What is a global insurance contract?
A global insurance contract covers risks located in more than one country. Examples include insurance contracts:-
- Covering immovable property (such as buildings), situated in more than one country.
- Where there is more than one insured and the insureds are situated in more than one country (eg an insured defined as a named company 'and subsidiary and associated companies'.)
- Covering fleets of aircraft or ships, where the aircraft or ships are registered in different countries, and registration determines the legal location of the risks.
- Global insurance contracts do not include reinsurance contracts.
Related compliance issues
International fiscal and regulatory obligations arise in territories where risks or insureds are situated. The international insurance laws and regulations permitting or prohibiting insurance transactions vary in their application and impact upon the contracted parties:-
- The insurer,
- Insurance intermediaries, and
- The insureds.
Legal repercussions may arise for each of the contracted parties where coverage is placed with a nonadmitted insurer breaching local insurance laws and regulations.
Download the global contracts presentation (for Market participants only, 208KB pps) The premium accrued from a global insurance contract must be apportioned to reflect the level of exposure located in each territory covered by the policy. This is to ensure that appropriate taxes are paid and liabilities are funded. Whilst there are no set rules in calculating the apportionment, the method used should be justifiable and documented.
Read further information on methods of premium apportionmentRules on risk location differ by territory and may give rise to conflicting obligations. For guidance on how to determine the location of your risk or how to handle a global contract.
Visit the 'Risk Locator'Requirements for contractual evidence validating proof of cover can mean the issuance of multiple policy documents where risks are located in more than one territory.
Furthermore, due care should be taken to ensure that a contract does not have any exposure where international sanctions apply, prohibiting or limiting insurance transactions.
For more country specific trading information Lloyd's market participants can access Crystal or contact Lloyd's International Trading Advice:
Lloyd's Desk, Ground Floor, Underwriting Room.
Telephone: 020 7327 6677
Email: LITA@lloyds.com.
