Success Stories


Hanover Stone Partners is proud of the long-term relationships we have developed and maintained over the years with many of our clients. Across a wide range of assignments, we are consistently able to deliver impressive results by working in close collaboration with risk managers, financial professionals and C-suite executives.

HSP’s comprehensive approach to help clients with their most complex risk issues is built on our shared commitment to offer clients the advantage of sound risk management advice and superior services from leading professionals, delivered economically and with a strategic focus on reducing overall cost of risk.

Our enthusiasm and ability to work collaboratively enables us to offer tailored solutions for clients that produce measurable results. In each of our engagements, we strive to gain a deep understanding of the client’s unique risk profile, eliminate or reduce exposures to loss, benchmark performance, drive down costs and strengthen our client’s competitive advantage.


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A leading U.S.-based global manufacturing company had its operation in a major emerging country opt out of the firm’s global insurance program.  Complicating the decision was the fact that the firm had earmarked its local operations for significant future capital investment. Nonetheless, local leadership was enticed by substantial premium savings and the promise of “like-for-like” coverage from a domestic insurer.

Yet, in the course of a year, no local policy was produced and certain irregularities were noted by the company’s Global Risk Management Department. Hanover Stone Partners was retained to help reassess this decision by conducting a strategic and tactical analysis of the coverage, local market insurance practices, compliance, the financial integrity of the domestic insurer and its claims practices as benchmarked against the rest of the market.


The Client

A global manufacturing company with nearly $20 billion in annual sales and a diverse risk profile of wholly owned, joint-venture and franchised operations, including an extensive network of several hundred distributors in emerging markets.

The Challenge

To evaluate the firm’s local-language insurance policies in comparison with its global program for quality and replication of cover. HSP also needed to analyze the financial integrity of the local insurance company (given the lack of any available audited financials) and their reinsurance treaty placements. In addition, the insurer’s claims handling history and philosophy had to be evaluated against local market practices.

While the HSP report needed to provide an accurate assessment, it could not question the decision-making authority of the company’s local management, which may have been rewarded financially for achieving large premium savings.


Finally, the review needed to synthesize local buying habits, laws, business practices, regulations and clarify the local cultural and political implications of bringing the coverage back under the global programs.

The Strategy:

Hanover Stone Partners conducted an extensive review and analysis of the local insurance market, its operating guidelines, the local language and global policies and the domestic insurance company. The analysis encompassed the following:


1. Insurance coverage. A detailed comparison of coverage provided by the local insurance policies, including an assessment of potential coverage interpretation issues posed by the use of the local language, with that available under the global program. The analysis also examined compliance issues, the extent of coverage available locally, and potential issues if coverage disputes arose and were litigated.


2. Financial strength. An analysis of the local insurance company in terms of its financial security; this was complicated by the facts that the insurance company was not rated by global ratings agencies and was closely held so that critical financial information was not readily available.  As such, HSP marshalled multiple local resources to provide an objective overview of the insurance company and its reinsurance treaties.


3. Claims practices. A review of the domestic insurance company’s claims-handling practices benchmarked against local market peers, including interviewing local clients and adjusting firms to frame out its reputation in working with its insureds to resolve matters involving complex claims.



The Results

Hanover Stone Partners completed its analysis and prepared a comprehensive report for the company’s global risk management team and board of directors. Although HSP found the local insurance company’s financial condition and claims paying ability met the client company’s global standards and that it had sound treaty placements, there were numerous issues with the insurance coverage, contractual compliance, underpayment of premium taxes, local and regional tariff violations and the insurer’s claims handling practices when filtered through the Byzantine customary local procedures. 


Specifically, HSP found the following with respect to the domestic insurer:


  • Coverage deficiencies. The coverage provided under the local policy did not match that available under the global insurance program; in particular, there were several deficiencies with respect to the extent of coverage provided by the local policy, which arose from different legal systems and linguistics issues related to policy wording.


  • Policy language issues. The local policy contained ambiguous clauses and conflicting terms as well as endorsements that could have direct bearing on how certain types of claims might be handled and resolved.  Direct English translations did not correspond precisely with the local language resulting in uncertain contractual interpretation.


  • Legal contradictions. The policy was endorsed to note that any coverage interpretations were to be resolved in English, rather than the local language; however, the endorsement contradicted local insurance law, which stipulates the use of local language in all such situations. As such, local language would likely prevail in the event of any coverage disputes. This, in turn, could ultimately affect coverage interpretations under the global program as well.  


  • Claim resolution issues. Through extensive local interviews and research, Hanover Stone Partners learned the domestic insurance company had a reputation for not paying claims on a timely basis, as well as for disputing significant claims; further, the insurer generally was considered adversarial toward policyholders during claim events and claims not presented in accordance with its rigorous reporting standards could take years to settle. Moreover, the client’s program was administered out of one of the most notorious non-claim paying offices in the country.


Given all the sensitive internal factors related to this engagement on multiple levels, HSP’s report was reviewed by the board of directors and all facets of senior management. In light of the company’s plans for significant future capital investment and expected profits, leadership chose to fold the local program back into the global programs despite nearly a seven-figure increase in premiums.




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