Insurance

The global marketplace offers companies attractive opportunities to expand into new markets and generate increased sales. International business, however, also brings risks. Without the right insurance protection, companies could suffer financial setbacks and damage to their reputations.

Companies with dealings in foreign countries should have by their side a risk and insurance consultant that understands the intricacies of the global insurance market and can provide access to a broad range of specialized products and services. The multinational enterprises usually try to achieve through global insurance programs:

• Central control of their worldwide insurance placements for all their subsidiaries
• Efficiency and uniformity of cover, by negotiating centrally for their insurance package as a whole
• Compliance with local legislation and internal corporate rules
• Cost reduction

There is no “one size fits all” solution when it comes to international insurance. In putting together the right solution, the extent and the type of the company’s business dealings outside the home country, the complexity of the risks, the particular growth model, are some of the factors that have to be taken into consideration. Multinational enterprises want to secure an exceptional level of service, including consolidated loss information with respect to each of their subsidiaries, affiliates, and joint ventures. Moreover, as many multinational companies consolidate risk management functions in the parent office, the parent takes the lead in negotiating and arranging insurance policies that provide consistent worldwide coverage and consistent limits to its worldwide interests. The multinational markets have typically fulfilled this need by offering a master “broad-form” policy to the parent, in addition to local policies covering its foreign affiliated entities.

“From a naive buyer’s perspective, it should be easy to set up a global insurance program. It is only when you come to actually do it, you find that easy is the last thing it is.” 

Chris Maurice,
Risk Financing Manager, BT Group plc

In today’s market, sophisticated buyers of multinational insurance programs demand not only consistent coverage of their worldwide exposure to risk but flexibility, compliance with national regulations and taxes, local policy and certification provision, payment of claims in a tax efficient way, and readily available, on the spot technical support, as well.

Insurance is subject to intense and specific regulations by all nations. And there is a multiplicity of different laws and regulations, or an absence of regulations. Furthermore, insurance products are not standardized around the world, and there is the issue of the provision of after sales service involving claims and loss adjusting. Add to that the fact that it is a people dependent process, and it relies on customer co-ordination of global subsidiaries.

The risk manager’s challenge in this, however, is to find an insurance partner with broad knowledge and capability to construct and appropriately service a strong global insurance program. The administration of global insurance programs has been no easy task for most insurance companies, either. Building global programs is challenging, requiring a considerable commitment of resources to successfully deliver and service programs.

There is continuing debate in the insurance industry about efficient alternatives to the current market offerings for multinational clients, and how alternatives may provide seamless and compliant global risk and insurance solutions.

Although proprietary networks used to be seen in the past as an attractive choice, many international companies achieve global compliance and capture efficiencies through alternative network service and insurance program structures.

Proprietary Networks – Some points of concern:

• They are designed to certain standards that may not be applicable in their entirety for the particular client.
• The network may provide – and charge for – surplus capabilities not needed by the client
• The local subsidiary of the proprietary network might not be the best choice available in a particular country.

• Cost. Proprietary networks are often burdened with high overheads. Consequently, in order to remain competitive, some companies may cut down on areas not easily identifiable by the client.
• As they grow so large they may become breeding grounds for conflicts of interest.
• Little if no latitude for innovation and original thinking. Procedures and practices are so deeply imbedded that it is not easy for somebody to go out of their way to meet special client requirements.
• The best talent and attention of the network is less likely to be allocated to a comparatively smaller account.
• The faces of some experts brought in for the closing of the deal there is a very slim possibility that they will ever be met again by the client.

“Our traditional view of looking at our business as a closed and fully integrated system has become obsolete….…Breaking up the value chain and questioning who is the best supplier of the services and functions for each part is a process which is a must and which requires some difficult choices and decisions.” 

Anton van Rossum,

The Geneva Papers on Risk and Insurance, Jan. 2002

Alternative Networks – Competitive advantages

• Tailor-made solutions to suit the exact client requirements.
• Costs are kept low – No high overheads, no unnecessary charges.
• Freedom of choice – Choice of network. Choice of services within the network.
• Innovative operators well versed in all aspects of global insurance programs, often with long experience in large risk and insurance providers, keep winning on customer satisfaction.

A knowledgeable, experienced, and innovative risk and insurance consultant with access to the international insurance community can help you establish exactly why you should have a global program and how to best execute it. The solution lies in the creation of a fit-for-purpose alternative network that is professionally managed, and it is constantly monitored and assessed to make sure that it is performing in terms of the service standards that are set. Managing a multinational insurance program can be enormously complicated. Today companies doing business abroad materially simplify the process by working with a risk and insurance consultant proven in putting together international insurance programs that can provide substantially one-stop service even when local insurance policies are required.

The globalization of the economy and corporations heightens the need for the globalization of insurance programs. Multinational risk managers – encouraged to reduce the overall cost of risks, yet equally motivated to find credible capacity to identify and handle the most complicated and difficult risks – have new opportunities when designing and implementing a seamless and compliant multinational program is the solution.

It is critically important to protect your base assets – your place of business, your contents and inventory, and/or your production processes – against fire, flood, earthquake and other risks. But that’s not all. The risk of business interruption is of paramount importance.

Even if you have to close your doors for only a few days, the impact on your revenues and net income can be substantial. Do not assume your business will snap back to its previous revenue level as soon as you reopen. While you are closed to customers, they will go elsewhere, and they may take their time finding their way back to you again. And as your revenues decrease, you will have both ongoing and new expenses. That combination can be impossible to handle without business income and extra expense coverage.

Although insurance can help protect your assets, it alone cannot assure the post-event viability of your business. Without a pre-defined plan to protect people and property, and to resume business operations in the larger community context, most organizations find it very difficult to survive a business outage.

The EXL Business Interruption Plan

We can keep your business from closing its doors due to unexpected events. Because if you are closed for business, you still have to pay the bills – employees rent or mortgage, suppliers, taxes and yourself. A force outside your control may interrupt your business continuity strategy and cause you to close your doors for a time, including:

• Fire
• Hail
• Wind storm
• Vandalism
• Equipment damage

The EXL Business Interruption Plan keeps your business running because it can keep capital flowing through your company in the event of such disruptions.

The EXL Business Interruption Plan can help you:

• Maintain your business continuity strategy
• Keep your business afloat if a loss forces you to close for a short time
• Pay for lost net income and continuing expenses such as mortgage, advertising, taxes and salaries
• Pay your relocation and advertising fees if you set up shop at a temporary site
• Your business continuity strategy gets business back on track faster

Your Business Continuity strategy will get your business back on track faster.

At EXL you can secure expert consulting services through accomplished professionals with a clear vision to protect your corporate assets. Since casualty insurance often deals with working layers of loss and expected claim activity we actively engage our Claims Management, Loss Control and RMIS services to benchmark loss rates and identify areas of operational opportunity.

Our casualty team will design a service delivery plan aimed at reducing your workload while obtaining the information needed to make smart and timely decisions.

We use several evaluation timelines to organize, measure, and deliver services. These tools help us learn your business and manage our consolidated efforts so we focus on the outcomes you prioritized.

We offer seasoned, results-oriented experience, in the spectrum of casualty insurance:

• Workers Compensation
• General Liability
• Product Liability
• Automobile
• Excess/Umbrella Liability
• Alternative Markets Captives, Risk Retention
• Specialty Placements – M&A facilitation, discontinued products, program buy outs

We access the world to find the broadest solutions, including all domestic markets and the various captive domiciles.

Our services include:

• Negotiating the broadest coverage at the best price
• Taking advantage of changes and trends in the insurance cycles
• Analysing coverage forms to maximize application
• Facilitating direct relationships between you and the underwriters
• Partnering with well-established International/World Broker Networks – with offices in 120 countries – for global placements
• Benchmarking utilizing databases containing information from more than 1 million companies spread in more than 70 countries
• Loss forecasting picks, with analysis to change predicted outcomes
• Modeling analysis for experience modifications
• Tracking loss sensitive programs and aggregates
• Reviewing contracts for indemnification and hold harmless implications
• Consulting on acquisition, merger and divestiture opportunities
• Advocating for you in claims resolution
• Mitigating risk of loss through onsite inspections and data analysis
• Managing and offering alternative solutions to insurer recommendations
• Providing electronic access to your insurance program information through our proprietary data management system

By working with risk managers, safety, finance, legal and operational managers, we’ll assist you in program design, budgeting, and premium allocation.

Entrusting us with your insurance requirements you’ll have a dedicated team with extensive underwriting, brokerage, risk management, claims, loss control and legal expertise seeking out the most competitively priced and comprehensive coverage. This comes as the result of careful planning, listening and preparation.

And when a plan is in place, we don’t stop working. We’ll continually test the marketplace to ensure you receive the best coverage, pricing, and program design.

You have a reputation to keep.

Reputation is one of those things that it takes many years to build and it can be lost in a heartbeat (no pun intended). And when it happens, the damage is far greater than reduced goodwill and trust and a tarnished brand name. It very often includes market capitalization, stock value and sales. Real money.

Your product has a life of its own and as in everyone’s life accidents do happen. The common belief is that accidents always happen to ‘other people’. However unfortunate it is there are occasions that we are labelled ourselves as ‘other people’.

Accidents that can affect your product can occur at any stage of the manufacturing process, as well as during packaging, storage and distribution. They can happen up and down the value chain that you are part of. Let alone malicious product tampering by disgruntled employees, political or social activists, and terrorist groups,

Over the past 5 years there has been a steady increase in the total number of alerts issued across Europe. This reflects more effective regulation and reporting rather than falling standards. Despite this, there are also many other food and non-food safety issues that don’t get widely reported, although the media always keep a sharp eye on the matter.

We are in an era of increasing regulation and heightened consumer awareness. The internet has created instant access to information for the average consumer and websites have been established to alert consumers to current product recalls. In addition, the authorities for disease control have greater abilities today than ever before to trace food borne illness outbreaks to their originating source.

You have a brand and even a company to protect.

There are those who just keep their fingers crossed. And there are those who hugely underestimate the total cost of product recall.

Why don’t you estimate the cost of recalling your leading brand?

• Value of recalled products and customers’ lost profits whilst off sale
• Value of unaffected products that are returned or implicated due to poor traceability
• Point of sale notices
• Publication of recall notices in the press
• Public relations advice
• Consumer care lines
• Remediation
• Retailer administration charges
• Shipping and additional logistics charges
• Disposal
• Warehousing
• Value of loss of contract to supply
• Specialists (laboratories, consultants)
• Cost of production stoppage /shutdown
• Repair / correction
• Replacement costs
• Packaging design or wording changes
• Post recall advertising – brand recovery
• Fines and penalties

Ongoing costs after the initial recall action:

• Reduced sales
• Reduced profits
• Increased regulatory scrutiny by government authorities
• Increased testing and quality assurance / safety procedures
• Unfavourable resolution of litigation
• Ongoing legal fees
• Management time
• Increased retailer slotting fees
• Prosecution of members of the board of directors in relation to product safety breeches
• Risk of increased insurance premiums
• Cost to reputation
• Reduction in share price and therefore company value
• Cost to change or correct manufacturing process
• Temporary suspension of ability to import products from specific countries imposed by governments
• Increased threat from competitors

Prevention is always better than the cure.

If you can do everything in your power to greatly reduce the possibilities of a crisis you will be one step ahead of your competition. And our range of prevention services allows you to take every step possible to avoid a potentially damaging incident.

Transferring the risk by insurance.

Product Recall Insurance reimburses costs incurred to recall and replace a product in the marketplace with a safe one. It also provides expert assistance and advice during this process.

Costs covered by the insurance on ‘claims made’ basis can include:  

• Business interruption
• Extra expense – The increase of the total cost of conducting business activities during the period of time necessary to clean or repair the location, including the increased cost of subcontracting manufacture to a third party.
• Loss of gross profit as a result of an insured event.
• Recall costs including newspaper adverts, transportation, additional warehouse space, overtime, inspection and analysis costs, cost of replacing the contaminated goods.
• Rehabilitation expenses to re-establish the Insured’s product(s) to the reasonably projected level of sales or market share anticipated prior to the insured event.
• Crisis Consulting Costs
• Extortion demands

We can also provide on an optional basis that a product recall does not have to actually materialize, for a claim to be successful; a contamination in a factory or in transit will also trigger the policy.

Simply put, we are prepared to offer you nothing less than the power to avoid and respond to threats to your brand and your business. A product recall crisis is a complex and immensely costly enterprise.

The cost of litigation for companies has risen dramatically in recent years as a result of product and service disputes. Why are we seeing this sudden influx of lawsuits? More and more customers are willing to sue long established business partners for management failure problems.

The result: an increase in business partner litigation.

Dramatic increases in the average size and length of contracts raises the plaintiff’s chance that a management related failure “will be worth the fight” and result in a large jury award. As market competition continues to increase, there is a greater chance that marketing and sales pressure will invite over-promising of supplier capabilities. Today companies are crossing borders to conduct business which brings a host of new exposures due to foreign laws and regulations.

Directors’ & Officers’ Liability insurance provides financial protection for the directors and officers of your company in the event they are sued in conjunction with the performance of their duties as they relate to the company. Directors’ & Officers’ Liability can usually include Employment Practices Liability and sometimes Fiduciary Liability. The former involves harassment and discrimination suits, and is where the majority of your exposure will be.

Directors’ & Officers’ Liability is often confused with Errors & Omissions Liability. The two are not synonymous; Errors & Omissions is concerned with performance failures and negligence with respect to your products and services, not the performance and duties of management. Generally, depending on your line of business, it might be a good idea to carry both policies.

When you assemble a board of directors, they will frequently make the requirement. Investors, especially Venture Capitalists, will also usually require that you show evidence of Directors’ & Officers’ Liability insurance as part of the conditions of funding your company.

Why do you need Directors’ & Officers’?

First, claims from stakeholders, including stockholders, employees, providers, authorities, NGOs and clients, will be made against the company, AND against the directors of the company. Since a director can be held personally responsible for acts of the company, most directors and officers expect to be protected rather than put their personal assets at stake.

Second, investors and members of your board of directors will not be willing to risk their personal assets to serve as a corporate director or officer, no matter how heartfelt their belief in your company.

Last, employment practices suits constitute a very substantial area of claim activity under Directors’ & Officers’ policies.

At the same time your corporate balance sheet needs protection from exactly the same claims. It is either your balance sheet or the private assets of the accused Directors & Officers, or both, that will take the heat.

The risk of legal assessments caused by a service mistake makes Errors & Omissions Liability insurance an absolute necessity for any services related business. Even with work that seems less risky, there’s no outsmarting the consequences of a lawsuit.

Practically any firm or individual that improperly performs services can cause a client to suffer economic loss. Commercial General Liability does NOT provide coverage for service errors, contract performance disputes or any other Professional Liability issues. Consultants and companies who have General Liability without Professional Indemnity (Errors or Omissions) coverage are taking a serious risk. Even if you’re not at fault, litigation is time-consuming, costly and potentially disastrous to the reputation of your firm.

Errors & Omissions insurance is a cost effective way to protect your business.

Errors & Omissions Liability protects your company from claims if your client holds you responsible for losses suffered due to not performing as expected or promised.

Coverage includes legal defence costs – no matter how baseless the allegations. Errors and Omissions insurance will pay for any resulting judgments against you, including court costs and investigation costs, up to the coverage limits on your policy.

Mistakes Happen. Every company messes up at some point. For example, you recommend to a client that they run a certain test of their system, after you did some extensive work on it. The client takes your advice, the system crashes, and they are unable to conduct business for a whole week. The client becomes enraged, calls his attorney, and looks to you for reimbursement.

You Can’t Be Everywhere. Sometimes you can’t personally handle every job. Errors and Omissions coverage can insure not only your mistakes, but also the mistakes of the employees and Independent Contractors you hire.

Most Importantly: Errors and Omissions insurance might save you from extreme embarrassment, a lost client, or worst of all, a bad reputation.

What

As environmental liability has evolved over the last decade, so has business’ general awareness of these risks and the propensity of plaintiffs to press claims for environmental damages. In response to these pressures, developments of science and other social dictates, the legal system’s interpretation of what constitutes pollution and the rules for who bears the burden of responsibility has also changed and become refined over time. However, recent developments in all of these areas may create an immediate environment for rapid change in this specialized area of environmental risk which may require greater vigilance and additional immediate assessment to manage risks.

Why You

When executives in charge of risk management think about the day-to-day operations of their business, environmental or pollution exposures may not be apparent or recognized as material. What is critical to understand, however, is that in today’s marketplace, insurance policy definitions of pollution are generally not limited to regulated hazardous or toxic substances, but also include broadly defined irritants, contaminants or pollutants.

Pollution events involving industrial chemical releases are no longer the only risks to manage. Liabilities associated with damage to neighbouring properties due to activity, renovation or construction are now creating liability for property owners who never imagined they could be held accountable for environmental liability in such circumstances. The reality is that nearly any enterprise can be at risk for environmental claims. To illustrate the range of potential exposures, consider the following scenarios:

• Discharge of treated water from a manufacturing site into an adjacent river altered the Ph level of the water, killing fish;
• Milk released from a tanker into a water system exposed to high temperatures caused the milk to spoil and smell, and further caused damage to the aquatic environment;
• A catering hall that had a problem with its refrigeration unit released Freon and refrigerant gases into structures and the atmosphere requiring air monitoring and remediation, and resulting in violation of environmental laws and public health rules;
• A vacation resort was cited by the local public health authority for exposing a patron to the legionella virus via its water system, causing his death from legionnaires disease, and the environmental regulators required a complete investigation and clean-up of the water delivery and filtration systems;
• A university was improperly storing and disposing of animals used for laboratory research dissection and its related chemicals, exposing the university to clean-up orders from the environmental regulators, and fines and penalties for violations of law;
• Sediment consisting of dirt particulates when introduced into water systems changes the turbidity of water disrupting PH balances and creating a murkiness to the water resulting in noncompliance with environmental standards and disruption and/or death to aquatic life;
• Naturally occurring materials, such as serpentine rock, when disturbed during excavation, demolition or grading can increase the levels of such naturally occurring materials in the environment above acceptable background levels, requiring engineering controls and monitoring;
• Materials brought on to a site or commercial operation can be released to the environment as a result of terrorist activities or vandalism and can cause both injury to persons and the environment, and business interruption;
• Certain pressed wood products, building materials and carpeting can be sources of emissions;
• Water intrusion events can result in mould and mildew growth that can affect the health of sensitive individuals, resulting in claims for bodily injury to third parties and employees, property damage and business interruption.

Why Us

In light of these developments, companies would be wise to assess their environmental risks, regardless of their industry or current insurance coverage, and to consider the solutions that best address their needs. Fortunately, there are options. Even for industries as varied as agribusiness, construction, non-retail manufacturing, professional services, technology and warehousing – many of which do not have pollution coverage because they may not realize they have pollution exposure – there are highly customizable environmental liability policies that allow customers to tailor coverage to their unique fixed-facility exposure.

EXL helps companies in many industries navigate the ever-changing world of environmental risk, whether it’s stricter government regulations, intensifying consumer concern on environmental issues, or protecting new assets. We provide your business with easy-to-understand, cost-effective environmental insurance solutions, where you can customize your policy for today’s needs. And adjust in the future when new risks arise.

Our flexible Environmental Liability Policy features the following covers:

• Biodiversity Damage
• Third Party Bodily Injury and Third Party Property
• Defense Costs
• Mitigation Expenses
• Loss arising from Gradual, as well as, Sudden and Accidental pollution conditions
• Clean-up Costs (on-site and off-site) including the repair/rebuilding costs to first party property damaged during clean-up

Optional Covers

• First party Business Interruption losses resulting from a pollution condition
• Transportation related environmental liabilities

Environmental Liability is without doubt a serious issue.

Today in our increasingly litigious society, exposure to liability cannot be taken lightly.

Trustees, guardians of the estate and receivers have considerable exposure to litigation. Lawsuits can come from beneficiaries, wards or third parties should they believe that a trustee, guardian or receiver has not properly carried out their duties. They can and do sue. Lawsuits do take place regardless of how faithfully the person involved in the management of a charity, club or association fulfilled their obligations. And when lawsuits do occur, the personal assets of the trustee, guardian or receiver may be at risk.

One area of controversy is very often investment performance. Trustees have a duty to invest as a prudent person, including a duty to reasonably select an investment advisor. In addition, trustees have an obligation to direct the advisor in accordance with trust guidelines, and to reasonably review the advisor’s performance. The trustee may also have to make investment decisions on assets in the trust not under control of an investment advisor, such as real estate and ownership of private companies. While poor performance of an investment advisor selected by the trustees may be a potential source of litigation by beneficiaries, a more typical dispute would arise over whether the investment direction given to an advisor by a trustee follows the intent of the trust.

Trustees, guardians or receivers can be held legally accountable for the decisions they make and the services they provide, with their personal assets at stake, even if compensation is not accepted for rendering services.

Claims against trustees can allege:

• Mismanagement
• Violation of trust, exceeding authority
• Conflict of interest
• Self-dealing
• Breach of fiduciary duty
• Misrepresentation
• Negligent supervision and selection
• Professional negligence
• Challenges to trust terms

Thankfully, trustee professional liability insurance has been made available specifically to protect trustees, guardians, and receivers for the wide variety of claims that can arise from management or administration of trust, receivership or estate assets. The policy indemnifies trustees, guardians and receivers for defenсe costs, settlements and judgments in covered claims for errors and omissions in the performance of professional services that are brought against the insured by beneficiaries, creditors and others. The policy even pays the costs of defending groundless lawsuits that are covered – an important feature – since even these claims can require significant time and money to defend.

In recent years, appointing a trustee pursuant to a trust agreement has become an increasingly popular alternative to the standard ‘Last Will and Testament’. Because trust-based planning is often intended for the privacy of the family estate, the perception of withholding communication or information from the beneficiaries often creates dissent, and in turn, legal recourse.

Many trustees who are handed the family or company reins are unaware that their corporate, accounting or lawyers liability insurance policy may not provide them with any coverage, leaving them uninsured and exposed to large potential losses, particularly in a volatile economy when depreciating assets may easily be tied to damages.

The trustee may also be left exposed when claims are asserted after the trust has been fully distributed, leaving the trustee without trust funds to defend himself, much less compensate himself for the additional trustee services that will be required.

Suppliers that deliver goods and/or services on credit, have to manage credit risks associated with on time payment of debt. Accounts receivable make up more than 40% of current assets as seen on balance sheet and under corporate management these accounts receivable have to be cashed without fail. Bad debt losses affect liquidity and profits. Even worse, they can cause a company’s ultimate financial ruin. In foreign countries however faced with insolvency or bankruptcy, recoveries are much more difficult due to language barriers, different business customs, and local legal systems among other factors.

Trade Credit Insurance provides comprehensive services, beyond the concept of general insurance, for the protection of accounts receivable and credit management.

Some basic considerations in deciding whether to purchase Trade Credit Insurance lie in the following questions:

• Are your sales concentrated on a small number of large buyers, or is the industry in which you operate consolidating into a few large customers?
• Do your bad debts suffer wide fluctuations from year to year?
• Does your lending bank provide adequate credit limit against your domestic and export accounts receivable, or could you sell more goods or services if your credit line was increased?
• Are your terms of sale competitive with those of your main competitors?
• Could you withstand the insolvency of your top one or two buyers?

Trade Credit Insurance cover has proven invaluable during the current financial crisis, when insured manufacturers and traders saw their losses on defaulting buyers reimbursed. In 2008 and 2009 the insurance industry paid out claims exceeding 9 Billion EUR to its insured policyholders. Many of them would not have survived without the Trade Credit Insurance compensation.

While Trade Credit Insurance is often mostly known for protecting foreign or export accounts receivable, there has always been a large number of companies that use Trade Credit Insurance for domestic accounts receivable protection. Domestic Trade Credit Insurance provides companies with the protection they need as their customer base consolidates, creating larger receivables to fewer customers. This further creates a larger exposure and greater risk if a customer does not pay their accounts.

Among the key benefits of the Trade Credit Insurance is that the policy can be used as collateral for bank loans. As normal practice, banks tend be more flexible in lending against insured receivables.

Benefits of the Trade Credit Insurance also include:

• Late or on-payment risk is transferred to the insurer.
• Access to professional credit risk expertise and related advice is made available.
• Protection from liquidity shortages or insolvency due to delayed or non-payments.
• Earnings volatility reduction by protecting a significant portion of assets against risk of loss
• Suppliers can extend credit to customers rather than requiring payment in advance or on delivery, or requiring security such as a letter of credit, thus gaining a competitive advantage over the competition.
• Allows insured suppliers to move up the value chain and accept direct buyer risk, bypassing the middlemen.

Trade Credit Insurance is a financial loss protection tool and in economic crisis periods it can be a real lifesaver.

The challenges of the global economy are there, as there is a clear evidence of prolonged recession. Every business is looking for opportunities to grow and the emerging markets seem to be very attractive alternative areas for growth. Nevertheless, despite the great opportunities, putting assets or investments into a country where the political situation is unstable can be very risky. In these markets, assets, contracts and loans are often dependent on government actions. Also, the supply chain is usually extremely vulnerable.

We live in an increasingly uncertain world where the risk of terrorism is very real, yet “traditional” insurance policies are not designed specifically with this exposure in mind.

A terrorist attack can strike at anytime, anywhere, and the consequences can be devastating. In today’s volatile world with terrorist organizations striking around the world, global terrorism coverage is essential.

Terrorism is not a phenomenon of the 21st century, but the 9/11 attacks on the United States mainland in 2001 signalled a new level of intensity, boldness and geographical reach on the part of those dedicated to causing indiscriminate death and destruction.

Recent years have seen major terrorism events in London, Madrid, Mumbai, Moscow, Paris, and elsewhere. The death in May 2011 of Osama Bin Laden, leader of the al-Qaeda terrorist group, has raised fears of further attacks.

In addition to increases in instances of terrorism, there has been a substantial rise in political instability. Exacerbated by a depressed economic outlook, 2011 has seen the advent of the “Arab Spring”, the term given by the international media to the wave of uprisings that have swept the Arab world across Libya, Yemen, Bahrain, Egypt and Syria. Predictions of further disturbances and potential revolution seem reasonable in the region.

This turmoil is not limited to the Middle East. The unpredicted Norway attacks in July 2011 saw sequential acts of terrorism against the government, the civilian population and a summer camp for young people.

Elsewhere, recent times have seen austerity protests and violent political marches in capitals such as New York, Rome, Paris, Athens, London and Madrid. And in August 2011 there was rioting, looting and public disorder in several parts of London and in other cities across Great Britain.

Social unrest, it seems, is becoming a global phenomenon. The impact of social networking and the internet clearly means it is now much easier to influence and mobilize public opinion.

In such an unstable outlook, the use of insurance helps protect the financial well-being and continued viability of your organization. It is important to be aware of the nuances of the cover afforded under a straightforward terrorism program, how that sits alongside a standard property damage policy, and the existence of any potential gaps in cover.

What is more, the definition and therefore the interpretation of an “act of terrorism” within most property policies can be very inconsistent. This may mean that a wide range of violent acts that may not initially seem to be terroristic in nature are caught within the policy’s definition and thus excluded from cover. In turn this means policyholders without a specialist policy may find themselves exposed.

The professional services of the qualified insurance broker will arrange secure ways in which you can organize your insurance coverage to ensure you have a seamless protection wherever it is required.  In a way that your sabotage, terrorism & political risks policy aligns with existing policies to eliminate gaps, overlaps and/or duplications.

The “It can’t/won’t happen here” reason for not buying terrorism cover or bespoke sabotage, terrorism & political risks programs is no longer tenable anywhere in the world. Fewer and fewer countries remain unaffected by terror attacks or politically-inspired unrest, and hardly any would consider themselves free from the threat of such incidents and upheaval.

Examples of such events include:

• Illegal seizure of assets by the government
• Outright nationalization
• Government acts that have the effect of expropriations
• Breach of contractual obligations by the government
• War
• Civil strife
• Terrorism
• Restriction on the conversion and transfer of currency

Sabotage, Terrorism & Political Risks Insurance is business insurance that reimburses losses caused by social or political disruption in a country. It is also a product that can serve as a loss control or mitigation tool in order to encourage investment in a project. When your bank and potential investors support your expansion plans – but not the politically unstable country you’ve chosen – insurance can alleviate their concerns by safeguarding your assets against a range of political risks.

EXL allows businesses to take advantage of commercially attractive opportunities in emerging markets, mitigating risk and helping them compete in a global marketplace. We provide innovative, comprehensive, and cost-effective risk-mitigation products to cover losses to tangible assets, investment value and earnings, that result from sabotage, terrorism and political perils.

Kidnap and detention are real dangers for companies operating both overseas and in domestic markets. They are often overlooked by management on the grounds that “it won’t ever happen to us”. But the damage this can inflict on a business can be very severe – as the annual roll call of corporate and individual victims around the world testifies.

Criminals don’t discriminate. Any company of any size can be a target for kidnapping or extortion. People tend to associate kidnapping with global companies. The fact is, radical groups and criminals exist everywhere. Those persons who are perceived to be wealthy need K&R insurance. A kidnappers’ perception of victim’s liquid assets may have little to do with the real value of the victim’s assets. In fact, a ransom demand or attempt at extortion can affect just about anyone if they are in the wrong place at the wrong time.

These risks may not feel like everyday exposures, but too often they are. And when they happen, you may need financial assistance as the costs associated with negotiation and recovery and the ransom itself can be very substantial.

Due to globalization of economies, multinational companies need to prepare for the possibility of attacks on their employees and facilities virtually anywhere in the world. For people who travel frequently to high-risk regions this coverage could be a life saver. There are more than 21,000 kidnappings reported globally every year, 26% of them occur in Africa, 24% in Latin America and 16% in the Middle East., 3% occur in North America and Europe collectively. However, these figures are rising rapidly not taking into account cases that go unreported.

A kidnapping can be traumatic but can also lead to considerable financial losses from ransom, business disruption, litigation, adverse publicity, to name a few.

K&R insurance provides coverage for kidnap extortion or hijack through a combination of financial indemnification and expert crisis management as well as numerous benefits and services to the applicant and the insured. A basic policy can cover items such as the ransom paid, loss of income, interest on bank loans, and medical/psychiatric care. Besides insurance, companies can also utilize crisis management teams and employee training in what to do in a hostage situation to minimize losses due to kidnap or ransom.

The K&R insurance covers employees for individual or aggregate amounts. Insurance plans also provide assistance to the family and business with regard to independent investigations, negotiations, arrangement and delivery of funds, and numerous other services vital to a safe, speedy and satisfactory resolution.

It is imperative that K&R insurance polices be kept a secret. The reason for this is simple; gangs, criminals, and even terrorist organizations may make a target of an employee where a known K&R insurance policy exists, over a random person that may not be able to pay the ransom. Policies that don’t require secrecy are not worth very much and should be replaced.

Although, many have wondered how they possibly could find out about the existence of a kidnap and ransom insurance policy, and the chances may be quite small, good underwriters take this matter very seriously. Second, unlike what most may initially believe, the actual payment of the ransom is far less important than the security firm that will be under contract to manage the process and deal with the kidnappers. These K&R programs are about far more than just paying a ransom.

Many large companies’ response to K&R insurance is “we are large enough where we don’t need this coverage…we would afford to pay the ransom ourselves.” Such statements demonstrate the lack of understanding regarding these policies. Of course they can come up with several million dollars of ransom. However, walking through the actual event will help to clarify why this is not a risk that can just be “figured out” during a crisis.

At EXL we offer a wide range of K&R services and products – on a tailor-made basis – providing cover for individuals on short term trips, or blanket coverage for a whole company on either an annual or multi-year basis, including:

• Guidelines to help you reduce vulnerability to attack
• Resilience reviews and bespoke training
• Ransom insurance
• Loss of ransom in transit
• Negotiators & special response consultants fees
• Loss of earnings
• Rehabilitation costs

The extent and quality of the planning and research you do before a merger or acquisition deal will largely determine the outcome. However, sometimes situations outside your control will arise and you may find it useful to consider and prepare for these risks.

Potential liabilities may arise out of Mergers and Acquisitions transactions therefore acquiring insurance coverage is a very prudent move.

• Mergers and Acquisitions insurance polices can be purchased by either of the parties involved in the deal and they can be used for general corporate purposes, particularly for tax and litigation related issues.
• Warranty and Indemnity Insurance for protection against breaches of warranties and claims in a sale and purchase agreement.
• Tax Opinion Insurance against potential liabilities arising from specific tax treatments in the event they are challenged by the relevant tax authorities.
• Litigation Insurance for transferring liabilities arising from potential litigation.

It is important for you to seek professional advice when considering a deal. You may use bankers, accountants, lawyers, and surveyors for different matters. However, Mergers and Acquisitions insurance can translate a potential future exposure into a fixed present cost, which is included as part of the negotiated structuring of the agreement.

The process of settling a significant insurance claim with a team of experts from your insurers is challenging enough, even with the right people on your side.

Our expert team of claims/loss specialists has only one goal: to represent you and ensure that your interests are protected in the best possible way.

Our team of claims/loss specialists provide support in any or all of the following areas:

• Advice on loss mitigation
• Technical and procedural advice
• Assessment of policy coverage
• Processes for data collection and loss measurement
• Claims preparation and quantification
• Review of claim submissions
• Interim payments to optimize cash flow
• Claims disputes

The EXL  Approach

Our loss adjusting experience and industry expertise provides parity with insurers experts and ensures you are properly represented and your interests are fully protected.

We know how insurers operate, their approach, what information they need to settle claims and how to present it. We use this knowledge to give you best advice and keep one step ahead at all times.

We have credibility with the insurance market and a strong reputation for professionalism and integrity. We use our technical capability to present your case to best advantage and optimize the claim settlement.

We believe that creating the right team and effective teamwork – with our clients and also with the insurers and their experts – is key to delivering a successful claim outcome.

We adopt a collaborative approach to the insurer experts where possible but stand no nonsense. We challenge inappropriate or unnecessary practices whenever necessary.

Pre-Loss Auditing

Most insurance products remain untested until a claim comes along, by which time it’s too late to remedy any errors or omissions. However, there is a great deal you can do in advance to smooth the progress of a future claim and ensure that your policy delivers when it matters.

Evaluation of loss before an incident occurs will help you ensure your insurance product is fit for purpose.

Our pre-loss expertise springs directly from the experience we have gained in preparing, presenting, negotiating and resolving complex claims including policy stress testing, business interruption review, accident and injury claims review.