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International policies hampered by European obstacles.

Despite the implementation of the Freedom of Services Directive on July 1, risk managers have yet to see the removal of all barriers to designing a European-wide insurance program. The directive allows a company, including an insurer, headquartered in one EEC country to provide services throughout the community.

Nevertheless, the change should help innovated U.S. risk managers who are able to get around the barriers to create international insurance programs, according to Mark Robinson, manager of the international department for Chubb Group, who spoke during the semiliar "The European Market in 1992-International Insurance Programs."

An international policy should cover such exposures as executive travel overseas, foreign sales, foreign operational facilities, U.S. sales of foreign-manufactured goods and foreign-owned operating plants, he said. Other factors to consider are coverage availabilities in each country, valuation, policy conditions and insurance law, he added.

Because admitted and non-admitted insurance contracts have advantages and disadvantages, Mr. Robinson recommended a blend of both. "You can purchase insurance outside the United States and Canada that is issued concurrently with a master difference in conditions contract in the United States or Canada"' he said.

Theory Vs. Practice

According to Ken Davey, manager of international risk services for Arkwright Mutual Insurance Co., a U.S. risk manager can get a contract in Europe that is similar to a U.S. policy and can structure it to all risk and local contracts. However, he added that while this may work in theory, it does not always work in practice.

"It is possible to have one contract in France that applies to all companies throughout Europe," he said. "However, a West German facility may not be happy with a French contract. ... Deep-seated animosity still exists."

As far as risk management in Europe, Mr. Davey said it is virtually non-existent. "There is very little risk management in Europe," he said. "However, it is coming to the fore, with the French leading, followed closely by the British."

Without risk management training and education, said Mr. Davey, Europeans will not overcome their huge cultural differences and ingrained habits. For example, most Europeans believe in buying lots of insurance and retaining as little risk as possible. "They should be doing the opposite," he said.

While the governments of the 12 European nations agree that a unified Europe would work best, much work still needs to be done to eliminate differences. "There is this desire to be one big, happy family in Europe," said Mr. Davey, "but it's not happening yet."-M.M.
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Title Annotation:Risk and Insurance Management Society Conference; insurance
Author:McCabe, Monica
Publication:Risk Management
Date:Nov 1, 1990
Words:418
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