The allure of the American dream is still strong for many businesses today. But for non-US companies looking to expand into the country, there’s a myriad of risks and exposures to take into account.
From the challenges in navigating differing state laws, to the highly litigious environment and extreme weather and nat-cat events, finding the right insurance for such a move can be anything but simple.
“When you think about the US you think of one country, but from an insurance standpoint it is 50 different states, each one with its own nuances and characteristics,” Graham Taylor, VP, head of corporate & field - business insurance, UK&I region at Travelers UK, told Insurance Business.
“When it comes to setting up the insurance policy, you’ve got to ensure that you meet the state regulations as well as federal regulations, and that adds to the wider cost of doing business, as well as the complications from an insurance point of view,” he explained.
The types of cover needed by a foreign company entering the US can be vastly different from the covers they are used to taking out in their home domicile. Workers’ comp, for example, is a key cover for those doing business in the US, and is likely to account for a sizeable chunk of an insurance spend.
The US also has unique exposures when it comes to weather and natural catastrophes, from earthquakes and tornadoes, to flood and hail events. In fact, 2017 was the costliest year on record for natural disasters in the US, with the damage costing more than US$300 billion.
In short, it’s a different beast entirely and one that requires a considered approach from a risk manager, according to Taylor.
“A risk manager should be thinking – which state am I in, and can I be confident that the insurance company has the scale and capacity to actually respond to my loss, as well as pay for my loss,” he said.
As a result, clients should look for an insurance provider that can cater for every state in the US, as well as offer multi-lines, so that it can offer consistency in handling any claims that should arise.
Your local broker should also enlist the support of a US-based broker, who can provide information and support based on local knowledge.
Taylor added: “[Clients] should always have a local representative from a broker standpoint in the US, who will know all the pitfalls, challenges, and nuances for that particular jurisdiction.”