United States
Read more
A different animal
Doing business in the US is becoming increasingly difficult for Dutch companies as a result of the current (geo)political situation and the recent introduction of high import tariffs. ‘But even if you put these developments to one side, doing business and risk management in the US is a different animal because the legislation, tax authorities and claim culture are all different from what we are used to in the Netherlands,’ says Ruben Oostwouder, Manager International at Meijers Global & Specialty. Together we explore the most important and common risks in the US.
Liability risk
‘This is by far the most significant risk for businesses in the US because the claim culture is much more prevalent in the US than it is in the Netherlands. Not only is the likelyhood of being held liable much higher, but the claim amounts and legal costs associated with one’s defence are also much higher compared to the Netherlands. The situation in the US is particularly risky in relation to product liability. For instance, importers in the US are often regarded as the producer of the product and treated as such in the case of damage to a third party arising from that imported product. Companies active in the technology or consultancy sectors, in particular, are at risk of a claim as a result of errors or negligence in the services they provide.’
Employers risks
‘Employers in the US are legally required to insure their employees against industrial accidents and occupational illness by providing them with Workers’ Compensation insurance. Workers compensation insurance is mandatory, but the regulations vary by state. Employement Practice Liability claims can be related to discrimination in selection procedures, intimidation on the work floor and wrongful dismissal. This can be covered by what is known as Employment Practices Liability Insurance (EPL).
Five questions about the risks associated with natural disasters
Natural disasters and climate change
‘The US experiences a wide range of risks resulting from natural disasters, including hurricanes, tornados, wildfires, floods and extreme heat, cold and drought. These can cause severe damage to buildings, property and employees and can bring your activities to a halt. Climate change is now greatly increasing the unpredictability of so-called Castrophes Naturelles (Cat Nat).’
Ruben Oostwouder (Manager International Meijers Global & Specialty)
Transport and assembly insurance
‘In the Netherlands, it is very common to insure both transport and assembly risks under one policy. Insurance companies in the US, however, adopt a different approach. After a machine, an installation or production lines arrive in the country, they are assembled and made ready for use on site. Any damage arising from faulty assembly must always be covered by a local policy. It is particularly important that (industrial) machine manufacturers are aware of this fact.’
Share:
Cyber risks
‘Cyber risks can be found everywhere, as the computer networks and data systems of most businesses are globally interconnected. However, in the US, the privacy laws are particularly strict and the consequences of hacks and data leaks can result in complicated legal proceedings, expensive fines and reputational damage.’
A-Side DIC insurance
Compliance
‘Full compliance with US laws is essential. Non-compliance with those laws or with individual state legislation can lead to exorbitant claims and fines. Contract management is also very complicated in the US, both in the commercial and legal sense. Contracts often contain extensive liability clauses. Careless formulation of the terms of liability, indemnification and coverage limits can have disastrous results.’
Directors and Officers Liability
‘It is possible for businesses to insure directors and officers in the US against legal claims. However, the biggest challenge lies not in their insurability but in the costs involved and the complexity of the risk management. An A-Side DIC (Difference in Conditions) insurance policy offers directors and managers extra protection. It can safeguard the financial stability of a company on the one hand and protect its ability to do business on a global level on the other, without affecting its liability in the case of claims.
Local policies and extra coverage with the Master policy
‘Given the frequency, magnitude and complexity of the risks and the differences in legislation per state in the US, it is wise and in many cases even mandatory to arrange a local policy. At Meijers Global & Specialty, we make sure that Dutch companies operating in the US are aware of this. We point out the specific risks and rules in their particular sector and, out of all the states in which they are active, we identify the one with the most advantageous judicial system. We have access to an international network of local partners who can arrange local policies and we can offer a Master policy to cover any shortcomings in the local policy.’ (Difference in Conditions/Difference in Limits). Every company is different, and each one requires a different approach, especially in countries like the US. That’s why international insurance is always tailor-made to suit a business’s specific needs.’
Extending credit limits on time
Table of contents
United States
A different animal
A-Side DIC insurance
Table of contents
Extending credit limits on time
Local policies and extra coverage with the Master policy
‘Given the frequency, magnitude and complexity of the risks and the differences in legislation per state in the US, it is wise and in many cases even mandatory to arrange a local policy. At Meijers Global & Specialty, we make sure that Dutch companies operating in the US are aware of this. We point out the specific risks and rules in their particular sector and, out of all the states in which they are active, we identify the one with the most advantageous judicial system. We have access to an international network of local partners who can arrange local policies and we can offer a Master policy to cover any shortcomings in the local policy.’ (Difference in Conditions/Difference in Limits). Every company is different, and each one requires a different approach, especially in countries like the US. That’s why international insurance is always tailor-made to suit a business’s specific needs.’
Directors and Officers Liability
‘It is possible for businesses to insure directors and officers in the US against legal claims. However, the biggest challenge lies not in their insurability but in the costs involved and the complexity of the risk management. An A-Side DIC (Difference in Conditions) insurance policy offers directors and managers extra protection. It can safeguard the financial stability of a company on the one hand and protect its ability to do business on a global level on the other, without affecting its liability in the case of claims.
Compliance
‘Full compliance with US laws is essential. Non-compliance with those laws or with individual state legislation can lead to exorbitant claims and fines. Contract management is also very complicated in the US, both in the commercial and legal sense. Contracts often contain extensive liability clauses. Careless formulation of the terms of liability, indemnification and coverage limits can have disastrous results.’
Cyber risks
‘Cyber risks can be found everywhere, as the computer networks and data systems of most businesses are globally interconnected. However, in the US, the privacy laws are particularly strict and the consequences of hacks and data leaks can result in complicated legal proceedings, expensive fines and reputational damage.’
Five questions about the risks associated with natural disasters
Natural disasters and climate change
‘The US experiences a wide range of risks resulting from natural disasters, including hurricanes, tornados, wildfires, floods and extreme heat, cold and drought. These can cause severe damage to buildings, property and employees and can bring your activities to a halt. Climate change is now greatly increasing the unpredictability of so-called Castrophes Naturelles (Cat Nat).’
Employers risks
‘Employers in the US are legally required to insure their employees against industrial accidents and occupational illness by providing them with Workers’ Compensation insurance. Workers compensation insurance is mandatory, but the regulations vary by state. Employement Practice Liability claims can be related to discrimination in selection procedures, intimidation on the work floor and wrongful dismissal. This can be covered by what is known as Employment Practices Liability Insurance (EPL).
Transport and assembly insurance
‘In the Netherlands, it is very common to insure both transport and assembly risks under one policy. Insurance companies in the US, however, adopt a different approach. After a machine, an installation or production lines arrive in the country, they are assembled and made ready for use on site. Any damage arising from faulty assembly must always be covered by a local policy. It is particularly important that (industrial) machine manufacturers are aware of this fact.’
Liability risk
‘This is by far the most significant risk for businesses in the US because the claim culture is much more prevalent in the US than it is in the Netherlands. Not only is the likelyhood of being held liable much higher, but the claim amounts and legal costs associated with one’s defence are also much higher compared to the Netherlands. The situation in the US is particularly risky in relation to product liability. For instance, importers in the US are often regarded as the producer of the product and treated as such in the case of damage to a third party arising from that imported product. Companies active in the technology or consultancy sectors, in particular, are at risk of a claim as a result of errors or negligence in the services they provide.’
Ruben Oostwouder (Manager International Meijers Global & Specialty)
Share:
Doing business in the US is becoming increasingly difficult for Dutch companies as a result of the current (geo)political situation and the recent introduction of high import tariffs. ‘But even if you put these developments to one side, doing business and risk management in the US is a different animal because the legislation, tax authorities and claim culture are all different from what we are used to in the Netherlands,’ says Ruben Oostwouder, Manager International at Meijers Global & Specialty. Together we explore the most important and common risks in the US.
