Challenges in Global Insurance And International Claims
Multinational organizations have become extremely powerful entities in the 21st century. There are many companies which have business interests that are spread across hundreds of countries.
Given the global nature of such companies, it is only rational for some of these companies to want a global insurance provider. These companies want to standardize the insurance experience for each of their subsidiaries. However, achieving the same is not easy. There are many obstacles that both the insurers as well as the insured have to face while making international claims. These differences have been explained in detail in the article below:
- Master vs. Local Insurance
Global companies want to deal with one insurance partner. Since their business is so widespread, it can become extremely complex for them to have different insurance partners at all their locations. They do not have the time or the resources to deal with multiple insurance partners. Hence, they end up appointing one insurance company as the master service provider. All their communications are routed via the master insurance company. This master service provider, on the other hand, has the responsibility of finding local service providers which can best meet the needs of the global company.
In most cases, master service providers and local insurance companies are able to function as one unit and provide seamless services to the customers. However, in other cases, there might be disputes between local companies and master companies and this may affect the quality of services which are provided to the global company.
For this reason, it is important to select a reputed master service provider. The master insurance company has a vital role to play since it has to augment local policies in such a manner that a consistent experience can be provided to the insured. Experienced master insurers can make global insurance much less stressful than it otherwise turns out to be.
- Legal Differences
It needs to be understood that insurance is a highly regulated business all around the world. However, this regulation is not homogenous and differs from place to place. This is the reason why there are many legal differences which make it difficult to provide a consistent insurance experience. Also, these differences do not have to be across continents. Within Europe itself, there is a huge difference in the regulations. Countries like France have a totally different set of rules as compared to England or Spain.
- Dispute Resolution
The insurance contract between the master service provider and the insured clearly mentions the jurisdiction of the contract. Hence, it also mentions the exact court or arbitrator that needs to be used in the event of a dispute between two parties.
Problems arise when the master service providers deal with multiple local service provider. The end result is a web of contracts which are extremely muddled up. The exact jurisdiction of these contracts is difficult to determine, creating room for more disputes.
As far as the insured is concerned, they expect the settlement from the master service provider. Other disputes are between the master service providers and the local insurers. However, in reality, things are not so simple. Sometimes, in the event of a catastrophe, the master service provider may be bankrupt and hence dealing with local insurers and solving their disputes may also become necessary.
- Parties Involved
When an international claim is made, multiple parties get involved in the process. For instance, insurance adjusters from local as well as the master insurance company may get involved. Also, local departments such as police and fire brigade may be involved. It is also common for other parties such as forensic accountants and auditors to get involved.
In the event of a dispute, multiple law firms may also get involved in the process. Each of these parties ultimately wants to have a look at the same set of documents. Different parties may end up reaching different conclusions leading to further disputes which may be difficult to resolve. In the past, there have been many cases where different parties have presented wildly different interpretations of the same contract in court. In general, as the number of parties increase, so does the complication involved with the contract.
Communication is also key while handling international claims. Users in local offices need to be trained appropriately. They should know what to expect and who to contact when an event related to insurance occurs. They are also supposed to know exactly what paperwork they need to provide and what loss mitigation measures they need to undertake to ensure that the insurance company has all the proof that they need to pay out the money.
- Lack Of Infrastructure
Providing a seamless global experience becomes even more difficult when a catastrophe occurs. In the event of a flood or an earthquake, the resources required by insurance companies are difficult to come by.
For instance, the adjusters required to verify the extent of damage may not be available for many days since they are overworked. This usually happens in developing countries where the infrastructure related to insurance is not that well developed. This causes unnecessary delays which is one of the major reasons why global companies feel dissatisfied after buying global insurance coverage.
To sum it up, global insurance and international claim settlements are fields where a lot of challenges still exist, and there is still scope for a lot of improvement.
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