Effective insurance coverage is key to international success

International expansion can be a powerful driver of growth for intermediate-sized businesses. However, there are various important things to consider before entering a new market, and the country’s regulatory environment and its system of insurance coverage should be a particular focus. These vary from one country to another, and so recovering the sums due in the event of a claim can be complicated, in particular when local operators have a more precise knowledge of the legal and administrative system than the foreign business.

Solutions are available to protect companies planning to set up operations outside their home country.

Who is liable?

For a business based in France , operating within Europe is relatively simple.

Under Europe’s free movement of services principle, an intermediate-sized business can take out insurance in France for its property damage and liability risks that will extend the same cover to all European Economic Area countries. (The EEA includes the 27 European Union countries together with Norway, Iceland and Liechtenstein.)

For all damage relating to a building and its contents, it is the legislation of the country in which the building is located that applies. As regards goods-in-transit insurance for shipments transported abroad, cover must meet the regulations of the country in which the insured company’s head office is located. The same applies to general liability insurance. In the event of a claim, these fine details can have very significant consequences.

Companies that need insurance coverage for non-EEA countries must also seek expert advice. Numerous intermediate-sized companies are now targeting “new international markets”, says Alexandre Montay, delegate general of the METI (movement of intermediate-sized businesses). “They’re realising that they need support, in particular as regards insurance.”

The more intrepid among them, and those with trusted networks in the markets they are working to access, can seek out a local insurance company prepared to cover their risks. This can be a perilous choice, however.

The importance of nuance

In business, every word carries a specific meaning and is there for a reason, and so intermediate-sized companies must not minimise the impact of the language barrier. Remember that your contact abroad may not be aware of the details of the insurance contract you have in France. The conditions of cover they offer you may therefore be different from the conditions you’re used to relying on at home. For a decision-maker in an intermediate-sized business who is not an insurance expert, the differences can be difficult to spot.

To avoid a misunderstanding that could lead to issues, the best solution is to ask your usual insurer for advice – they may have partners abroad. MMA does, as Vincent Astié, MMA’s Head of International, explains. “In non-EEA countries, we can arrange a local policy for customers through a member of the International Network of Insurance, which operates in over 150 countries across the world. As well as being a member of the network, MMA is involved in its governance.
The local contract that we define with our partners is not a carbon copy of our French policy, because each country has its own specific legislation. The aim is to provide a contract offering the business local coverage that is as close as possible to the coverage it has in France, but that also complies with local law and fits local practices.”

This solution makes expanding internationally an altogether less stressful experience.