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A global insurance programme is a master policy issued to a UK parent, coordinated with local policies in each country where the group operates. It gives consistent cover and limits while meeting local legal and tax rules.
Part of: Commercial insurance
In short
A global insurance programme pairs a UK master policy with locally admitted policies in each country where the group has subsidiaries. Local policies meet local law and pay claims locally in local currency. The master policy provides difference in conditions and difference in limits cover where local policies fall short, subject to local rules on non-admitted insurance. Premium allocation between entities affects premium taxes and tax deductibility. The insurer's local network largely decides how well the structure works in practice.
A global insurance programme is a coordinated structure in which a UK parent buys a master policy, and local policies are issued in each country where the group has a subsidiary or significant operations. The local policies meet local legal and tax requirements and pay claims locally. The master policy sits above them, filling gaps in cover and limits and giving the parent consistent protection across the group.
The alternative is a patchwork: each subsidiary buys its own cover locally, with different insurers, wordings, limits and renewal dates. That can work for a group with one or two overseas entities, but it tends to leave gaps the board does not see until a claim. Our page on corporate insurance programme structure explains layers and sections; this page focuses on the international dimension. For groups at an earlier stage, see business insurance when expanding overseas.
| Element | What it does | Points to check |
|---|---|---|
| Master policy | Issued to the UK parent; sets the group's core wording and limits | Which entities are insured, and in which countries it can lawfully respond |
| Local policies | Issued in each country by a locally authorised insurer | Local minimum terms, language, currency, compulsory classes |
| Difference in conditions (DIC) | Master policy responds where the local policy is narrower in scope | Whether DIC can lawfully be paid in that country |
| Difference in limits (DIL) | Master policy responds where the local limit is lower | How local limits erode the master aggregate |
| Premium allocation | Splits the total premium between master and local policies | Premium taxes, transfer pricing, local deductibility |
| Claims handling | Local claims paid locally in local currency | Who controls large claims, and reporting to the parent |
DIC and DIL are where much of the value of a programme sits, and also where most of the legal complexity arises. If a country prohibits non-admitted insurance, the master policy may not be able to pay a claim directly to the local subsidiary. Programmes often address this with a financial interest clause, under which the parent is indemnified for its financial interest in the subsidiary's loss, though whether that is permitted and how it is taxed depends on local rules.
"Admitted" cover is issued by an insurer authorised in the country where the risk is located. "Non-admitted" cover is issued from outside, typically by the master policy insurer. The UK itself restricts unauthorised insurance business: section 19 of the Financial Services and Markets Act 2000 prohibits carrying on a regulated activity in the UK unless the person is authorised or exempt. Many other countries have equivalent rules, and some go further, prohibiting non-admitted cover for local risks, imposing penalties on the insured as well as the insurer, or treating non-admitted premiums as non-deductible.
Rules change and are often class-specific: compulsory classes such as employers' liability, motor and certain liability covers commonly have to be locally admitted. In Great Britain, for example, HSE's employers guide says employers' liability must be placed with an authorised insurer. Programmes are usually designed with up to date local advice for each country, rather than relying on general statements. For the US, see surplus lines and non-admitted insurance.
Premium allocation decides how much of the total premium is paid by each local subsidiary and how much by the parent. It matters for premium taxes, for corporate tax deductibility and for transfer pricing between group companies. An allocation that bears no relation to each entity's risk can attract challenge from tax authorities.
For UK Insurance Premium Tax, HMRC guidance on establishing the location of a risk says buildings and contents are located where the property is situated, and for business policyholders other risks generally sit where the relevant establishment is. Overseas insurers can register for UK IPT; HMRC's overseas insurers guidance notes that the compulsory requirement to appoint a UK tax representative was removed in 2008. Other countries apply their own premium taxes, which is one reason allocation should be agreed before inception.
Local policies usually pay claims locally, in local currency, which keeps subsidiaries whole without cross-border transfers. Currency fluctuations can affect how local limits compare with master limits, so DIL limits are often expressed in a single currency with conversion rules.
A global programme needs an insurer able to issue local policies in each relevant country, either through its own offices or a network of partner insurers. The quality of that network decides how quickly local policies are issued, whether wordings match the master, how claims are handled locally and how reliably information flows back to the parent. A strong master wording is of limited use if local policies arrive late or on different terms.
Groups with substantial retained risk sometimes consider a captive insurance company to sit inside the programme, though that is a separate strategic decision. Groups with operations in less stable regions may add political risk insurance.
Illustrative only; not based on any real business or claim.
A UK parent has sales and assembly subsidiaries in two EU countries and one in Asia. Each buys local property and liability cover with different limits. A product liability claim in one country exceeds the local limit. Without a master policy providing DIL, the excess falls on the subsidiary and, in practice, the group.
A technology group acquires a business in a country that restricts non-admitted insurance. The UK master policy names the new entity, but cannot lawfully pay a local claim. A local admitted policy is issued, with the master responding through a financial interest clause, subject to local advice.
Apex arranges commercial insurance programmes for UK groups with overseas subsidiaries; a broker reads every enquiry.
It is a structure in which a UK parent buys a master policy and local policies are issued in each country where the group operates. Local policies meet local law and pay claims locally, while the master policy fills gaps in cover and limits. It gives the group consistent protection and central control over terms.
Difference in conditions (DIC) means the master policy responds where a local policy is narrower in scope, for example excluding a peril the master covers. Difference in limits (DIL) means the master responds where the local limit is lower than the master limit. Both are subject to local law on non-admitted insurance.
Sometimes, but many countries restrict or prohibit insurance from insurers not authorised locally, especially for compulsory classes. In those countries, a local admitted policy is usually needed, with the UK master policy responding through mechanisms such as a financial interest clause where permitted. Local advice is normally taken country by country.
The total premium is split between the master policy and each local policy, usually in proportion to each entity's risk, such as turnover, assets or headcount. Allocation affects local premium taxes, corporate tax deductibility and transfer pricing, so it is generally agreed before inception and documented.
There is no fixed threshold. Groups commonly consider one when they have several overseas subsidiaries, want consistent limits and wordings, need central visibility of claims, or have had a local policy fall short. A small group with one overseas entity may manage well with coordinated local policies.
Send us your current schedules or renewal pack and we will review the whole programme and tell you plainly what to keep and what to change. No fee and no obligation. Or call 0117 325 0027.
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