Clearing the Confusion for Internationally Expanding Businesses

Businesses with growing international exposures need tailored coverages to meet their unique demands. As more insureds expand their business internationally, it creates an unprecedented opportunity for the commercial insurance industry to provide coverage for overseas operations. In addition to your clients’ expanding portfolio, they need to reduce vulnerability to competitive pressures.

Admitted vs. Non-admitted Coverage

In international terms, admitted and non-admitted coverages refer to whether or not an insurance policy is issued by an insurer authorized to do business in the country where the risk is located. In some countries, local admitted (licensed) insurers may only write admitted insurance.

Admitted coverage

This type of coverage signifies that the insurance company is authorized (licensed) to conduct insurance business in the country where the insured has operations.

Non-admitted coverage

This type of coverage signifies that the insurance company is not authorized (licensed) to write business in a particular country.

What is considered admitted and non-admitted can vary by country. In some countries, insurance coverage may only be available through a government monopoly. Local premium taxes, stamp fees, and other taxes and fees do not apply and are not added to the non-admitted premiums. Premiums are paid in Canada and are not tax-deductible locally overseas. 

While non-admitted coverage is legal in the jurisdiction that permits it, the non-admitted insurer may not be recognized or even permitted to operate locally in that country. In some local jurisdictions, non-admitted insurance is illegal and, if discovered, subjects the parties to fines and penalties. As a result, claims handling is often on an indemnification or reimbursement basis.

CNA’s International Solutions team focuses on providing International Property and Casualty insurance coverage for Canadian-based commercial customers as they expand into non-Canadian markets. International insurance is written on admitted coverage, non-admitted coverage or a combination of both. Our knowledgeable underwriters identify the needs of expanding businesses, make recommendations based on the local guidelines and simplify the coverage process for your clients.

How you structure your clients’ international program could negatively affect their international business if done incorrectly.

CNA’s Oneworld+^® Controlled Master Program coverage (CMP) is a specialized international package policy for medium to large Canadian-based commercial entities that consolidates the insured’s coverage needs around the world into one CMP underwritten by CNA. By issuing local policies in countries that require local admitted coverage and a master policy issued in Canada, it closes any coverage or limit gaps between the local policies and the Master policy. The Master policy effectively provides the necessary Difference in Conditions (DIC) and Difference in Limits (DIL) components over the local admitted policies.

As your clients expand internationally, it is important to determine the required insurance coverages in the country where the insured has operations. CNA combines knowledgeable underwriters with flexible and comprehensive solutions for international businesses without borders.