One Report for Four Countries
Norvell Industrial ($600M revenue, Ohio) is acquiring Aventa, a $120M specialty coatings business with operations in Mexico (45% of Aventa revenue), Germany (40%) and a 51/49 joint venture in India (15%). Norvell currently buys a US master property and liability programme. Mexico and India require locally licensed insurers; Germany permits non-admitted placement, though local managers expect local policies. The group risk manager proposes a $50M master difference-in-conditions/difference-in-limits programme above local policies. Due diligence found that the Mexico plant manager reports injuries only when they require a clinic visit and says near-miss reporting creates paperwork and blame; the JV partner has refused to release five years of loss runs or let the group broker inspect the plant; and the German and Mexican entities use different definitions of employee for liability and auto. The board wants one quarterly risk report covering all four countries.
1. Design the programme and explain which gaps the master DIC/DIL can fix and which it cannot.
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Structure
- Local admitted policies in Mexico and India, placed with locally licensed insurers, because regulatory requirement makes non-admitted placement unavailable rather than merely unattractive.
- German local policy: optional but buy it anyway. Non-admitted placement is legal, but a local policy gives local defence, local regulatory comfort, and a consistent base for a difference-in-conditions layer.
- Master programme at $50M issued to Norvell, sitting above local limits: difference in limits where local limits are exhausted, difference in conditions where the local policy excludes or defines more narrowly.
- Single global claims protocol: one notification address, 24-hour internal escalation, and one claims coordinator empowered to notify every relevant policy at once.
What DIC/DIL fixes
Local limits that are too low; narrower local definitions of insured, occurrence or products; exclusions that are standard internationally but not locally; and the mismatch between the German and Mexican definitions of employee, provided the master wording is drafted to control. Draft on a follow-form-plus basis and test it against one sample claim per country, including an expatriate and a contractor.
What it cannot fix
- Regulatory prohibition. In Mexico and India the master may only indemnify the parent for its financial interest, not defend the local entity, and it will not satisfy a compulsory local requirement. Where the local entity must be the insured of record, DIC/DIL becomes a reimbursement mechanism, not a defence.
- Undisclosed risk. No master policy fixes a JV whose losses nobody has seen.
- Uninsurable perils and sanctions, and any local coverage that is void rather than merely narrower.
- The JV's own programme. If the partner blocks group placement, the JV needs its own local cover plus a shareholder-level contingent arrangement, and the group report must say so.
Name local entities as insureds where permitted; where not, use financial interest and parent-reimbursement drafting, and confirm the master carrier will pay the parent for a subsidiary's loss in that jurisdiction.
2. Design the quarterly board report and explain how you handle the JV's data refusal and the Mexico reporting culture.
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Report design
One page per country on a common taxonomy, a common severity scale and a common currency basis, so the table can actually be aggregated. Each page carries:
- Top exposures with quantified ranges and a confidence grade (A = modelled, B = benchmarked, C = proxy only).
- Leading indicators: near-miss rate per 100 employees, corrective actions open beyond due date, training completion, uninsured contractual exposures identified.
- Loss and near-miss narrative for the quarter, coverage summary, and an explicit gaps section.
- A page-one aggregation that discloses what is not in the number.
The confidence grade is the design feature that makes the report honest. Aggregating four countries without grading invites the board to treat a proxy as a measurement.
The JV data refusal
Treat it in three layers. First, contractual: use the audit and information rights in the shareholders' agreement, the board seat and the reserved matters list, and escalate formally. Second, analytical: until data arrive, model the JV as an unquantified exposure with a stated maximum (revenue-based proxy) at confidence grade C, and disclose it separately - never silently average it into the group total. Third, structural: have the JV buy its own compliant local programme with agreed minimum limits and warranties, and pursue the data right at the next transaction or financing point. If the partner still refuses, the report to the board names it as a governance risk, not just an insurance gap.
The Mexico culture
Change the incentive, not the form. Reporting is currently punished because the only visible metric is injury frequency, so near-misses look like self-inflicted damage. Publish near-miss counts without blame, make reporting and closure of corrective actions a supervisor's performance measure, deliver everything in Spanish with a local champion, and decouple the clinic visit from the trigger by defining a reportable near-miss independently of treatment. Expect near-miss reports to rise and injuries to fall; if the first happens and the second does not, the reporting is real but the corrective actions are not, which is the next problem to solve.