1. COVERAGE ACROSS BORDERS: INTERNATIONAL INSURANCE CLAIMS
Kelly B. Castriotta, Arch Insurance Group
Heather W. Habes, Kilpatrick Townsend & Stockton LLP
Christine Hiler, Hanson Bridgett LLP
Kirsten C. Jackson, Kasowitz, Benson, Torres & Friedman LLP
Evie Lee, International Medical Corps
October 20, 2016

2. Today’s Roadmap Increase of cross-border operations
Types of insurance coverage that might be relevant to cross-border risks
Unique international insurance coverage issues
Key considerations for structuring an international insurance program

3. It’s A Small World
Companies increasingly seek to build an international platform
Challenges of cross-border operations
Employees and property abroad
Non-English speaking countries
Different laws and regulations
Presents unique insurance coverage issues

4. Multinational Operations
Interaction between local offices and multinational company
Protecting employees sent abroad and those that are hired abroad
Key challenges and considerations for in- house counsel

5. Potential Cross-Border Liabilities
Third-Party Claims
Claims by customers or other third parties for bodily injury, property damage, etc.
Loss incurred as a result of investigations, enforcement actions, employee claims, etc.
First-Party Exposures
Theft by employees or vendors
Business interruption or extra expense

6. Potential Cross-Border Liabilities
Companies based in the United States that have foreign operations abroad, including subsidiaries or joint ventures
Companies with employees who travel or are stationed abroad
Companies that produce, sell, distribute, or export products that may be used or cause injury or property damage abroad

7. Relevant Third-Party Coverages
Commercial General Liability
Directors and Officers Liability
Pollution Legal Liability
Errors and Omissions
Employment Practices Liability
Other possible coverages

8. Examples Implicating Third-Party Coverages
No. 1 – A class action is filed against a multinational corporation in the U.S. alleging design and/or manufacturing defects sold to customers in France.
No. 2 – A U.S. oil company drilling in Ecuador is sued for damage to surrounding homes and injuries to persons living near drill sites.

9. Relevant First Party Coverages
Property, Business Interruption, Extra Expense
Crime/Fraud
Other possible coverages

10. Examples Implicating First-Party Coverages
No. 1 – A U.S.-based company learns that a vendor in its Chile office has been improperly stealing merchandise.
No. 2 – Heavy winds cause tree to fall onto a warehouse located in Spain.

11. International Coverage Issues
Coverage Territory
Terrorism/war exclusions and coverage
Political/Civil Unrest coverage
Choice of law and venue considerations
Foreign Policy language

12. Coverage Territory
Damages caused by an “occurrence” in the “coverage territory”
Location of the “suit” and not the occurrence
Beware of “gaps”

13. Terrorism And War Exclusions
Following 9/11, new endorsements became available that excluded war, military action and terrorism
The clause excludes coverage for loss or damage caused directly or indirectly by::
War, including declared or undeclared war;
Warlike action by a military force;
Insurrection, rebellion, revolution, usurped power, or action taken by governmental authority
Consider effect of terrorism coverage

14. International Terrorism Coverage
Government-Backed Insurance Schemes
September 11, 2001
United States Terrorism Risk Insurance Act of 2002
United Kingdom (Pool Re)
Declarations by the government of event

15. International Terrorism Coverage
Standalone Terrorism Coverage
No required government declaration
Property Damage and Business Interruption
Multiple attacks as a single event

16. Political/Civil Unrest Coverage
Different from terrorism coverage
Triggers for coverage
Additional considerations

17. Business Interruption Coverage
Loss to covered property
Loss caused by covered cause
Local policy coverage

18. Compare And Contrast Government declaration might be needed
TERRORISM COVERAGE
POLITICAL/CIVIL UNREST
Government declaration might be needed
Coverage to consider for all countries, and might be mandate to obtain
Business interruption may be covered by standalone
No declaration from the government needed to trigger
More important in countries with general unrest/less secure/higher crime rates
Business interruption likely covered
Compare And Contrast

19. Choice of Law and Venue Loss abroad
What court will adjudicate the case?
International insurer?
Choice of law clause – given effect unless enforcement contrary to public policy
Venue considerations

20. Policy Issued In Foreign Language
Interpretation of terms?
Translate the policy.
Ambiguity based on differing translations.
Seek counsel conversational in both languages to advise.

21. Constructing An International Insurance Program
Underwriters being asked to write on a global basis
“Worldwide coverage” provision might not suffice
Specific locations needed
Kelly to present. Possible question – how can the insured work with the insurer to ensure that all of the

22. Admitted Insurance
Purchase domestic insurers and brokerages for local access
Liabilities backed by state’s guaranty fund
Contrast with non- admitted
Taxes
Insolvency
Kelly to present

23. Admitted And Non-Admitted
International insurance program could include both admitted and non- admitted
Potential issues
Delayed payment/fines
Specific prohibition
Fractured result
Kelly to present.

24. Controlled Master Program
Stand-alone coverage
Issued to parent company and applies to international operations
Still need to confirm compliance with local requirements
Kelly to present – possible questions:
Does the master policy act like umbrella or excess coverage?
How do Sirs usually work for master policies? If the company has paid the SIR under the local policy, and the master policy is excess when the local policy is exhausted is there typically another SIR that the company will need to pay before the master policy is on the risk?

25. Key Steps to Evaluating Your Cross-Border Insurance Program
Involve relevant stakeholders to identify business goals and limitations, cross-border risks and liabilities, conduct risk assessment and develop risk profile
Review existing coverages – look for gaps
Involve your broker
Involve international and local counsel
Interpretation of policy terms
Claim presentation, negotiation, and mediation
Coverage litigation and arbitration
Evie – Discuss that this is an important part of the work that you do with IMC each year.

26. Questions?