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Managing Growing International Motor Programs

The motor fleet segment is seeing expansion, bringing with it a new set of exposures.
By: | November 3, 2014 • 6 min read

As U.S.-based companies expand operations abroad and leverage new markets and growth opportunities in the global economic landscape, the need to move products or deliver services in multiple countries will often correspond with the need to find solutions to complex international motor fleet exposures.

Whether operating passenger vehicles, delivery trucks, long-haul trucks or heavy commercial vehicles, U.S. multinationals are indeed expanding motor fleets deployed overseas. And where there are vehicles, there will be fleet exposures as well as the need for proven, controlled international casualty motor fleet insurance solutions.

“This particular segment is a significant international growth area,” said Larry Boyk, head of International Programs, Casualty, Zurich Global Corporate in North America. “Most of our Fortune 500 clients already have or are expanding international operations, meaning that they are also expanding a host of casualty exposures, including motor fleet liability. So it’s important that they have a relationship with an insurance carrier that has the global scope and local capabilities to be able to accommodate these growing customer needs.”

Boyk explained that all international casualty motor fleet program components — including policy terms and conditions, premium allocations, risk engineering services, claims procedures and other essential components — must comply with all relevant local insurance regulations and tax laws, factors that can vary from country to country.

“International motor programs can be complicated, time consuming to manage, and deal with a myriad of tax and regulatory requirements,” Boyk said. “Our primary objective at Zurich is to take the complexity out of the implementation of international motor programs.”

In fact, Boyk added that many potential customers see international motor exposures as risks they don’t want to tackle under a master program. Instead, they may trust country managers to place these policies locally. While that may seem to be the most expedient approach, it fails to provide the customer with the centralization and control necessary to ensure consistent pricing and program management. In addition, allowing local contacts to place motor coverages themselves can leave potentially serious gaps in coverage, compliance, or both.

“International motor programs can be complicated, time consuming to manage, and deal with a myriad of tax and regulatory requirements.”
— Larry Boyk, head of International Programs, Casualty, Zurich Global Corporate in North America

“The insurance regulations and tax guidelines governing motor fleet and other lines of business will differ on a country-by-country basis,” Boyk said. “If coverages are placed with markets that are not up to speed with local requirements, there could be issues once a claim occurs. Also, buying coverage on a local basis could result in doing business with a local provider whose claims handling, risk engineering, or financial resources may not be up to par.”

According to Andrew Smith, International Programs Regional Manager, Casualty, Zurich Global Corporate in North America, Zurich has established itself as a leading player in the international motor program segment as its book of business has expanded.

“International motor can be difficult to do well and Zurich is one of the markets that is recognized for our global capabilities in meeting complex multinational needs,” Smith said. “We offer risk managers a value proposition that we believe is a major marketplace differentiator.”

Smith added that controlled motor programs provided by a single carrier are relatively recent phenomena, offering significant benefits such as ease of doing business.

“With Zurich, customers get consistency of pricing and coverage from a single carrier with demonstrated financial stability and global presence,” he said. “That is, as opposed to local managers purchasing local policies from several carriers, whereby risk managers may not know the local insurer’s ratings, stability, etc.”

Also, a controlled international motor program offers the customer consolidated loss data, policy and invoice tracking, as well as confirmation of premium payment. A controlled program also provides a single underwriting point of contact through which stewardship meetings, renewal strategy meetings and negotiations with the risk manager can take place.

Smith explained that international casualty motor fleet programs feature many “moving parts,” including various risk managers or country managers, or may have no local management at all. In addition to the possibility of multiple brokers, there could be leasing companies using different coverage methods, which means a lot of different individuals with existing broker and carrier relationships.

“It can be very tough to move those countries into the program,” he said.

Boyk noted that global brokers trying to bring multiple countries into a single controlled program can face challenges when trying to work with local brokers.

“In some of these situations, brokers handling the controlled motor programs can have difficulty getting the information they need on local policies,” he said. “This can be especially true when we are talking about very large, multinational fleets. Brokers and customers need a carrier with the infrastructure to handle a potential influx of claims. The broker and customer will also want to improve program performance, so we give them the necessary risk engineering support.”

Boyk points out that few markets have Zurich’s breadth of capabilities for casualty motor coverages. Headquartered in Switzerland with major operations located around the globe, Zurich insures millions of fleet vehicles worldwide. In addition, Zurich offers thousands of claims professionals and more than 900 risk engineers around the world, all of whom share information and risk insights with clients one on one and through symposiums, such as one recently held in Cameroon.

“We distinguish ourselves through our service and our network,” Boyk said. “When a risk manager looks at auto expenses on a global basis, he or she knows it can be costly. So when we deliver a fleet program, we can offer local and centralized service coordination as well as aggregated customer data as a value-added piece helpful in benchmarking and assessing program performance.”

In fact, Zurich’s innovative technology tools include a new web-based system empowering risk managers to access not only motor loss data, but also risk engineering data, safe driving information, local policies, local invoices, and local country tax and compliance information.

Boyk noted that complexity is a hallmark of international motor fleet coverage. In fact, motor coverage can be a constantly moving target from a compliance standpoint. Hence, Zurich closely monitors evolving local regulations with specialized attorneys to provide greater certainty to customers that their international motor programs will be compliant.

“No corporation wants to make headlines for violating regulations or tax laws,” Boyk said. “We offer an array of resources and tools — we call it Zurich’s Multinational Insurance Application — that can be effectively used on a country-by-country basis to stay on top of evolving insurance regulations and tax laws.”

Ultimately, given the sophisticated data tools, claims, and risk engineering services Zurich provides, risk managers can make significant progress in learning where motor losses are coming from, what can be done to improve loss frequency and severity, and how to produce sustainable, positive results in a particular country or geographic region.

Learn more about Zurich’s International Casualty Motor Solutions at

Larry Boyk can be reached at



This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Zurich. The editorial staff of Risk & Insurance had no role in its preparation.

This is intended as a general description of certain types of insurance and services available to qualified customers through the companies of Zurich in North America, provided solely for informational purposes. Nothing herein should be construed as a solicitation, offer, advice, recommendation, or any other service with regard to any type of insurance product underwritten by individual member companies of Zurich in North America, including Zurich American Insurance Company. Your policy is the contract that specifically and fully describes your coverage, terms and conditions. The description of the policy provisions gives a broad overview of coverages and does not revise or amend the policy. Coverages and rates are subject to individual insured meeting our underwriting qualifications and product availability in applicable states. Some coverages may be written on a nonadmitted basis through licensed surplus lines brokers.

Zurich Insurance Group, Ltd is an insurance-based financial services provider with a global network of subsidiaries and offices in North America and Europe as well as in Asia Pacific, Latin America and other markets.
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Adjuster X

Wild Kingdom

By: | November 3, 2014 • 3 min read
This column is based on the experiences of a group of long-time claims adjusters. The situations they describe are real, but the names and key details are kept confidential. Michelle Kerr is the editor of this column and can be reached at

One of our clients had a delivery driver involved in a car crash. I happened to be in the area so I was dispatched to the scene. I spoke with an officer after the ambulance left with the driver. The officer checked his notes: “One vehicle accident. Good weather conditions. No skid marks indicating a high rate of speed. Driver says he simply lost control of the van and ran off the road.”

I inspected the van, which had crashed into a copse of trees. The windshield was broken, the front bumper was dented, the headlights were broken, and the grill was damaged.


I checked the back. The storage area of the van was open to the front seats. It was scattered with boxes that looked more bashed up than I would have expected. “What do you make of that?” I asked the officer.

He shrugged. “Got jostled in the crash?”

The boxes were all fairly light. Some of them looked punctured, but I didn’t spot any sharp objects in the back of the van. I noticed the interior paint in the van was scratched up, too. Odd.

Then I spotted a small smear of blood near the back door of the van. Something really wasn’t adding up here.

At the ER, I introduced myself to the injured driver, Kyle Warner, as a nurse checked his wound, which was on the back of his head, behind the right ear.

After a few preliminary questions, I said: “So, Kyle, what exactly caused the accident to the best of your recollection?”

Warner looked down at the floor and said, “I guess I just lost control of the van.”

“That’s a bit strange,” I replied. “It was a straight road. No lights, stop signs, or construction crews around.” Warner glanced at me sideways. “It’s even more baffling how you sustained a laceration on the back right side of your head.”

He looked uncomfortable. “Maybe a box hit me. I don’t know.”

Then I spotted a small smear of blood near the back door of the van. Something really wasn’t adding up here.

I looked intensely at him. “I think you do, Kyle. What did you have that was alive in the back of that van?”

Warner stammered, “I … I don’t know what you mean.”

“C’mon, what was it?” I pressed. “It was something large. Not a dog. It was wounded. My best guess is a white-tailed deer. The hooves would explain the punctured boxes and the scratched paint, not to mention your head wound.”

Warner was staring at me with his mouth open. “You may as well tell me,” I said. “I can easily get a blood sample from the van.”

“OK,” he said finally, letting out a sigh. “I came across a doe on the side of the road that must’ve been hit by a car. I thought it was dead, so I put it in the van so a friend of mine could butcher it for venison.


“Only it wasn’t dead — it was just stunned. Five or six miles later, it came to and went berserk in the back of the van. Before I could pull over, it hit me in the head with a hoof and knocked me half senseless. That’s when I ran the van off the road. I was able to get out and get around to the back of the van and let the deer out before the police arrived.”

I indicated that picking up a stunned deer was certainly not something in the course and scope of employment of his job as a driver, and that this non-sanctioned action led directly to his injury.

“What’s going to happen with my job?” Warner asked me.

“That’s up to your employer, Kyle,” I replied. “but I wouldn’t be counting on receiving a commendation.”

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Sponsored: Liberty Mutual Insurance

Construction’s New World

The underwriting of construction risk is undergoing a drastic change, one that may take many years to resolve.
By: | November 3, 2014 • 5 min read

Get off a plane at Logan Airport and cross the harbor toward Boston and you will see construction cranes, a lot of them.

Grab an Amtrak train from Philadelphia into New York and pulling into Penn Station, you will see more construction cranes, many more of them. The same scene repeats in Denver, Los Angeles, San Francisco and Chicago.

All that steel and cable in the skyline signifies a construction industry that is growing again, after having the rug pulled out from under it in the Great Recession of 2008-2010.

The cranes these days look the same as cranes looked in 2008, but the risk management and insurance environment in construction is anything but the same now.

A variety of factors are now in play that have drastically changed construction risk underwriting, according to Doug Cauti, a senior vice president and chief underwriting officer with Boston-based Liberty Mutual’s construction practice.

Doug Cauti characterizes the current construction market.

Talent and Margins

For one thing, according to Cauti, the available talent pool in construction is nowhere near what it was pre-recession.

“When the economy went into its downturn, a lot of talent left the business and hasn’t returned,” Cauti said.

Cauti said recent conversations with large contractors in Ohio and Pennsylvania confirmed once again that contractors are facing a workforce that is either aging or very inexperienced. That leads to safety management and project quality concerns at just the moment in time that construction is rebounding.

Doug identifies one of the top risk management issues facing construction firms today.

Workers compensation risks in construction, already a problematic area, are seeing an impact from that dynamic.

Contractors are also facing much more competition. In the past, contractors might have bid on 10 jobs to get one, now they have to bid on 50 or 60 jobs to get one. That’s putting pressure on margins.

“There are a lot of contractors out there competing for business,” Cauti said.

“Margins are going up but not at the same rate as the industry’s recovery,” he added.

Financing and Risk Transfer

Another factor impacting the way construction risk is being underwritten is the size of projects and the way they are being financed. Construction’s recovery from the recession might be slow and steady, but the size of projects requiring risk management and insurance has increased substantially.

In 2010, there were 85 projects under contract nationally that were worth $1 billion or more, according to Cauti. One year later, the percentage of projects of that value or higher had grown by 30 percent, and the trend continues.

A lot of those projects are design-build, a relatively new approach to construction that Liberty Mutual has grown comfortable underwriting over the years. But design-build is still an additional complication, blurring the traditional lines of responsibility.

SponsoredContent_LM“We did it when the growth in contractor-controlled insurance programs happened, we did it with the evolution in design-build and we’re laying the groundwork to be a thought leader in public-private partnerships and integrated project delivery.”
– Doug Cauti, Chief Underwriting Officer, Liberty Mutual National Insurance Specialty Construction

Given the funding demands of these much larger and more valuable projects — many of them badly needed public sector infrastructure improvements — public-private partnerships, otherwise known as P3s, are now coming into vogue as a financing option.

But deciding how risk should be allocated, underwritten and transferred in this new arrangement between contractors, the state, and private partners is a relatively new and untested science.

As a thought leader in the underwriting of the design-build approach – and the more traditional design-bid-build – Cauti said construction experts within Liberty Mutual are growing their knowledge to stay in step.

“We did it when the growth in contractor-controlled insurance programs happened, we did it with the evolution in design-build and we’re laying the groundwork to be a thought leader in public-private partnerships and integrated project delivery,” he said.

That means attending relevant industry conferences like the annual IRMI Construction Risk Conference where Liberty Mutual has maintained a significant presence, and engaging in dialogues with contractors and government officials, and maintaining clear and active lines of communications with brokers.

Doug discusses emerging approaches to construction.

Legal and Regulatory

Another change that is creating challenges for construction risk underwriting, according to Cauti, stems from what’s happening in United States courtrooms.

Across the country, how a court interprets coverage can vary widely, especially in the area of construction defect.

“In the past, many jurisdictions viewed construction defect simply as shoddy workmanship and they had to go back and redo it,” Cauti said.

But now, on a state by state basis, courts are ruling that a construction defect is an accident under certain circumstances that may be covered by a contractor’s general liability policy.

In 2014 alone, according to Cauti, Supreme Courts in West Virginia, Connecticut and North Dakota ruled that construction defects can sometimes be considered accidents.

Cauti said doing business with a carrier that pursues contract clarity whenever possible – and that possesses an experienced claims team that can navigate the wide variety of state interpretations – is absolutely essential to the buyer.

Having claim teams not only dedicated to construction but also to construction defect, adds a lot of value to a carrier’s offering.

Doug outlines another top risk management issue facing construction firms in today’s booming market.

Now, as never before, contractors are relying on experienced construction insurance teams to help them address these complexities.

Insurers need to have the engineering expertise to analyze a project, to make sure the right contracting team is in place and to insure that risk exposures are being properly assessed. Another key in a construction insurance team, according to Cauti, is the claims department.

A Strategic Approach

The legal and financing changes that are taking place in the construction market, from a risk transfer standpoint, aren’t going to get ironed out overnight.

Cauti said it could be 10 years until the construction and insurance industries fully understand the complications of public-private partnerships and integrated project delivery, these approaches gain traction, and the state-by-state legal decisions that are causing so much uncertainty can be digested.

In the meantime, an engaged, collaborative approach between carriers, brokers, contractors, and their financing partners will be necessary.

Doug discusses how his area can provide value to project owners and contractors.

For more information on how Liberty Mutual Insurance can help assess your construction risk exposure, contact your broker or Doug Cauti at



This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Liberty Mutual Insurance. The editorial staff of Risk & Insurance had no role in its preparation.

Liberty Mutual Insurance offers a wide range of insurance products and services, including general liability, property, commercial automobile, excess casualty, workers compensation and group benefits.
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