Deploying an international programme, backed by a captive, should give businesses greater visibility of insured operations and reduce the total cost of risk (TCOR), according to Jason Tyng and Marco Hensel, of HDI Global in the United States.
Speaking on a GCP Short, underwriting lead Hensel outlined the definitions of difference in conditions (DIC), difference in limits (DIL), freedom of services and admitted versus non-admitted insurance and their relevance to international programmes.
HDI Global appointed Tyng its first US captive leader in January 2023 with the German industrial insurer expanding its fronting capabilities and services to State-side captive owners.
Tyng and Hensel first featured on the Global Captive Podcast in May when, in an interview recorded at RISKWORLD in Atlanta, they said the target was for its US fronting business to be writing $100m in gross premium within five to six years, expanding into auto, workers’ compensation and potentially cyber.
“When you’re talking about large multinational organisations that have high existing premiums and they want to form a captive, the captive becomes an attractive risk management tool if they’ve got a lot of high frequency, low severity claims,” Tyng said on this latest episode.
“With an international programme, when you have a footprint all over the globe, what the captive allows you to do is create the consistency across the enterprise.
“A lot of companies talk about the total cost of risk and how they manage that risk. You want to be able to have consistency and similarity from Canada to Mexico, to the US, to the UK.
“When you’re using an international programme, what you’re eliminating is all of that inconsistency in the coverage, limits, the claims handling, the policy administration, and in that simplification of the process it allows you to better understand how your business functions.
“When you add a captive, that’s you taking complete control of your risk management solution. And usually what that does is that it reduces that total cost of risk for the organisation.”
Hensel said that an international programme can be as small as including just two territories, with the size and complexity increasing as more countries and lines are added.
Property, casualty and marine lines are the most common seen on HDI’s global programmes.
“Obviously, the challenge for these programmes is having the expertise and the knowledge of each jurisdiction that the local policy is needed,” he added.
“We have a system solution that allows us to manage international programmes and that also allows the client to see the international programmes within a system, within a software with up-to-date live data about their local policies.
“Secondly, we have experts in all the countries where HDI is present or one of our group companies is present. We have the local expertise that comes together on a producing office level, producing office being the country that administers the global programme.
“And with all these expertise together, we are able to handle the challenges and provide the solutions to have a compliant, number one, programme in place and also a programme that will meet the client’s needs.”
Listen to the full GCP Short episode with Jason Tyng and Marco Hensel on the Captive Intelligene website here, or or any podcast app. Just search for ‘Global Captive Podcast’.