Ryan, tell us a bit about what you do at Hayes Parsons
Hayes Parsons is an independent, chartered and Bristol-based insurance broker. My remit as a chartered broker within Hayes Parsons specifically revolves around supporting the life science and tech sectors.
We work with a range of businesses engaged in R&D across both sectors, and have had the pleasure of supporting businesses that have experienced significant growth across several territories.
With the UK redoubling its R&D efforts in years to come and future trade agreements aiming to reduce barriers following Brexit, the opportunities to trade and export overseas are increasingly significant and exciting.
What insurance considerations should businesses make when expanding into new territories?
As businesses grow and expand into overseas territories, it remains important to ensure that existing insurance arrangements can align with the risks and requirements of having a presence in a new territory.
Most insurers in both sectors have a global reach, and therefore the scope to cover overseas territories. It is however worth noting the following considerations:
- Jurisdiction of liability covers
- Contractual requirements
- Local insurance covers
- Property
Jurisdiction of liability covers
Key covers for both sectors includes Public & Products Liability and Professional Indemnity, primarily covering third party costs incurred through negligence of a supplied product and the financial loss incurred due to an error or omission.
These covers will be subject to a limit on its jurisdiction, i.e., the overseas territories in which a claim can be brought. It is therefore vital that this aligns with new territories that a business begins working in.
Most insurers commonly cover all territories, aside from North America which requires adding back in. UK insurers view the North American courts cautiously, owing to its litigious nature and punitive approach which is considerably different to that of UK and the EU, and can inflate defence costs and eventual settlements.
It is worth noting that most insurers can cover North America, but their approach to doing so will be conservative due to those inflated costs. This will include insurers often limiting claims emanating from North America to “in the aggregate”, whilst including defence costs within the overall limit of indemnity.
Contractual requirements
When negotiating an overseas contract, it is important to be mindful of stipulations relating to insurance covers. In our role as a broker, we would always welcome sight of such stipulations and offer comments regarding cover. It is often requested that a business has certain limits of indemnity in place, for example.
Again, a special mention for North American contracts. It is commonplace for there to be requests of an additional insured status and/or a waiver of subrogation. Both requests should be treated with caution, and discussed with broker and insurer prior to agreement.
Noting a customer as an additional insured assigns them with identical rights to the policy, whilst a waiver of subrogation removes the right of an insurer to recover costs from the customer in the event that they were negligent. The key drawback of agreeing to such clauses is that any claim that arises due to the customer will sit on the claims record of the business and potentially impact future premiums negatively.
Whilst such clauses are eminently doable with insurers, it does increase their exposure to claims which enforces a cautious and often reluctant approach.
Local insurance covers
If a business is trading under a newly incorporated subsidiary overseas, it should consider its legal insurance requirements according to the specific laws of the country.
Similarly, if a UK business is employing overseas employees, it should be aware of any legal requirements in the specific country regarding employment-related covers or contributions.
Property
Finally, if a business intends on having property (e.g., R&D samples, Stock and Computer Equipment) overseas, its UK insurance arrangements should extend to cover such property to the required territory. Any cargo shipments can also be insured via a specialist marine cargo policy.
About the author
Ryan Legge is a chartered Insurance Broker and has vast experience working with all manner of life science and tech businesses. If you have any additional queries about your insurance arrangements please get in touch with Ryan via phone or email:
Ryan Legge FCII | Chartered insurance broker
r.legge@hayesparsons.co.uk
07889 561 418
