International Risks – The Need for Insurance

To determine insurance needs for its international operations, an organization must identify and understand the full range of its risk of loss in each country or locality where it operates.

Bogota, October 2020-. An organization's risk of international loss may be similar to those faced by its operations in the United States, such as fire, theft, legal liability, or weather-related losses.

However, an organization operating internationally often encounters a new risk of unknown or high loss in remote locations, justifying special consideration for insurance purposes. Thoroughly identifying the risk of international loss may be more complex and time-consuming than assessing the risk of national loss.

Identifying the risk of international loss is the first step in the long process of developing an international insurance program. While this discussion focuses only on the first step, it is useful to see it in its broader context. Obtaining insurance for international operations involves four key steps.

  1. Identify the main risks of international losses of the organization, which can be classified as referring to liability and net income.
  2. Consider the broader geographical, political, environmental, and physical aspects of loss risks for each location where the company conducts business, for each category of loss.
  3. Combine available coverages with identified loss risks.
  4. Select the most appropriate international insurance solutions considering available options, exclusions and local policy costs.

The risks of loss of an organization that are generally insurable by accident insurance, whether domestic or international, fall into three general categories: ownership, liability and risks of loss of net income.