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A world of difference: Workers’ compensation and liability programs for multinationals

10/03/2024 · 6 minute read

Commercial Risk hosted a webinar in collaboration with Marsh, bringing together experts from the US, Europe, and Asia to explore the challenges that multinational companies face when managing workers’ compensation and liability programs across different jurisdictions. We condensed this lively discussion into four recommendations to help risk leaders better navigate program complexity, remain compliant, and protect their people and businesses.

Casualty, workers’ compensation, and employee liability programs are universally complex — but particularly for multinational companies looking to expand into new jurisdictions. This is particularly true when they have limited knowledge about the basis of coverage, local legal requirements, or contractual requirements from third-party vendors or customers.   

Global expansion presents significant opportunities for multinationals, but it can also open the floodgates to a host of new exposures. As leaders set their sights on new opportunities and horizons, they should also be asking: how can we better protect our people and businesses with greater clarity around global workers’ compensation and liability programs?

Understand local legislation and policy requirements

A top priority for multinationals is securing adequate workers’ compensation and employee liability coverage, written in alignment with local insurance premium tax requirements, laws, and regulations. It is equally important that multinationals have no gaps in coverage, or on the other hand, are not over-insured with policies covering the same loss.

Typically, insurance programs exist under a master policy, or a centralized global program that covers multiple locations. Beyond the master policy, there are also local policies and extensions available to meet the unique requirements of local laws and regulations as well as specific coverage needs.  

Understanding the discrepancies between the master policy’s guidelines and those of local policies is crucial to ensure effective risk management in a multinational setting. The US, for example, is a far more litigious environment than some regions in Asia and may have more stringent regulations. In the same vein, workers’ compensation may not have the same requirements or even be compulsory, depending on the region. For example, workers’ compensation is mandatory in the US, barring Texas, but is not in Hong Kong or New Zealand, among other regions.

It is essential to consider the legal framework of each jurisdiction where you are operating to ensure that insurance programs align with the specific requirements and nuances of the legal system. This may involve tailoring insurance policies, understanding the potential for legal disputes, and considering the impact of court decisions or statutory provisions on insurance coverage. Working with professionals who have expertise in the applicable legal and regulatory landscape can help multinational clients navigate these complexities.

Align internally on risk exposures and claim management

Risk managers, legal professionals, HR representatives, and organizational leaders should be aligned under one, strategic approach, especially when tackling renewal questionnaires. Their alignment hinges on successfully assessing risks and available coverage, to gain a holistic and company-wide understanding of where exposures are and needs to be properly protected.

This includes providing clear guidelines on reporting incidents, filing claims, and accessing support services. For instance, if a multinational company wants claims paid locally, this needs to be discussed internally and then brought to the global carrier for discussion.

A good example of the importance of internal alignment is the usage of freedom of services insurance in Europe. This coverage, unique to Europe, allows for the free movement of insurance services across countries. In turn, providers reap the rewards of more streamlined operations and broader coverage.

However, one of the challenges with freedom of services insurance is ensuring compliance with local regulations, like the need for certificates in local languages. Typically, certificates are issued in English, but this may not be acceptable for use by certain third-party vendors or customers. As a result, it is important for companies to internally investigate and understand these unique considerations at the outset.

Coordinate with global brokers and insurance programs

Effective communication is crucial when managing workers' compensation and liability programs across multiple jurisdictions. Multinational clients should establish clear communication channels with local employees, legal advisors, global insurance brokers, and other relevant stakeholders.

By fostering open and transparent communication, multinational clients can ensure that employees understand their rights and responsibilities, and that any incidents or claims are promptly addressed and managed in accordance with local regulations and company policies.

Oftentimes under contractual requirements, a worldwide territory and jurisdiction may be needed. This means that the contract should apply to all locations around the world and be subject to the laws and regulations of multiple jurisdictions. However, to ensure that there is no overlap or duplication, it's crucial to align the contractual requirements with the global program. This coordination helps to streamline the insurance coverage and ensures that there is a single policy in place that adequately addresses the risk without unnecessary redundancy.

In Hong Kong, for example, it is very common as part of the local casualty program to have unlimited liability for vendors. Landlords may require unlimited liability in the certificate, but it is possible that this isn’t accepted by global carriers. This necessitates a conversation, ideally with an experienced global insurance broker, to ensure clarity, compliance, and cost-effectiveness across insurance arrangements.

Conduct consistent health checks  

One key benefit of annual health checks is the ability to evaluate the effectiveness of existing risk management measures. By analyzing data on workplace incidents, injuries, and claims, multinationals can identify patterns that may indicate key areas for improvement. This information can then be used to enhance safety protocols, training programs, and preventive measure to reduce the likelihood of accidents and injuries.

Additionally, consistent health checks enable multinationals to ensure compliance with local regulations and legal requirements. By conducting regular health checks, organizations can determine if there have been any changes in legislation and ensure they are remaining compliant across jurisdictions.

People are your organization’s greatest asset

The complexity of casualty, workers' compensation, and employee liability programs is magnified for multinational businesses seeking to expand into new jurisdictions. However, these challenges should not deter multinationals from doing their due diligence; protecting the people that power their organization is critical to long-term success.

Effective workers’ compensation and employee liability programs require multinationals to do the following:

  • Understand the local legislation and policy requirements where they operate.
  • Align internally on risk exposures and claim management.
  • Coordinate with global brokers and insurance programs.
  • Conduct consistent health checks.

By following this guidance, multinational companies can begin to mitigate their exposures globally and continue meeting their growth objectives.  

To learn more, speak with a Marsh representative.

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Diana Accordi

Multinational Advisory Practice Leader, Marsh Europe

  • Spain

Corinne Boeri

Corinne Boeri

Multinational Advisory Practice Leader

George Scaglia

George Scaglia

Multinational Advisory Practice leader, US

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