As business travel goes on booming, industry experts tell David Kernek about the growing risks facing employees out on the road and how insurers can meet them
Whether or not business travel risks are greater now than ever before in mankind’s largely savage history is arguable. To cite just some examples: abductions and hostage-taking for one reason or another were an ever-present likelihood in medieval Europe; trade journeys along the Silk Roads had so many hazards in the security department that merchants had to travel with battalions of bodyguards; doing business in 19th century America’s Wild West was anything but risk-free; and the men responsible for keeping the wheels of Britain’s global trading empire turning through the centuries were all too familiar with the damage that could be inflicted by natural disasters, disease and piracy.
What’s different now, of course, is the exponential growth of business travel, which continues despite the risks; the existence of global broadcasting systems – we all know almost immediately what terrible things are happening almost everywhere; and the development of worldwide insurance networks to assess the risks and count the cost of crime, catastrophe and disease.
Clear and present dangers
“The risks for business travellers are evolving rapidly,” says Ian Robinson, AIG’s UK personal accident product manager. “While travelling to the four corners of the world becomes easier, the risks that travellers face are ever more unpredictable. Recent terrorist acts in locations previously considered ‘benign’ – such as a Nairobi shopping centre, hotels in Mumbai and even the streets of Boston – show how easy it is for a traveller to be caught up in a dangerous situation. But while political situations grab the headlines, the most likely cause of a major problem overseas is from rather more mundane events such as road traffic accidents, or falling ill on a trip.”
A recent AIG marketing video makes the point that one consequence of instability and economic turmoil across Europe has been increased business travel to emerging markets – ‘unfamiliar, riskier locations’ with ‘more precarious situations’ for employees.
Globalisation, says Robinson, has seen business travellers going to ever more remote areas. “We have seen a growth in trips to sub-Saharan Africa, which in turn brings an increase in the number of claims due to malaria. Last year, the outbreak of Ebola in West Africa exposed the fragile medical infrastructure in some of the poorest countries of the world. While these countries struggle to contain the outbreak, providing emergency medical and repatriation support for both Ebola and non-Ebola conditions has proved challenging due to compromised medical infrastructure, availability of suitable transport options, closed borders, and non-availability of quarantined facilities in receiving countries.”
At ACE’s EMEA division, Stephane Baj, regional director, accident and health, corporate and affinity, flags up the group’s 2013 risks barometer based on a survey of 650 executives – most of them responsible for risk management – across a range of industries and 15 countries: “Not only has business travel grown in volume, but long-distance travel has increased significantly from what it was 20 years ago. After some years of recession in Europe, big companies and, increasingly, middle-sized companies have tried to develop markets in new territories further south and east. From our latest risk barometer, we could see that the biggest areas of concern now for big companies are Africa, Latin America and the Middle East, and emerging markets in general, including some in Asia.”
This, according to ACE’s analysis, illustrates both the broadening geographical footprint of companies, and their relative lack of experience of operating in these markets. “Within each country,” Baj adds, “the regions visited by business travellers are more and more diverse, and sometimes more exposed. In Africa, 20 years ago, it was the main capital cities; now, in the mining, construction, oil and gas sectors, companies are travelling to more remote places where exposure to medical and security risks is changing considerably.”
The link between emerging markets and risk is emphasised by Tim Holt, divisional director, intelligence, at Willis’ Special Contingency Risks Limited: “As retailers expand their footprints, outlets may be in areas of relative affluence in the capitals and major cities in fragile states where weak governance cannot guarantee security against threats ranging from cyber-attack to violent crime, civil disorder and terrorism. At the worst, outlets situated in areas where the wealthy or Westerners congregate may become targets of riots or terrorism, as was tragically seen in the attack on Nairobi’s Westgate Mall in 2013.”
Apart from the most likely threat of road traffic accidents, said Holt, the most common risks faced are usually criminal. “Kidnap is a crime increasingly carried out by opportunists looking for a quick ransom payment from the local office, as opposed to the high-demand negotiated settlement still practiced by established gangs throughout the world.”
Ian Nunn, head of WorldAware Solutions at Aon – which says it was the first in the field to develop catastrophe models for country specific perils including floods, earthquakes and terrorist attacks – agrees that business travellers face a multitude of potential risks when considering visits to new or complex overseas environments, and adds: “It’s a fact that of the eight largest emerging markets, five are located in what could be regarded as presenting the highest security risk to the business traveller.” In WorldAware’s aggregate measurement of more than ten specific risks (including crime) impacting on travel safety these are the countries flagged up as high-threat zones: Brazil, Chile, Columbia, Egypt, India, Indonesia, Mexico, Peru and the Philippines.
But too many companies, he says, are woefully ignorant of their responsibilities when it comes to safe business travel. “I often find that companies are unaware of their responsibilities of duty and care with regard to their employees, which means they’re not complying with legislation, which means there’s a liability risk; if something happens to someone, they’re going to get sued. Their responsibilities extend to making sure that employees are properly supported and protected when they are travelling. But I regularly meet risk managers who, when I ask them where all their travellers are in the world, have no idea. I came across an engineering company that didn’t know it had people in Libya until it saw the expenses coming in.”
And when he talks about employers, he includes universities: “In the past three months, I’ve met universities which are not aware that by law students are regarded as their employees. I’ve met universities which have got students to sign waivers in this regard, and they’re illegal. I’ve met universities that are insuring only the faculty, which is a bit embarrassing when you’ve got an event at a dig in Israel, and you only take the faculty to hospital!”
Personal or business?
“When dealing with personal leisure travel,” says Frank D’Ancona, vice president, accident and health at ACE USA, “you’re addressing a specific trip; it might be one or two trips a year, which are typically planned well in advance. From a corporate standpoint, multi-national companies have employees travelling worldwide representing the company as the need arises. This requires taking a much broader perspective, a more planned approach.” A global company needs to consider the various exposures their employees may face when travelling and implement an insurance programme that is going to address not only the known risks – the things you know will occur, it’s just a matter of timing as to when – but also address or mitigate the potential risks that might occur – the unknowns, said D’Ancona. “That’s what travel risk management is about; it’s having a plan in place to respond when these issues arise. That’s the big difference: a programme – that’s going to be unique to each company – in place to address these concerns, as opposed to someone accessing a website or an insurance company or broker to purchase a single policy for one trip.”
His colleague at ACE in Europe, Stephane Baj, adds: “The fact that companies are more exposed to security situations, kidnap and terrorism is leading them to pay particular attention to the type of response that medical and security insurance cover can offer employees. We have not seen, so far, expectations of that kind of cover in the private leisure insurance space.”
Dan Maloney is founder and managing director of Champion Insurance Brokers, specialising in business cover, in Manchester, UK. “When our clients travel, we try to steer them in the direction of a business travel policy, and there are a number of reasons for that. A business travel policy will cover the personal trips of directors, and it also gives them a wider cover than is available from a policy for personal travel. Personal travel policies tend to be loaded with exclusions, while the cover with business travel policies is typically far wider. For example, they tend to not exclude pre-existing medical conditions providing the traveller does not foresee that the condition is likely to materialise during the journey.” He adds that another advantage is that because business travel cover is often done on a company or group basis, restrictions on the duration of stay is less likely, and the approved territories cover tends to be wider than it is with personal policies. But, he says, UK insurers offering ransom cover – currently freely available on the market both as a stand-alone or as an add-on to travel cover – will have to close that line if draft legislation, to be tabled by the British government, outlawing it is approved.
Ian Robinson at AIG further emphasises the benefits of specific business travel policies, also citing their provision of cover for war, terrorism and high-standard benefits for cancellation and baggage. “They provide benefits for families to travel to be with injured travellers and, importantly, personnel replacement cover so that a replacement employee can be sent to attend that crucial meeting. The principal difference between leisure and business travel is that business travel provides cover for pre-existing medical conditions rather than leisure, where all conditions need to be declared and charged for prior to travel.”
What’s key for business cover?
Frank D’Ancona at ACE in the US points out that what used to be available to most companies as the primary cover for employees was chiefly a business travel accident policy, consisting only of accidental death and dismemberment (AD&D) benefits. “That certainly addressed the needs of the survivor, but it didn’t address the risks beyond loss of life. What about accessing medical coverage? What about the need to evacuate employees? What about natural disasters? How are we as a company going to communicate with employees in that kind of need when they might be 12 time zones away? How do we address local policy requirements in certain countries? How do you address the customs and expectations of local nationals?”
Initially, the market addressed these questions by bolting on coverage to an existing business travel accident policy or by offering additional policies, he told ITIJ: “For example, if I have employees travelling on business, I’ll purchase a business travel accident policy to cover AD&D. If employees are travelling out-of-country, I’ll purchase an out-of-country medical policy. I’m going to have to communicate with employees in need, so I’ll contract with a travel assistance company. And when it comes to local requirements and local nationals, I should be looking at each country’s requirements to have a policy in place that’s been filed and approved in countries in which we employ local nationals. But the result of all this is a fragmented approach: you’ve got multiple policies, different claims philosophies, and there might be two or three travel assistance service contracts in place. You can imagine the confusion that would cause for the employee who’s travelling, and the administration that’s involved in managing these multiple policies.”
This is what D’Ancona’s company saw in the marketplace up to about five to seven years ago. An alternative, he said, is a policy form specifically designed for these types of exposures – it’s a multi-national travel and accident programme, one that integrates all of the different features: AD&D, the out-of-country medical, emergency evacuation coverage, travel assistance services – all combined in a single contract, so that you’re dealing with one claims philosophy and one carrier. You can imagine just how much easier that is from a management standpoint, but it also gives the company the comfort level of knowing that it’s got the right coverage in place, that it’s meeting all of the regulatory requirements where they have to be met, and it’s addressing in a single programme all of the multiple exposures that employees are facing.” Such a product is offered by ACE – the Controlled Master Programme. It utilises a master policy that includes the US policy covering both US employees and local nationals in countries that allow coverage under a non-admitted policy, plus coverage for local nationals in countries in which admitted business travel accident policies are required.
The omission, says D’Ancona, of an admitted business travel and accident policy in jurisdictions that require them can cause ramifications for multi-national companies. “This aspect doesn’t seem to be part of the conversation at the time of purchase, but it needs to be. What if, as an organisation, you did everything in accordance to operate in a country as required, but the one thing you didn’t do was find out if you were required to have an admitted business travel accident policy in the country in which you’re hiring local nationals. Penalties for not meeting local requirements vary by country, but one possible penalty is that you’re no longer able to conduct business in that country. For benefit or risk managers, that could mean a very challenging conversation with CFOs or chairmen. Companies should consider these issues and ask, will my policy perform or respond as intended when a loss occurs or a global event occurs placing my employees in harm’s way? Will the cost incurred be covered under my policy?”
Stephane Baj applauds insurance coverage that also offers pre-trip advice through emails, websites and travel apps: “People travelling can use these things to get information – additional to alerts and warnings from foreign ministries – about the country they are visiting, its customs, and the medical and security risks to which they’d be exposed.”
These tools, adds D’Ancona, can provide post-trip information, too: “There could be a healthcare concern – a malaria outbreak, for example – in the country you happened to be in two weeks ago. Having that information could help you decide that you ought to see your doctor to get a check-up. That could be very important.”
Adds Ian Robinson at AIG: “Cancellation cover under business travel now provides a far wider definition, in that it provides cover for events outside the control of the insured rather than a defined list of events. Following the ash cloud event in 2010, most insurers now provide cancellation costs arising from natural disasters.” His company’s Lifeline+ policy provides cover without age restrictions or pre-existing medical exclusions: “It has adequate sums insured for baggage and money loss, and offers cover for cancellation if the UK’s Foreign and Commonwealth Office changes its travel advice after booking a trip.” It also offers services that include an assistance website and a smartphone app, providing destinations reports and security; cover for political and natural disaster evacuation; help with missed international connections, plus concierge benefits for lost baggage tracking and vehicle rental excess cover for the frequent traveller; and family leisure travel cover for directors, and insurance of clients’ customers participating in corporate events.
“Organisations sending staff abroad can protect their employees with either business travel or international private medical insurance (IPMI),” says Now Health’s global business development director, Christopher Claridge-Ware. “Business travel insurance is essentially there for emergency medical treatment and loss of items, but IPMI provides far wider healthcare protection and is more suitable for people travelling extensively or living for longer periods abroad.”
Claridge-Ware continues: “Travel insurance is perfect for short-term trips and will likely return the traveller home for further treatment if needed once they are ok to do so. With IPMI, if an employee abroad has an accident or falls ill they can choose to seek treatment from any WHO-recognised facility but, importantly, they can also benefit from a wide network of medical facilities, where they need not have to pay for any treatment and have to claim back their expenses – including out-patient care. Also with IPMI, employees can take advantage of typically very high benefit levels and even be evacuated or repatriated if their condition warrants it. The extent of medical protection is more limited – usually for emergency care only – under a business travel policy.”
Aon’s WorldAware programme, says Ian Nunn, offers a bespoke, client-specific safe travel system that is based in large part on information provided by business travellers, not travel bookers. The four-part programme comprises: travel risk analysis, which includes the profiles of travellers and their travel experience, where they normally stay, their sexual orientation (which presents a risk in certain territories) and highlights vulnerabilities; awareness, covering country risk information, pre-travel training designed to reduce vulnerability, especially in hostile environments; risk-managed travel – an online management system stores essential information (passport details, medications, proof of life questions) about travelling employees, reviews country risk assessments and produces safety and risk mitigation advice; and incident management, which includes access to Aon’s 24/7 operations centre manned, says Nunn, not by the ‘burger flippers’ who answer phones in call centres, but by ex-military personnel with substantial crisis-handling experience able to provide immediate expertise.
No substitute for boots on the ground
Could conducting more international business using video conferencing technology reduce the need for travel to high-risk territories? No, according to a survey by ACE’s European division of 650 executives in 15 countries. Eighty-five percent ‘somewhat’ or ‘strongly agreed’ that despite new technologies, their company’s reliance on business travel remained as high as ever.
Says Frank D’Ancona, vice president, accident and health at ACE USA: “What we’ve found is that as a multi-national company you need to develop local expertise, and that requires people to travel and interact with each other across borders. There is only so much you can do through video-conferencing and conference calls. For an organisation to deliver its products or services, it requires boots on the ground and face-to-face contact.”
Ian Nunn at Aon concludes with the point that business travel is unavoidable: “The UK’s Foreign & Commonwealth Office will rightly say, ‘Mexico bad, don’t go’, but that’s not adequate. Our WorldAware programme is not about preventing travel, it’s about enabling travel safely. If there’s a million-dollar contract at stake, you are going to want someone down there.”