In today’s interconnected world, Canadian organizations with international operations face an increasingly intricate web of risks that span diverse regulatory frameworks, geopolitical uncertainties and local market intricacies.
Successfully navigating these complexities requires not only a deep understanding of global insurance structures but also a strategic approach to ensure comprehensive and compliant coverage across multiple jurisdictions.
For businesses operating beyond Canada’s borders, international insurance placements are far from a one-size-fits-all endeavor.
Each country has its own regulatory landscape, cultural expectations and operational challenges. This makes it imperative to partner with Acera Insurance, whose Complex Risk Group possesses the specialized knowledge and global reach to mitigate risks effectively.
The framework of international insurance programs
An international insurance program is designed to provide seamless coverage for businesses operating across multiple jurisdictions. The objective is to safeguard assets, employees and liabilities while maintaining compliance with both local and global regulatory requirements.
A well-structured international insurance program typically consists of:
- Master Policies: Issued in the company’s home country, these centralized policies establish overarching terms and conditions, ensuring consistency across global operations.
- Local Policies: Many jurisdictions mandate that insurance coverage be purchased from locally licensed insurers. These policies are tailored to comply with country-specific regulations and address unique exposures while facilitating in-country claims management.
The interaction between master and local policies must be carefully managed to prevent coverage gaps or overlaps. Structuring these policies to work in harmony ensures that risk transfer mechanisms are both compliant and efficient.
5 key considerations for a global insurance program
1. How regulatory compliance factors into international insurance
Each jurisdiction has distinct regulations governing pricing, claims handling, solvency requirements and taxation. Some countries — such as Brazil and China — impose strict limitations on non-admitted insurance, necessitating the purchase of coverage from locally licensed insurers.
Insurance brokers must stay abreast of local licensing requirements, approved insurers and tax and premium obligations — such as cash-before-cover rules in certain regions — to avoid costly penalties and disruptions in coverage.
2. How taxation and fiscal requirements factor into international insurance
Insurance premium taxes and fiscal requirements vary widely across countries, and failure to comply can lead to financial penalties or reputational risks. For example, Spain’s Consorcio de Compensación de Seguros requires mandatory contributions for catastrophe coverage. Come April 2025, Italian companies, as well as foreign companies with establishments within the country, will be required to obtain natural disaster insurance.
3. How sanctions and compliance risks factor into international insurance
Political and economic sanctions can impact insurance coverage, potentially invalidating policies or restricting claims payments. Ensuring compliance with international sanctions regimes is critical to avoiding legal repercussions and reputational damage.
4. How claims handling across borders impacts international insurance
Claims management can vary significantly by jurisdiction, with local legal systems dictating dispute resolution, response times and claims settlement procedures. Working with local brokers ensures adherence to regulatory requirements and provides insured parties with access to in-country support and expertise.
5. How currency and contractual nuances factor into international insurance
Exchange rate fluctuations and differences in legal interpretations can create discrepancies between master and local policies. Careful coordination is required to align coverage terms and avoid unintentional gaps or duplications.
International insurance: Bridging the gaps with DIC/DIL and financial interest coverage
A well-structured international risk insurance program incorporates mechanisms to ensure coverage consistency across jurisdictions, including:
- Difference in Conditions / Difference in Limits (DIC/DIL): The master policy acts as a safety net, stepping in to fill gaps or supplement limits when local policies fall short.
- Financial Interest Coverage (FINC): In markets where DIC/DIL coverage is not permitted on a non-admitted basis, such as China and Brazil, financial interest coverage can protect the parent company by recognizing and indemnifying financial losses on its balance sheet.
The role of international insurance broker networks
Navigating international insurance complexities requires deep local insights. Partnering with an international broker network enables seamless collaboration with trusted local brokers who possess the expertise and licensing to ensure compliance and optimize coverage.
These partnerships facilitate:
- Cultural and language fluency in negotiations and claims handling
- Understanding of evolving regulatory changes
- Efficient coordination of multinational insurance placements
At Acera Insurance, our affiliation with leading international broker networks allows us to provide unparalleled access to knowledgeable and reputable broker partners in more than 150 countries, ensuring that your global insurance strategy remains both robust and compliant.
Staying ahead of emerging risks on the international stage
The risk landscape for global businesses is constantly evolving. Canadian companies must remain proactive in addressing emerging challenges, such as:
- Cybersecurity threats: As organizations expand digitally, cyber risk exposure across multiple jurisdictions requires tailored coverage solutions that account for local privacy regulations and data breach response requirements.
- ESG (Environmental, Social, and Governance) obligations: Increasing regulatory focus on ESG compliance necessitates coverage solutions that align with sustainability goals and evolving disclosure requirements.
Regular program reviews, informed by global regulatory shifts and business expansions, are essential to maintaining an effective and future-ready insurance framework.
Crafting a global safety net with international insurance
International insurance placements are a balancing act — requiring precision, foresight and the right partnerships to ensure businesses remain protected across borders.
The complexity of managing regulatory requirements, avoiding coverage gaps and ensuring cost-effective solutions underscores the importance of working with brokers who possess both the expertise and global reach to deliver seamless protection.
Think of your international insurance program as a carefully woven safety net — each thread representing a specific regulatory requirement, operational risk or compliance obligation. For that net to function effectively, every thread must fit seamlessly with the others.
By partnering with Acera Insurance, who specializes in global risk placements, Canadian companies can navigate the complexities of international insurance with confidence, ensuring that their businesses are protected, no matter where in the world they operate.
Jaime Gordon, Senior Client Executive, specializes in complex risks and international placements. With more than 25 years of experience in the insurance industry, Jaime excels in navigating complex and hard-to-place risks across many sectors, including manufacturing, distribution, property ownership/development, transportation and energy, and specializes in international placements. As the lead coordinator of Acera Insurance’s International Division, Jaime’s expertise and passion for insurance shine through in her dedication to Acera Insurance’s clients. Her commitment to delivering tailored solutions is reflected in her profound impact in the field.
You can reach Jaime at jaime.gordon@acera.ca.