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MARKETING Regional brokers, global power Foreign markets open up to Globex International partners By Elisabeth Boone, CPCU
Imagine you’re an established, prosperous regional brokerage with A rated markets, top-drawer clients, and a stellar reputation. Virtually all of your business comes via referrals; you’re meeting or exceeding all of your goals; and your clients wouldn’t think of going anywhere else for their risk management and insurance needs. Or would they? Now that the global marketplace is no longer the exclusive domain of mega-corpora-tions, regional brokers are facing increasing pressure to offer clients and prospects a range of international market capabilities that might be beyond their reach. For 50 such brokerages based in North America, these capabilities are available as a result of their partnership in Globex International Group. Established in 1993 by international market veteran Douglas Fay, Globex International Group is a multinational insurance, risk management, and employee benefits consulting firm that operates worldwide via 296 partner brokers in more than 100 countries. The firm’s primary services include risk identification and assessment; program design, program implementation, and program control. The mission of Globex is to expand the regional capabilities of select independent brokers globally. “Globex International is the largest global business unit in the market today, even when compared with Marsh and Aon,” Fay observes. Globex has 50 full and associate partner brokers in North America with a combined revenue base in excess of $3.1 billion. Some 246 regional and local brokers around the world, with a combined revenue base of more than $2 billion, handle non-North American services as well as referral business coming into North America. Globex International has a staff of 13 professionals with more than 150 years of multinational experience with such organizations as Johnson & Higgins, Aon, Alexander & Alexander, Willis, Marsh, Minet, Royal, AIG/AIU, Continental, Chubb, and Arkwright/Hobbs Group. In-house power For its North American partner brokers, Globex essentially serves as a firm’s in-house international division, providing such services as prospect identification, international training and education, broker development, and the overall globalization of the broker’s operations. General services include the selling, marketing, and implementation of multinational or global programs. Globex’s services on behalf of its partner brokers are transparent to the client. Principal categories of insurance in which Globex provides services are property, liability, marine, auto, workers compensation, directors and officers, employers liability, political risk, kidnap and ransom, terrorism, bonding, health, life, disability, accident, employee benefits, and pensions. The Globex partners’ multinational client base consists primarily of manufacturers, specialty (marine, construction, wrap-ups, energy, and various “one on/one off” risks), and the service industry (restaurants, franchise industry, consulting operations, logistics). Globex and its partner brokers have relationships with many leading multinational and local markets. Although Globex has no exclusive market relationships, it has formed strategic partnerships with two markets: Fireman’s Fund McGee for ocean marine and inland marine, and MultiNational Underwriters, which writes international medical insurance coverages through Lloyd’s. Risk and benefits assessments For U.S.-based broker partners whose clients operate overseas, a valuable tool is Globex International’s Global Risk Assessment. The assessment will assist a client or prospect in developing an accurate picture of exposures and establishing an effective risk management program. The assessment consists of: • A local site visit by qualified insurance professionals • An independent assessment of local exposures, values, and costs • A review of existing service providers (broker, underwriter, third-party) • A discussion with local management about current operations, likes and dislikes of the current risk management program • A summary of current insurance arrangements • Detailed risk management observations and recommendations from a local and global standpoint • A tool to minimize cost of risk • A tool to manage and control the client’s overseas risk manage-ment program Also available is the Global Benefits Assessment. Composed of the same elements as the Risk Assessment and available in most countries of the world, the Benefits Assessment is useful for clients who do not currently know or understand their local and global benefits programs and have concerns about cost-effectiveness; clients who have recently acquired or opened new international operations; or clients who want a second opinion of their existing coverages. Defense Base Act coverage With major U.S. military operations ongoing in Iraq and Afghanistan, U.S. and foreign contractors face myriad serious security challenges. In fact, Globex says, in those two countries, overall security costs are currently estimated at 20% to 25% of total operational costs. The federal Defense Base Act (DBA), established in 1941, was originally intended to cover workers on military bases outside the United States. The act was amended to include public works contracts with the government for the building of non-military projects such as dams, schools, harbors, and roads abroad. A subsequent amendment added a wide array of enterprises involving the national security of the United States and its allies. DBA, according to the Globex Web site, “is one of the most generous workers compensation programs, and claims can take years to mature.” DBA, Globex points out, applies to more than military operations or projects and to American companies employing U.S. citizens. Today almost any contract with an agency of the U.S. government for work outside the U.S., whether military in nature or not, will likely require DBA insurance coverage. Globex is able to help its partner brokers secure DBA coverage (including life, accident, and medical) for their clients at competitive rates with reliable service. Clinical trials coverage For broker partners who have clients that are involved in the field of clinical trials in Europe and elsewhere, Globex has developed a facility that can provide coverage and risk management for exposures outside North America. The clinical trials program is underwritten by a major European insurer, and coverage is written on a stand-alone basis rather than as an add-on to a medical products liability policy. Coverage is provided for the duration of the trial in question. Policies are generally specific to one trial, with one limit applying for the duration, a sub-limit per person, and a single premium calculated on the basis of the number of patients to be involved. If a client plans to undertake multiple trials in one country in the same year, Globex partner brokers can also offer coverage under a single policy. In such instances, the policy will provide one limit for all trials, a sub-limit per person, and a minimum and deposit premium, adjustable upon determination of the final number of patients in the trial. Other products available to Globex partner brokers are: • A combined marine and products liability program for foreign-based manufacturers or suppliers of goods that manufacture on behalf of U.S. companies or that export their goods into the U.S. • Nursing home professional liability coverage for U.S.-based risks • International automobile programs for fleets • U.K. employers liability coverage on a stand-alone basis Praise from U.S. partners The proof of any organization’s worth is found in what its members say about it. To find out how Globex International Group rates as a virtual international division for its North American partner brokers, Rough Notes spoke with representatives of three large regional brokerages that are Globex partners. Each firm joined Globex for its own reasons, and each is using different products and services in building its international portfolio. What motivated The Heffernan Group of Walnut Creek, California, to join forces with Globex International in 2003 was the T-word: technology, says John Tallarida, who heads up the group’s technology practice. “That practice was growing to the point where we had clients with international locations,” he says. “We had been arranging coverage through local contacts we had in those countries. Then we began to acquire clients who were doing clinical trials in countries where we didn’t have relationships. In addition, we had clients expanding into areas where we didn’t have contacts. We realized we needed to formalize our approach to the international market, and that’s where Globex, with its broker network, really complemented the push we were making internationally.” On the property/casualty side, Tallarida explains, Heffernan uses the services of Globex primarily on its wide range of technology-related risks with international exposures. “We do have some non-tech clients on the benefits side where we’ve been using the international capabilities of Globex,” he says. In providing risk management solutions for Heffernan’s clients with international exposures, Tallarida says, Globex is helpful “from a consultative as well as from a marketing standpoint. We receive a lot of valuable information from them, and consultatively they’ve been a real asset, as well as placing insurance for us.” For example, he says, Globex has contacts with brokers around the world, “and they know a lot about the people some of our clients are doing business with.” This kind of ancillary information, Tallarida observes, can be invaluable to his clients with overseas operations. In choosing an organization to help The Heffernan Group move forward in the international market, Tallarida says, “We weren’t looking for domestic partner brokers, and we didn’t want to join a club with meetings and conferences. What we needed was a true network of international brokers who could help us do things for our clients, and that’s what Globex offers.” Summing up, he says, “There’s a $4 billion tech client we probably wouldn’t have acquired if it hadn’t been for the resources of Globex. In several other cases, Globex has been instrumental in allowing us to either attain the client or retain the client.” Based in Council Bluffs, Iowa, The SilverStone Group has been a Globex partner broker since 2000. Before joining Globex, says Jeff Barrett, executive vice president, “We had done research on a number of different avenues to provide international coverages and services to our clients. We went through a process to determine which approach was most advantageous to our clients, and from that we selected Globex.” SilverStone uses the services of Globex for many different kinds of insureds, Barrett says. “We use it for both property and casualty clients as well as employee benefits clients—any client that has international exposures.” SilverStone has used the Globex Defense Base Act coverage for clients who are vendors to the federal government. Before joining Globex, Barrett says, SilverStone had only limited involvement in the international market, “and that involvement was typically carrier driven, which in time we learned was not the most effective way to deal with international exposures.” With Globex, Barrett says, “We have the opportunity to compete with the national brokers for international placements when appropriate. We don’t try to duplicate what a national broker does per se. Where we find the opportunities and where we’re most successful is when we’re able to provide a local level of service for an international client where a national broker would not provide that service because the revenue would not warrant it.” The biggest advantage of being a Globex partner broker, Barrett remarks, “is that when we have a global situation, we know how to handle it, as opposed to having to try to guess how to handle it. Globex has trained us to handle international business. The Globex marketing plan is initially to acquaint you with international risks and how to approach them, and ultimately to train you how to handle them yourself. Because we’ve been in Globex for five years, we’ve progressed to the point where we handle a lot of risks ourselves.” Equally enthusiastic about the international expertise offered by Globex is Gary Ivey, president of J. Smith Lanier & Co. of West Point, Georgia. Lanier, he says, joined Globex in 1998. “We had a fairly large number of regional and national clients that were expanding into the international markets to level their revenue streams beyond being exposed just domestically,” Ivey explains. “They needed everything from risk assessment done on the ground at each of their locations to actual placement of coverage in the countries where they were conducting operations. Globex offered us a good solution for these needs.” Globex International’s Defense Base Act coverage is proving useful to some of Lanier’s clients. “Right now a lot of U.S. contractors are supplying different logistical pieces to operations in either Iraq or Afghanistan, and Defense Base Act cover is a necessity for these contractors,” Ivey says. “We use Globex in that area and have found them to be very effective. We also use them for property placements in Bermuda and the Caribbean, as well as for risks in Mexico and other locations in Latin America.” Lanier also uses Globex for reverse flow business: risks that come into the United States from overseas and need domestic coverage. “Globex is one of the few markets that will give leads on this business to its partner brokers so they can capitalize on reverse flow,” Ivey says. Although Lanier currently does not use Globex for benefits placements, Ivey says, the firm will do so in the future. “We want to offer benefits programs that will track U.S. nationals outside the U.S., and/or benefits programs for foreign nationals traveling abroad that will respond to the laws or cultures of given countries,” he explains. Ivey has high praise for the Globex Risk Assessment described earlier. “A Globex broker partner will physically inspect a site that is domiciled in a foreign country where the client needs local cover and send us the information on what exposures exist, what cover is required to be purchased locally, what are the available markets, what’s competitive. We call on Globex to do these surveys on our clients’ sites outside the U.S. so we can meet those clients’ needs,” Ivey says. “Before joining Globex, we had a correspondent relationship with a broker for international business, and they sometimes had to go through another broker, so becoming part of Globex simplified a lot of things for us,” Ivey comments. “We feel that Globex gives us in-house international capability that we wouldn’t have with just a correspondent partner.” Another advantage of working with Globex, Ivey says, is that “turnaround time is quick. Once we give them our information, they contact a broker partner in the particular country, and they usually have what we need within a week. In some cases it takes only a day. If we were going to a carrier ourselves, without Globex, we couldn’t get those fast turnarounds,” he says. “Whether solving an issue or providing coverage on a timely basis, they’ve never disappointed us. Their service is outstanding.” A look ahead As the international insurance market grows in both size and complexity, Globex International must keep its finger firmly on the pulse of emerging trends and developments. Looking ahead, what does Douglas Fay see as the greatest challenges in the global market, and how does Globex plan to respond on behalf of its partner brokers? “We have a facility in London that is responsible for our non-North American operations,” Fay says. “Their primary job is to focus on developing our European partners. We’d like to open up a similar operation in the Far East to capitalize on a highly significant trend: the emergence of Asia-based multinational companies, with China probably being the country with the most opportunity.” Possible locations for the new facility are Singapore and Hong Kong, Fay notes. “Three years ago, when we were interviewed about what trends we were seeing in the international marketplace, the dominant issue was outsourcing products and services to countries like India, Viet Nam, and so on,” Fay remarks. “Today the trend we’re gearing up for is the emergence of competition for U.S. multinational companies coming out of the service and product providers in the Far East, primarily India. These entities are saying, ‘Rather than just being an outsourced product or service developer, why don’t we formulate our own business and operate multinationally?’ Within the next couple of years,” Fay continues, “we believe there will be a hundred China-based manufacturers that Globex will need to offer services to.” Does Globex plan to increase the number of its U.S. partner brokers? “While we don’t guarantee exclusivity, our mission is to retain the value of the franchise,” Fay responds, “and the only way we can do that is to have a limited number of representatives around the country. In California, for example, we have a couple of brokers, but each has its own focus and territory, and they don’t compete against one another. Our mission is to have as few representa-tives as possible to accomplish our goal, which is for our partner brokers to write 25% of the multinational business in their given region.” Globex is currently seeking partner brokers in Indiana, Minnesota, Ohio, and Tennessee, Fay says. * For more information: |
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