All Claims Are Local

Multinational Claims Require Knowledge of Culture, Currency and Legal Climate

In today’s borderless global economy, claims can arise in just about any part of the world where a company does business. Even small and midsize companies with no physical presence outside the United States can find themselves managing multinational claims.

A company that exports products could face a multinational product liability claim, even if the company has no foreign offices. And any time a tired business executive gets off a red-eye flight and drives a rental car in a foreign country with unfamiliar terrain and traffic laws, an auto liability claim may be waiting just around the bend.

Anything from the theft of a laptop during a business trip in Prague to a warehouse fire in Madagascar or a product liability claim in France can trigger a multinational claim.

Multinational claims can arise from directors and officers liability, employment practices liability and financial fidelity exposures as well.

Complex Claims

A multinational claim is an event that crystallizes the need for adequate limits, a global, customized insurance program and a robust claims service platform. Any claim can be fraught with challenges; however, imagine the increased complexity that accompanies dealing with international laws, language differences and different legal systems. An insurance buyer or agent realizes quickly that they are operating in “foreign territory.”

Consider, for instance, the case of a U.S. manufacturing company with a subsidiary in China. A fire broke out at the subsidiary’s manufacturing facility in Guangdong on a Saturday evening. Several employees and other residents living nearby were seriously injured, and the fire substantially damaged the factory. The incident was serious enough to draw the attention of the local news media, and the subsidiary came under pressure to comment on the situation.

Without skilled claims management on the ground in that country, coordinating with claims staff in the home country that were available to assist at all hours, a bad situation could have become even worse. But in this case, the company was able to rely on expert claims managers who stepped in the next day, even though it was a Sunday, and coordinated the management of the case, bringing in highly qualified counsel, arranging in-country claims assistance, and bringing in other advisers to help with managing the news media.

Without in-country claims assistance, there might have been a delay in the recovery of losses, loss of future business, an increase in potential litigation costs and a delay in other necessary repairs or reimbursements.

Even relatively minor claims can be significantly more complicated to resolve than a standard domestic claim.

Local Expertise

Managing multinational claims often involves dealing with people who work in different time zones and who speak different languages. It can also mean working in different currencies and in countries with different legal, cultural and regulatory environments.

Part of the challenge with multinational claims involves finding specialized help that can get to the scene quickly and help to manage the situation and bring it under control.

In the United States, it is easy enough to find an attorney, claims adjuster or forensic specialist simply by doing an Internet search or by getting a referral from a trusted source.

But finding trusted reliable help in remote locations like Madagascar or the Ivory Coast is not an easy task. Even when the right specialist can be identified, they may not always speak English, and close coordination and instruction is required to ensure a successful and prompt outcome for the customer.

Other challenges can arise as well. Some jurisdictions, for instance, will not allow companies to transfer funds into the country, and disagreements also may arise over currency and the conversion date that should be used.

Aside from language and currency, cultural issues can also be a challenge. How information is shared and communicated is quite different in Japan than it is in Germany. The cultural norm to “save face” in Japan may influence how a claim settlement is communicated. Other countries may have very specific customs or traditions that should be observed. In Taiwan, for instance, it is customary for companies to give condolence pay to the victims of accidents. Even simple e-mail communications and the tone of those communications must be considered if working on a multinational claim. Knowing these nuances in each country will ensure a better process and improved customer satisfaction.

Each country also has its own set of laws and regulations that can affect the process and eventual outcome of a claim. In France, the laws are oriented toward investigation of the incident and litigation can take years to be resolved, involving the consultation of court-appointed technical experts and a protracted adjudication process. In Germany, however, the laws are more oriented toward reaching a quick settlement and resolving a problem. For a company that is being sued in both jurisdictions related to a single product defect, this can mean an even greater claims management challenge.

Global Reach

To avoid potential problems and ensure that losses are recovered in a timely manner, businesses should work with insurers that have an extensive global presence and expertise in handling multinational claims. With a broad network of global offices, an insurer can step in and provide local assistance anywhere around the world. An insurer with an extensive network of local offices will be able to locate reliable experts in the region and have them on the scene quickly. An incident in Morocco may seem a long way away from the home office in the United States, but it’s only a short hop by plane for an insurer with offices in France.

These local offices also often work with people who can communicate fluently with the people in the country where the incidents take place. In the case of Morocco, where French is the predominant language spoken in business, an insurer with an office in France could send a representative who is well versed in Moroccan claim handling and customs and who would have little trouble with the language.

An insurer with a network of local offices can make the difference between whether a claim is handled well or not.

Beyond having offices abroad, however, it is important that the claims organization be able to execute in a seamless fashion to support the global customer’s needs. In addition to having this network, the insurer also should have one central clearinghouse in the United States for multinational claims. By consolidating multinational claims in one location, companies will not need to work with multiple offices to get their various multinational claims resolved. Instead, all international losses can be coordinated from a single location. At the same time, an insurer with one central office to coordinate multinational claims will develop even deeper expertise in handling these claims.

When placing insurance, agents and brokers should seek an insurer with a strong global claims presence. Placing insurance with a company that does not have a broad, global network could lead to significant problems for their clients down the road.

In these difficult economic times, it is also important to look for an insurer that is financially strong and in a position to weather potential storms. By purchasing insurance with an insurer that is well capitalized, companies and their brokers can be assured that claims will be not only well managed, but also paid in a timely manner.

Topics USA Carriers Claims Human Resources