Employee Benefits for Indian Subsidiaries

13 May 2013
Social security is nearly non-existent in India. The only compulsory insurance cover that employers must take out to protect their employees is Workers’ Compensation.  As a consequence Indian companies try to attract a qualified workforce by offering Insurance packages as benefits. These include both accident and medical coverage for the whole family including the grandparents if they are living in the same household. Employee Benefits (EB) insurance is consequently the fastest growing area within commercial insurance.

​For compliance reasons foreign insurance companies are not allowed to issue EB cover for Indian employees, from abroad.

If any compensation is paid directly to local subsidiaries or to employees then, in addition to a 35% tax and other charges, other possible sanction could be applied. The supervisory authorities are unwilling to ease the rules for foreign insurers and therefore local insurance cover is necessary.

Business Travel Insurance for the employees of Indian subsidiaries is available through the issuing of a local insurance policy by an Indian insurance company.  A worldwide Master Policy usually includes a number of such local policies administered by the Nordic Insurance company. The local Business Travel Policy is normally only needed for foreign travel as the local employees usually have domestic business travel included in other insurance covers, e.g. personal accident and medical coverage, which the company has bought.

As a result a separate domestic Business Travel Insurance would, in the absence of such a product in the market, be very expensive. In the Nordic Business Travel programmes the Master limits usually exceed the Indian levels by a substantial amount.

Recommendation

To avoid confusion it is recommended to consider adjusting the limits as per the local practice. For example it is not possible to use the Nordic standard “Necessary and reasonable costs” in the local policy wording. In addition some elements of the Nordic terms and conditions are unknown in the local market (e.g. cover for crisis therapy).  Therefore it might be more prudent to accept the so called Best Local Practice. On the other hand, if the Nordic client requires it, adjustments can be negotiated.

For example the local limit for medical expenses, which is usually USD 10,000 – 100,000, can be increased by If P&C’s local partners to up to USD 500,000 by combining several types of insurance products.

If P&C Insurance has several years of experience in the Indian Insurance market. Local policies for the Nordic clients’ local subsidiaries are issued by two different partners, ICICI Lombard and Bajaj Allianz, the two largest private insurance companies in India.

Heini Heideman Regional Manager for Asia, If P&C Insurance
Malin Mörn Senior Underwriter for Employee Benefits, If P&C Insurance