Shoring Up Protection for Overseas Employees

Last November, like many Western contractors before him, British peace activist Norman Kember was kidnapped in Iraq and threatened with execution. At press time, his fate remains unknown. Since April, 2004, more than 200 foreign civilians have been abducted in Iraq. Of these, more than 30 have been killed. Many hostages, like Kember, remain missing with no clue as to their whereabouts or their safety.

The situation in Iraq is dramatic, but by no means unique. Across the world, companies spurred by an increasingly competitive global marketplace feel compelled to do business in dangerous countries. But for their employees, going to work is more than just another day at the office. It is a matter of life and death.

For years, the exposures faced by employees stationed overseas have been a concern for risk and benefit managers. Employees may have been required to take a brief country-training program, and international insurance may have been tacked onto their benefits package. Emergencies were, for the most part, handled on a case-by-case basis.

But with each passing day, the news of terrorism, war, industrial accidents and natural disasters reinforces the need for contingency planning that actively manages those risks faced by employees stationed overseas or traveling internationally. Today’s risk and benefit management plans must contemplate a diverse array of travel and overseas exposures that specialized insurance protection and programs can mitigate.

Nowhere to Hide
Recent events have shown that developed nations are as vulnerable to danger as emerging markets. Bombings of mass transit systems last year in London and Madrid speak to the widespread dangers that overseas employees face. No region of the world is immune to danger and coping with these concerns takes on an added dimension of peril in countries where the language, culture and social customs are unfamiliar, especially if the political structure is unstable.

The business goals of attaining distinct cost, production or revenue advantages that may be offered by an international presence must be balanced with planning for the safety and benefits of employees working or traveling overseas on behalf of the company. This includes meaningful insurance coverage as well as comprehensive contingency planning for man-made or natural disasters in any location—be it remote or easily accessible—where valued employees are stationed. This process requires thinking through the logistics involved in evacuating or providing medical assistance to employees before an event, without the pressure of doing so when their lives may be in jeopardy. Once disaster strikes, there is going to be little time to develop a plan to secure an employee’s safety. Borders may be closed, mass transit may be shut down, commercial airlines could be grounded, and access to medical care often is limited.

Evacuating overseas employees from a site where a natural or man-made catastrophe has occurred requires substantial advance logistical planning. The orderly exit of employees may depend upon the cooperation of governmental, military or relief agencies that can assist with transfer. The sad fact that a disaster can happen anywhere puts this component of contingency planning beyond the capacity of many risk and benefit management programs. One of the first resources an employer may turn to is an accidental death and disability (AD&D) insurer that understands catastrophic coverage and has developed a thorough program of travel assistance as a key part of its risk and benefit management offering.

A Personal Emergency
For companies with no experience or network to rely on, providing support to an overseas employee who has suffered a medical emergency in a foreign land can be as daunting and complicated as responding to a mass disaster. An employer may be placed in the position of trying to locate appropriate medical care and perhaps specialized transportation within a compressed timeframe and without sufficient information on the available medical capabilities. This situation could result in delays in treatment—even contribute to deterioration in the employee’s condition, prolong recovery time and possibly result in permanent health effects—all while adding cost for the employer.

Even in nonlife-threatening situations, insufficient knowledge of the medical landscape may cause an employer to turn in the wrong direction, creating additional hardship for a sick or injured employee who may have to travel to a distant facility when an equally competent one is close by. Once the appropriate medical care is located, travel to the facility may have its particular logistical challenges. Certain countries restrict their air space to flights from other countries and many employers lack the type of knowledge that would smooth passage for employees at a time when they may most need it.

Understanding travel logistics and overseas medical capacities only begins to define the diverse activity planning involved in weaving a safety net for overseas employees in an emergency. Planning may entail providing for emergency medical referrals, medical evacuation, hospital admission requirements, medical or nonmedical repatriation, provision for transportation of a child during a medical emergency, prescription assistance and foreign legal assistance among other capabilities. A precisely thought-out response, however, clearly involves contingency planning that reaches areas not formerly considered the domain of risk and benefit managers.

A Benefit Continuum
When facing a foreign emergency, employers have three choices: do nothing, develop internal contingency and logistical resources, or work with a specialist who can provide travel assistance support. While either of the first two choices may be an option, neither seems feasible in today’s competitive climate, where corporate resources are stretched thin and attracting talented employees who can handle tough overseas assignments can be a challenge.

An intelligent approach to managing a company’s overseas exposures is to integrate travel assistance services as provided in an AD&D program into a company’s contingency plan. This alternative offers meaningful benefits and brings existing infrastructure to what might otherwise seem a chaotic array of exposures.

Emergency assistance programs fall into three broad categories: traditional travel, catastrophe response assistance and event management.

Traditional travel. A travel assistance program will include assistance for routine mishaps such as loss of luggage, travel advisories and information about inoculations and immunizations. It should also include access to qualified support networks for medical referrals, medical evacuation services, guarantee of payment for hospital admission, medical monitoring, medical repatriation, returning an unattended child home during a medical emergency and many other services that would assist an employee through a crisis.

Catastrophe response. These programs recognize the need for well thought-out protocols, including a high level of communication with government entities, to deal with exposures as diverse as medical emergencies, natural disasters or terrorist attacks. Planning for these events can reduce loss of life and mitigate injuries.

Event management. Specific event planning establishes a response plan for a specific event such as a business function related to the Olympics or any other high-profile event. Should a medical or other catastrophic emergency occur during the event, specific response protocols and procedures are in place that would evacuate attendees or provide access to hospital beds or air ambulance services.

Accidental Death and Disability
Travel assistance services that are part of an AD&D program shift the logistical and administrative responsibilities of many emergency situations from the shoulders of home-office risk and benefit managers to an AD&D specialist who understands the medical and legal landscape of a distant country.

AD&D coverage and service levels, however, can vary greatly. For example, some traditional accident policies that are purchased as add-on coverage to an employer’s group life policy may exclude losses due to war, terrorism and nuclear, biological or chemical  attacks. Some AD&D programs may exclude coverage for independent contractors or local nationals. This restriction may be a disadvantage to companies that need to supplement their staffing with certain specialized skills of independent contractors or fill gaps in language proficiency or local culture with the knowledge of nationals. As each group has become a target of violence in areas where regional tensions exist, they have increasingly demanded benefits that are commensurate with the risks of their assignments. Yet coverage for these individuals can be lacking in add-on AD&D polices because underwriters of these polices often lack the technical knowledge to assess these risks.

Designing AD&D coverage that responds to global risks requires an understanding of a set of complex risks that are vastly different from the exposure base used in underwriting group life insurance. Unlike life risks that are fairly predictable, the risks of war, terrorism, industrial accidents and natural disasters are highly volatile and have a catastrophic component to their underwriting.

Trading Quality for Price?
The catastrophic nature of AD&D risks requires an understanding of an employer’s level and accumulation of exposures. Arriving at an appropriate cost therefore involves evaluating factors as diverse as the nature of an assignment; housing accommodations; local language skills; familiarity with local culture and customs; and means of transportation for arrival, departure and travel within the local country, among other factors.

This volume of information and level of detail are critical to developing a program that reflects the underlying risk. The level of fact-finding required by an AD&D insurer may also indicate that insurer’s level of underwriting sophistication and expertise. Lacking the analytical skill to make use of this information, some AD&D insurers simply do not require it, which may explain, in part, the wide variations in pricing that are found in the marketplace today.

Dangerous Accumulations
Finally, an insurer’s ability to provide flexible funding and comprehensive coverage is also linked to its ability to identify and manage its potential accumulation of exposures. With experience in managing accumulations of risk, specialists in AD&D programs may be better positioned to provide appropriate coverage and risk-adjusted pricing options than many life insurers that bundle group life and AD&D exposures together for administrative ease. The insurer that lacks specialized experience in managing catastrophic risks may run the risk of accumulating concentrations of exposures that could threaten their financial viability. One catastrophic event, such as a terrorist attack, could be financially crippling to some insurers.

The realities of today’s world have transformed the way in which AD&D exposures need to be approached. They need to be actively managed through thoughtful planning and partnership with a skilled AD&D insurer that has global insight and the technical knowledge to tailor coverage to the individual needs of an employer.

Stephen Mueller is senior vice president of sales and business development at Zurich’s accident & health group.