Business travel risk management

ITIJ 209, June 2018

Growing awareness of the value of travel insurance as a risk management tool is boosting demand from corporate clients for policies that are truly fit for purpose in a global environment that continues to present new risks for business travellers, finds Robin Gauldie 

Duty of care comes second only to cutting costs in terms of priorities for business travel buyers, according to a poll carried out for the Business Travel Show in London in February. Other perennial issues, predictably, included rising hotel rates and airfares.
Despite the ever-present need to keep travel-related costs down, companies are increasingly aware that the cheapest off-the-shelf insurance policy may not always be the most appropriate solution for their travelling employees.
So how is heightened awareness among corporate clients of the need to maintain duty of care, while balancing budgets, affecting their relationships with their travel insurance providers?  
“It's not surprising to see cost cutting and duty of care as the top two challenges facing buyers,” said David Chappell, Director of the event. “Given terrorist attacks across Europe and further afield, it's simply not an option for buyers to ignore traveller risk any more. It must be a priority for them, their organisations and their partners.”
The findings echo a 2017 report by the UK’s Institute of Travel Management (ITM), which reported that ITM members listed traveller security as their number one priority, ahead of cost reduction and budget control. The ITM outlook
Demand is certainly increasing for business travel insurance … [creating] an opportunity for the travel insurance industry to continue to design flexible solutions
report said that travel managers would be challenged to manage cost increases from suppliers, while being expected to rein in travel spending.
Research by the Global Business Travel Association (GBTA), a trade organisation representing the international business travel industry, also indicates that duty of care is a hot topic for corporate travel buyers and their clients. At the same time, many business travellers are unaware of their company's traveller security policy, as revealed by a GBTA study released in December 2017.
Kelvyn Sampson, retail, leisure and hospitality industry practice leader at Willis Towers Watson, a major multinational insurance broker and risk management company, said that the GBTA's findings underline the need for companies that wish to robustly demonstrate duty of care to do more to teach their travelling staff how to handle a crisis. “Risk assessment and preparation before travel are imperative, but it is also vital that the company travel policy outlines what employees should do in the event of an incident,” he said. “Employee responses need to be in line with the company's corporate crisis management plan, which is informed to some extent by the insurance policies that are in place. For example, if an employee is injured while on business travel they should be aware that they need to call the cover provider nominated on the company's travel insurance programme.”  
But the GBTA's survey of 1,050 employees revealed that many business travellers lacked knowledge of the support on offer. Almost one-quarter were unaware of the existence of their company’s policy, while only 36 per cent knew they would be contacted in an emergency.
However, according to the GBTA, businesses are learning lessons about duty of care. Of those taking part in the study, 27 per cent noted that recent incidents – both environmental and terror-related – had spurred a change in their employers’ attitudes.
Is this good news or bad news for travel insurers? Corporate clients are increasingly willing to accept that appropriate travel insurance comes at a price, according to some insurance industry sources.
Increasing awareness
“Corporate clients are becoming increasingly aware of their duty of care to protect their staff when sending them overseas on business,” said Carl Carter of Voyager Insurance Services. “They are also becoming very aware that the 'best price' may not always offer the ‘best cover’, and in some circumstances may not even be fit for purpose, especially when their employees are travelling further afield, to hostile locations, or are having longer duration travel assignments on business.”
Businesses that fail in their duty of care face ‘significant and onerous’ fines and penalties, as may individuals within such businesses,” he warns. “This is not something to be taken lightly by any employer.”
Awareness of the need for duty of care is on the increase in the US, as it is elsewhere, and corporate clients appear less inclined to automatically opt for the cheapest policy available, according to Megan Cruz, Executive Director of the US Travel Insurance Association. “Price will always be an issue when purchasing business travel insurance, but there seems to be more tolerance in the market for ‘best product’ versus ‘cheapest product’,” she said.
Business travel policies already offer companies a high level of flexibility, she pointed out, allowing them to tailor-make cover according to their needs: “Business travel accident insurance (BTA) is a very customisable product, so a company can choose who to cover (for example, executives but not all employees) and when they are covered, but also for how
insurers are responding to demand by creating more flexible, cost effective policies to meet the needs of small to medium sized enterprises (SMEs) as well as larger companies
much. The core benefit is accidental death and dismemberment so pricing varies greatly – for example, when offering [a benefit of] $50,000 versus $1 million. Companies may prefer to cover all employees under an annual policy for peace of mind – it is difficult to predict who will travel and when, so this approach ensures that all business trips are covered.”
A common misconception is that BTA applies only to air travel, Cruz added: “In fact, BTA is travel by any means (plane, train, bus, personal vehicle or on foot) as long as there is a business purpose.”
Mix and match
In the UK and elsewhere, insurers are responding to demand by creating more flexible, cost effective policies to meet the needs of small to medium sized enterprises (SMEs) as well as larger companies, Carter said.
“Budgets are under increasing pressure in the current economic climate,” he told ITIJ, “hence when we recently designed VoyagerProtect and a new suite of business travel insurance products aimed at SMEs with up to 500 staff and for multinational corporates, we made sure in our product design that we offered a spread of benefit levels that cater for those at both ends of the spectrum – from those that need it as affordable as possible to those that want some of the highest levels of cover, service and benefits available in the marketplace.
“Travel insurance needs vary from business to business, [so] a one-size-fits-all approach does not fit for most businesses that need travel insurance. To allow for this, not only do our products offer a range of cover levels and options, but we are also able to offer flexible ‘mix and match’ solutions for members within an employee group based on their employee class or job description. This allows an employer to ensure that they have the right cover for the right employees.”
As Cruz pointed out, business travel products that are already on the market can offer considerable flexibility for companies of all sizes. However, Carter opined, there are still opportunities for creative travel insurers to develop even more business travel products for SMEs whose budgets are smaller than those of large corporate clients. With fewer travelling employees, SMEs are potential customers for policies that meet their specific, more limited needs. Unlike bigger corporations, for which an umbrella-style policy may be more suitable, small businesses are likely to have a clearer idea of who is going where, and when, and will shop around for insurance accordingly.
“The needs of an SME are typically different to those of a big corporation and so is the process of arranging cover,” Carter explained. “Large corporations and multinationals tend to obtain their quotations based on the travel pattern of the business and its employees rather than on specific individuals or census lists, whereas SMEs and smaller businesses tend to know who is travelling and can obtain quotes based simply on cover level and number of employees.”
Carter believes that there is definitely increasing awareness among employers of their duty of care towards their travelling employees. However, he told ITIJ, ‘this does not put them in a weak negotiating position as this is countered by a range of supply within the travel insurance market in offering SME and business travel insurance solutions’. “Demand is certainly increasing for business travel insurance,” he added, “and employers are becoming more informed about their needs. This creates an opportunity for us within the travel insurance industry to continue to design flexible solutions to help meet their needs.”
Changing environments
“We have also been able to adapt our SME travel insurance products to meet the changing environments that businesses and their travelling staff find themselves in,” said Carter. These include what he claims as the travel insurance industry’s first dedicated option to provide cover for terrorism disruption before a trip or after departure. Such policies should find a market among corporate travel planners. The most noted steps taken by companies in response to environmental and conflict- and terror-related risks have been to restrict business travel to areas perceived as high risk and to invest in risk management solutions, according to the GBTA.
Megan Cruz concurred with Carter that travel insurers are responding to the requirements of smaller businesses as well as larger clients. “Business travel accident insurers in the US are product specialists,” she said, “and not necessarily segmented by size. Insurance plans can be customised at the SME level and prices and value are still competitive.” However, she cautioned, smaller companies may be less savvy in terms of risk management and choosing the right policy: “The SME buyer may not have its own risk management department, or travel booking company, so they as well as their broker, may not be educated on BTA or understand the product needs.”
Demand for business travel cover 'seems to be increasing' in the US, Cruz concluded. “BTA was once considered an ancillary benefit, but has grown to be a critical risk management tool for many employers.” This, she told ITIJ, has helped to increase awareness of the need for such products, which can only be a good thing. 

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