Global Product Liability

1. Global Product Liability Coverages Worth Buying and Claims to Learn From

2. • Jim Gothier, Enterprise Risk Manager The Sherwin-Williams Company • • TanjaMaffei Chan, CPCU, ARM • SVP, International, Willis • Based in Chicago, USA and Geneva Switzerland. • Responsible for production and account stewardship of • international business. Multilingual, almost 20 years in insurance. • Enjoys teaching and mentoring, traveling and cooking.

3. What to Expect • We will examine global claims statistics and case studies to help you understand if the coverage you purchase will pay the claim. • You should be able to: • • Consider global liability coverage options.• Improve your current liability program.• Assess the impact to your company of global claims settlement and litigiousness trends.

4. The Issues At A Glance The Issues at a Glance INSURERS PROGRAM STRUCTURE TECHNOLOGY LAWS TAX CLAIMS SERVICE PROTOCOL COMMUNICATION

5. Source: Norris& Bazemo law firm, Paris

6. US vs. Foreign Programs Source: Willis Dbase, Axco

7. Where to Buy Local Policies?

8. Recommended Structure - CMP Advantages • Uniformity of cover worldwide • Maximum bulk purchasing benefits • Tax benefits to local subsidiary • Uniform risk management approach • Solid claims coordination • Disadvantages • Needs firm central control • Considerable administration burden if no broker involvement Cover/limits Master DIC DIL Policy FOS GL/ EL Brazil GL/ EL China GL/ EL

9. Why Buy Foreign GL? • To protect foreign legal entities, employees and assets • To act as a good citizen and prevent reputational risk (social media), • To provide local certification, • To be able to deduct premiums locally and show proof of IPT payments, • To obtain broader coverage in some cases, • To tap into local insurer expertise- adjustors, lawyers. • Can be guaranteed cost and often less expensive than US rates • Continental EU, UK, Australia are all well developed and litigious societies- increasing class action claims -some punitive damages • Vendor’s programs- negotiate to ensure coverage. Consider an intl carrier for leverage, for broader territory (not only CHINA) and claims handling expertise outside China.

10. Defining Good Local Standards • Limits- • is 1-2M still enough? consider changing local laws, class actions, your contracts and certification requests, • Consider having your umbrella issue a higher limit FOS on an admitted basis • Coverages- • Beyond property damage- PFL/ DINC, Extended products, Recall • Fines, penalties, punitive damages • Tenant’s & Neighbor’s libaility • S&A versus EIL, EU directive, China, Russia • Duty of care/EL • Decennial liability • German warranty

11. A sample of Recent UK GL claims

12. What is The Trigger? • Product manufactured in 2000 • Sold and delivered in 2002 • Property damage occurs in 2005, claim filed • Which policy applies? • Importance of sunset clauses and claims-made versus occurrence • Especially when acquiring a firm, review your policies and contractual obligations to old products, employees, past liabilities

13. Why Buy FVWC? • Guaranteed cost- voluntary WC (occupational-medical, disability, income replacement) and excess EL (some countries excluded), • As coverage is voluntary, benefits can be provided in a more flexible manner than as legally mandated • Can cover all employees and some coverages can be extended to family, spouse, outside D&O, • More 24/7 than US WC and often on primary basis, can provide cover for personal deviation, commuting to/from work in situ, • Accidents and some endemic disease- sars, avian flu, malaria, yellow fever, H1N1, can manifest upon return, • Expert claims handling, • Assistance services and training- travel, medical, evacuation (disease/ accident and political), • Some ancillary coverages- K&R, AD&D. Other options: SOS, DBA, BTA, EB

14. Why Buy Employer’s Liability? • With globalization, employees are seeking remedies above smaller WC payouts • Often can be added to the local GL policy with minimal premium, compulsory in many countries • Duty of care- A concept that employers provide a place of employment that is safe and free from hazards that could cause injury or death. A corporation could be considered negligent. • UK Manslaughter Act – holds a company criminally liable for negligence that results in the death of an employee outside the UK. • Australian Case Law has expanded to include injuries to employees that occur during activities of their own choosing. Contractors on your premises filing GL claims. • Workforce (HSA /OSHA) audits to protect employees- often need to report US expats, tcns, volunteers, apprenticeship • Subrogation by Government health systems- Gross Negligence France, Italy

15. Why Buy UK Employer’s Liability? • It’s compulsory. MOJ reforms and the portal- speeding up claims, limits plaintiff attorney’s fees, loser pays defense costs. • UK EL very strict standard- reputable presumption of liability that ER did not provide a safe work place. • Insurers can offer training, loss control assistance • The most common disease claims: • Deafness (75% of the total disease claims)- average £5K plus costs (overall about £15K). Frequency is increasing with aging population. • HAVS (vibration claims) around £20K plus costs. Also on the rise. • The average Mesothelioma claim settles around £250K in about 3 years and liability remains often with the last employer.

16. Why Buy Excess Foreign Auto? • Local Limits are often very low in developing countries • To be able to schedule under the umbrella • To provide excess cover over foreign car rentals • When multiple claimants are involved, the claim can easily reach over 1M USD • Largest UK auto claim in recent years almost 14M USD: insured vehicle hits two third party cars, multiple injuries • Many injuries due to distractions- backing over cyclists and kids, not signaling lane changes, running red lights

17. Tips to a Better Global Program • Know your Exposures and Claims, • Basic Program Structure- GC or Loss sensitive, Implications, • Where to Buy Local Policies, • Adequate Local Limits, Aggregation WW (Master), Consider Admitted Excess, • Coverages/Good Local Standard- Terms and Conditions, • Which Carrier(s) to Utilize, • Discuss Premium Allocation (cash b4 cover) and Tax Records, • Claims- How to Coordinate the Local and Global Policies, • Define Service Expectations, • Policy certainty 30 days before binding.

18. Tips to a Better Global Program • Global Territory Provision (good), US occurrences foreign suits, US occurrences US suits, local policies should be ww • Broad named insured – All entities- past, present, newly acquired, formed, JVs • Global Liberalization Clause • Contract commitment to issue local policies upon request • Financial Interest Named Insured Clause (may be a problem or a solution) • Waiver of subrogation, Additional insured- blanket, broker to issue certs where possible • EL as part of GL if available or separate where compulsory

19. Questions? Please complete the session survey on the RIMS14 mobile application. THANK YOU for your attendance and for your active participation. We appreciate your candid feedback on the evaluations. Jim Gothier ERM, The Sherwin Williams Company James.Gothier@sherwin.com +1 (216) 566-2916 Tanja Maffei Chan SVP, International, Willis Tanja.maffei@willis.com +1-312-288-7324 Chicago Office +41-79-1374744 Swiss Cell