. “While the customer might ultimately get the same amount of money for a claims payment, it’s a lot simpler of a process for them.”
Difference in conditions (DIC) and difference in limits (DIL) and financial interests are “two sides of the same coin,” Porter explained. “The idea is that we want to be providing our customers with the coverage that they have negotiated and purchased from us under their master policy. We want to underwrite these risks once. We want to underwrite the whole world. We then work on local acceptance of the risk and get local policies issued.”
Let’s look at an example using CBI, contingent business interruption, a critical property coverage and one highlighted in recent years. A local policy may give a $10 million limit for CBI because that is what has been recorded locally as the exposure. But the master policy gives the client a $50 million limit. However, if the loss was actually more like $15 million, the local policy can only pay $10 million.
“But the customer is not whole yet,” said Porter. “Our goal is to make the customer whole based on the coverage purchased globally.”
The ONE Form provides a mechanism where the client can go back through the local policy up into the master policy. If everything checks out, that there was a true and legitimate $15 million loss, the ONE Form will see to it that the insured gets the extra $5 million they needed that they could not get locally.
“We’ll pay that through the master policy,” Porter explained.
Other ways this policy has helped is that any outstanding amount that cannot be paid to a foreign country subsidiary, can be made to the parent company in the home country using a concept called Financial Interest Coverage, available when local regulations do not permit DIC/DIL coverage.
For Swiss Re “brokers are absolutely integral to our success in the international program space,” Porter said. “The broker is a critical part of making sure that the program remains coordinated. They typically are talking with the customers most often and serve as the link for all three parties.”
With so many clouds on the international horizon, Porter wants brokers and clients to know that “we’re selling a promise – we will be there when you need us.” Ultimately, “it’s one less worry for our customer. They know they’ve got coverage.”
