Following the recent turmoil in the worldwide financial markets, there has been an escalation of litigation and regulatory scrutiny brought against senior-level managers, corporate boards, and their members. In the current climate, high-level service to a company either in a management position or on a corporate board is more likely than ever to result in exposure to litigation alleging mismanagement of business, conflict of interest, failure to disclose information, and other lawsuits. Such suits can be brought by shareholders, employees, regulators, and other third parties.
Companies with global operations and officers face even greater difficulty when it comes to protecting their directors, officers, and senior managers, as these firms must abide by the laws of the local jurisdictions in which they operate. It is imperative for multinational corporations to understand the local insurance environments in the markets in which they operate. The myriad of different laws, regulations, requirements, and particularly, the cultural idiosyncrasies, make operating in and understanding the multiple jurisdictions especially complex and difficult.
What is becoming increasingly evident is that the litigation environment and related exposures are no longer limited to the United States. Much as business is globalizing, so is litigation, and the trend of litigation, especially class-action type lawsuits, is spreading throughout the international community.
With respect to insurance, a specific area of concern for companies with multinational operations is whether or not a country prohibits foreign insurers from insuring local risks. In countries where foreign insurance is not permitted, foreign insurance companies are considered to be "non-admitted" carriers, and those countries require that insurance policies for local risks be procured locally, by "admitted" carriers that are licensed to operate in that country.
In those countries where non-admitted insurance is not permitted, the policies must meet local requirements for limits, policy language specifications, premiums, and premium taxes. In these jurisdictions, it is especially prudent to have access to trustworthy, dedicated insurance brokers to help you navigate the country's specific requirements.