Global insurance policies: recent issues and developments Hans Londonck Sluijk AIDA Europe Conference 27 November 2008 Budapest

2 Global Insurance Programs  One Master Policy provided to a Multinational Company  Local policies issued  Local limits  Local claims management  Regulatory requirements also an issue, but not the biggest... until recently

3 Global Policies: a tax issue?  Kvaerner v. Staatssecretaris van Financiën (European Court of Justice, 2001):  EU member states may levy premium taxes against business risks even if premiums were paid in another country by another person or entity to an insurer established in another country  Tax issues to trigger local Regulatory Authorities

4  Several important economies do not admit global policies to cover risks on their territories (e.g. Brazil, China, India, Japan, Russia)  Most EEA countries are ‘non-admitted’ countries  Compliance by providing local policies  For EEA countries the FOS applies ‘Admitted’ vs ‘non-admitted’

5 Should clients be concerned?  Payment of claims in non-admitted countries may be considered illegal and result in fines and penalties  Civil or criminal penalties may be imposed directly on the insured  Tax implications: payments may be treated as income

6 FOS: one policy fits all?  FOS: no regulatory restrictions to provide one single policy within the EEA  Second Non-Life Council Directive 88/357/EEC of 22 June 1988  Large risks: Free choice of law  But: No prejudice to the application of mandatory rules of law

7 Solutions and further issues  Providing financial compensation for the parent company/policyholder  Other issues:  local laws and regulations; local language, DIC issues, who will be the local carrier?  local policy may comply, but what about the master policy coverage?