How Canadian commercial brokers help cover multinational clients

Canadian companies — in particular, energy firms — are starting to expand across the globe, and that’s when setting up a multinational, controlled master insurance program may be beneficial.

“We’ve seen a number of Canadian customers expanding their operations outside of Canada into the U.S. and abroad,” Cody Smith, Intact Insurance’s manager of specialty solutions — multinational and cross-border, told Canadian Underwriter.

“We’ve seen solid growth of these [multinational] companies domestically in Canada as well as abroad, with more multinational programs being set up. We’ve been seeing them placing business in new countries where we haven’t previously written before, but where we have the reach and local expertise to do so.”

Are there particular opportunities for Canadian commercial brokerages looking to set up multinational accounts for their clients?

“It’s a risk-by-risk basis,” Smith said. “It really depends on the type of account. We’ve got access to more than 150 territories in our global network, so we’ve seen growth in [global insurance programs] in various areas.

“One example…is in in the energy space. We’ve seen mining companies based in Canada that are looking to expand internationally. We’ve seen success in [situations in which] countries have a strong mining presence and Canadian companies acquire them.”

Controlled master program

One advantage for Canadian firms with a global insurance program is using what’s called a “controlled master program.” This allows Canadian-based firms to fill in any gaps across their insurance programs in individual local jurisdictions across the globe.

“When we set up our master control policy in Canada, we add a difference in conditions and difference in limits, or DIC/DIL, for short. The DIC/DIL is meant to provide additional limits if coverage on the local [insurance] policy [outside of Canada] is insufficient, or potentially fill coverage gaps if the local policy doesn’t fully do this,” said Smith.

“Most of the time, a local policy providing good local standards is sufficient. So, the DIC/DIL rarely gets called in. But it is beneficial for customers and brokers to know that’s in place should a shortfall occur.”

Manufacturing is one example in which a master control policy benefits a Canadian multinational company. Commercial specialty lines in Canada typically have a robust, customized offering for manufacturing companies, which may not be available locally elsewhere in the world.

“Local policies around the world may not provide that level of detail,” Smith said. “What [master control policies are] meant to do is provide a robust master policy with a good local standard on the locally admitted solution in the countries in which the customer operates. Some policy features you might get in Canada may not be available in that local policy, so you see the DIC/DIL fill in for [gaps in] coverages in the event of a claim that calls in several different areas of the policy.”

Master control policies are particularly beneficial for multinational, risk-managed companies, Smith said.

“We see in our specialty property, energy and casualty [segments], these are large, risk-managed accounts — they are multinational customers by nature. They have exposures all over the world, and they benefit from having a really strong master policy in Canada, as well as having good local standard in the other countries, and then tying these two things in together.”

This story is excerpted from one that appeared in the August-September print edition of Canadian Underwriter. Feature image by iStock.com/sesame