Many practices are increasingly looking to expand by securing work overseas. If you are going to undertake work overseas, check that your professional indemnity and public liability policy covers you for work done in that country. Most PI policies these days provide worldwide territorial and jurisdictional cover, excluding USA and Canada. Cover for work in North America can usually be arranged for an extra premium.
If you intend to set up an office or subsidiary company in a foreign country, be aware that some countries have regulations in place that require the local entity to be insured by an insurer that is authorised and regulated in that jurisdiction. Failure to comply with these regulations may result in penalties being imposed. The payment of a claim to an overseas subsidiary in these circumstances can also be problematic. These regulations vary from country to country but some countries which do require local paper include China, Vietnam and Malaysia.
There are two options in complying with the local insurance requirements. The first is simply to purchase a new policy from an insurer that is authorised in that jurisdiction. This policy would be in addition to policies already in place and the associated premium may be costly as that policy would respond to a claim in that country. The second option is to arrange a “fronting” policy. This fronting policy is issued locally by a locally regulated insurer but is essentially backed by the policy in the country of origin; Australia. The Australian policy still carries the risk as in the event of a claim it would reimburse the local insurer for any payment. For this reason a fronting policy can be cost effective as the full premium is not charged by the local insurer.
We recommend seeking legal advice on contracts pertaining to work in foreign jurisdictions. Most PI policies provide broad civil liability cover but different jurisdictions may commonly use contractual terms which may not covered or may be excluded due to the Assumed Liability exclusion.
In addition to ensuring PI compliance, a comprehensive Corporate Travel policy is important to consider when working abroad. Cover for illness, death, injury and medivac for those working overseas should be included as well as for kidnap and ransom. A further benefit is that leisure travel for executive staff and their families can also be included in a Corporate Travel policy.
Please speak to your general insurance broker with regards to your proposed ventures overseas before you commence work or sign agreements.
Laurence Gottlieb
State Manager – Victoria
