Bloodstock insurance
A bloodstock insurance contract may cover a number of different risks. The principal risks is likely to be all risks mortality covering the value of the animal if it dies as a result of accident, disease or illness. Theft can also be covered as well as loss of use (covering financial loss) and public liability. For location of risk purposes, and despite animals being “property”, many authorities treat bloodstock contracts in a similar way to miscellaneous financial loss contracts. This pragmatic approach is probably taken because the animals frequently move between countries and to use any other method, i.e. the location of the horse, would create difficulties.
In the EEA the location of risk for a bloodstock policy is determined by reference to the country where the insured is domiciled. In the case of an individual this is where they are habitually resident, in the case of a business it is the country where the company or other entity covered by the insurance has its establishment(s).
Outside the EEA the location of risk for a bloodstock policy is determined by local rules. For example, in Canada it is the domicile of the insured but in Australia it is the location of the horse. For further information please look at the “Pre-placement considerations” section of Crystal under the subsection “Definition of location of risk”.
It is possible for a premium to be subject to the regulatory and fiscal regimes of multiple countries. For example, if an insured individual resident in the UK owns a horse stabled in the state of Victoria (Australia) the premium will be subject to UK premium tax and Australian income tax and Victorian stamp duty.
Livestock insurance
Livestock policies offer similar cover to bloodstock policies but as they relate to agricultural animals, which tend to be static, are treated as property risks for regulatory and fiscal purposes.
Global contracts
A Global contract is a contract insuring risks located in more than one country.
A bloodstock insurance contract is a global contract if it is taken out by a corporate body and covers other corporate bodies or other establishments as well. The contract may refer to specific named entities or may state that all subsidiaries, associated companies, branches (or other forms of establishment) are covered under the policy.
When identifying the location of risk for a contract covering a single corporate entity its branch structure and other types of establishment associated with the risk should be considered even if they are not specifically referred to in the contract. “Establishments” are discussed in detail here.
Premium apportionment
A global contract may give rise to regulatory and tax exposures in different jurisdictions. Compliance with these requirements requires the overall premium to be apportioned between the countries in which risks are located. Guidance on premium apportionment is provided here.
