Cover yourself: as big Latin American firms cross borders, choosing the right insurance is a big deal.

Author:Jones, Forrest
Position:INSURANCE: BEST PRACTICES
 
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Today, big Latin American companies, the so-called multilatinas, are not only doing business in a slew of countries in the region, but across the world. Foreign direct investment flowing into Latin America and the Caribbean hit a record $173.4 billion in 2012, up 6.7 percent from 2011, according to the U.N. Economic Commission for Latin America and the Caribbean (Eclac). A god portion of this comes from other Latin American countries. In fact, outward foreign direct investment originating in the economies of Latin America and the Caribbean increased by 17 percent between 2011 and 2012 to hit $48.7 billion, up 2 percent above a previous high set in 2010.

Such growth makes choosing insurance coverage a more complicated affair. An earthquake in Asia could disrupt copper shipments from Chile, or a fire in a Mexico manufacturing facility could disrupt deliveries to a retailer in Central America.

Plus, there are entire new categories of risk out there that need to be covered, especially for big Latin American companies that are increasingly visible in the global business arena. Business owners need to consider cyber liability insurance, insurance for contingent business interruptions that protect against the sudden loss of a supplier or client, and many more.

Add to that, many multilatinas axe family-owned or private affairs with less experience taking out insurance for worldwide risks than their Fortune 500 peers in the U.S. and elsewhere, meaning they have less experience agreeing on deductibles that can affect premiums, little time spent vetting insurance brokers, or protecting their brands and businesses on social media sites.

Hire an independent insurance consultant or spend lots of time researching policies, says Dan Weedin, a Seattle-based insurance consultant who has worked with U.S. and Latin American entities in the past as an underwriter and an agent. "If they don't do the right research, they are at the mercy of insurance brokers and carriers who know much more than they do on the subject. This leads to inadequate coverage and higher premiums, "Weedin says. Companies should be asking their consultants and insurance...

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