Employees are working in, expatriated to or travelling in all the corners in the world, away from familiar surroundings with larger exposures to their health, safety and security. We can clearly see that new business travel ‘claims hotspots’ are developing into for example Asia and South America.
Increased exposure for employers Duty of Care
The urbanization and the developments of more efficient transportation infrastructure lead also to larger or new risks, as for example growing exposure for traffic accidents and faster spread of diseases. The need for evacuations will rise due to effects from the climate change. All these recent trends in our societies leads to an increased exposure of the liability that companies have for the legal and moral Duty of Care for their employees.
Compliance of insurance regulations
To have a risk management program in place preparing the employees working across borders is essential in order to fulfill the company´s Duty of Care. Besides this, a Global Business Travel program is clearly an efficient way to handle the insurable travel risks. But the jurisdictional spread that a global program includes, increase their regulatory and fiscal risks as well as the exposure for loss of reputation. Complying with local insurance regulations and laws is of increasing importance for international companies, as well as for their auditors, their insurance brokers and their insurers.
There is no “one size fits all” solution
To buy a single insurance policy to cover the travel risks around the world with local claims services would be the ideal solution, but the regulatory environment is preventing this. In some countries non-admitted travel insurance is permitted, such as in Chile, Canada and Hong Kong and no problems arise.
But there are an increasing number of local regulations that prohibit domiciled residents or entities from purchasing insurance from a non-local/not locally licensed insurer, as in Russia, India, and China and in large parts of Latin America and Africa. Some jurisdictions have hybrid regulations that allow some local risks to be insured by unauthorized insurers, while demanding regulatory oversight and imposing taxes. In some countries, like Brazil, it can be allowed for International Travel but not for Domestic journeys.
There are also several countries where the laws are less clear on this subject. International agreements have also increased influence on the compliance situation. Without any global standard for insurance regulation or a consistent application of insurance law worldwide, a compliance analysis must be made for each global insurance program.
Increased interest from authorities
Due to the recent global economic downturn the governments are more eager to generate revenue from other sources by using insurance regulations and insurance taxes. Many historically protectionist measures are being revisited, and a number of enforcement activities has started from the authorities in for example India and in Brazil.
The penalties for breaking the regulations varies, they can be very severe and must now be regarded as a realistic threat.
Global Business Travel Insurance Check list
When designing a Global Travel insurance program there are a number of questions to be discussed and agreed upon for all parties involved. Here are some of the important issues.
- Insurance regulations and experiences from supervisory authorities? Is non-admitted permitted? Compulsory insurances? Taxes and charges?
- Insurers local underwriting expertise, partner network and capacity?
- Is there a need to use Financial Interest Cover to close the coverage gaps? In circumstances where non-admitted insurance is not allowed, claims can be paid to the parent company under the master policy, based on the parent’s financial interest in its local subsidiary. Under this structure, the parent will receive indemnity for its own loss, not the loss of its subsidiary. The amount of the payment will be calculated by reference to the local loss and the parent may then choose to reimburse its subsidiary or affiliate for the local loss.
- Administration of insurance certificates for Visa purposes and Travel Insurance Cards?
- Is the claims process adapted to the local legal demands? How will the claims handling process work? Assistance service set up? Central or local contacts?
There is not one single approach to solve all these issues with designing a good global insurance coverage and meet all compliance demands. The combination of an effective program structure and a perfect compliance is unfortunately not really possible. In order to support the quite complex process of making a customized design of the Global Travel Program If has developed a Nordic administration model with checklists and templates.
The Regional Managers in our International Operations Unit ensure that we have a growing international network of locally licensed insurance partners in a large part of the world, who accept business referrals from If and will serve our clients locally according to our service standards. We have internal and external compliance advisors for analyzing of the regulatory and fiscal issues. Our growing experience shows that this is a well-functioning set up.
As the world is becoming more and more unsecure the demands from employees to their employers for good solutions will increase regarding their safety and care, when they are sent out on business travel and assignments. An important part of this solution is for the company to give the employees access to an insurance solution with high quality benefits on the same level for all, and with practical, efficient claims administration. It is possible to do this without risking to run into large compliance complications by building a balanced global insurance program.