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Heading Abroad? Know the Risks

There is more to consider with international business travel besides good insurance coverage.
By: | March 29, 2017 • 7 min read

It used to be that international business travel was a glamorous perk reserved for Fortune 500 senior executives who globetrotted the world securing sales and distribution deals. Think first class flights, high-end restaurants and luxury hotels.

But oh have times changed!

As the global economy becomes more interconnected, many more companies and their employees are conducting business around the world in search of cost-effective suppliers and new sales markets.

“There are so many industries that used to be domestic U.S. focused but have since grown and expanded to be global. We’re seeing consultants, law firms, construction companies, even hospitals looking for opportunities outside the U.S.,” said Kathleen Ellis, Senior Vice President, International, at CNA. “While you can certainly accomplish a lot through conference calls, there is still a need for face-to-face meetings.”

Despite the rising frequency of international business travel, many companies underestimate the safety and liability risks facing their employees abroad, and are unknowingly under-insured.

The Mundane is Riskier than the Dramatic

Kathleen Ellis, Senior Vice President, International

Terrorism and crime usually get the most attention when it comes to global travel risk, but mundane safety issues are the more common causes of claims.

Slips and falls, for example, are much more likely when an employee is fatigued from a seven-hour flight. All it takes is a momentary lapse of attention to take a stray step into the way of an oncoming cyclist. Simple mistakes like misplacing a passport or a vital prescription can also call for immediate assistance and delay travel plans. Unpredictable illnesses likewise may require medical care and an extended stay.

“International business travel is expensive not just in terms of cost, but in terms of time and energy. There’s the stress of spending hours cramped in a plane, time-zone adjustments, sleep deprivation and still needing to be prepared to do business,” Ellis said. “That stress is compounded if you go to a country where you don’t speak the language, can’t read street signs or can’t communicate that you need help.”

These everyday woes are more frequent claim drivers than outright violence or crime.

“Sometimes people are not aware of all the aspects of international travel that they should anticipate or try to control,” said Chris Brutzman, Underwriting Director, CNA. “As a result, companies rely on domestic coverage that is just insufficient.”

The Problem of Incomplete Coverage

Too often, Ellis and Brutzman see middle-market companies rely on their domestic workers’ compensation coverage to cover incidental foreign travel accidents.

Workers’ compensation often includes some coverage for injuries incurred abroad, but the rules will vary depending on which state the coverage is written.

“Domestic workers’ comp may not apply 24/7, meaning it may not cover incidents that occur during ‘off work’ hours, and may not pay for emergency services like medical care,” Brutzman said.

And it would not respond to incidents where injury isn’t involved.

Becoming ill, getting robbed, losing a passport or anything else that requires immediate assistance and delays travel would be uncovered. Companies may procure trip travel insurance to cover expenses related to delay of travel, but even that may not be adequate for the full exposure.

Problems can also arise if a company purchases an international travel package from a different carrier than is used domestically.

“There’s almost guaranteed to be some finger-pointing if you have different insurers providing your domestic and international coverages,” Brutzman said. The policy language may not be consistent. This means the policies won’t “connect” in the right spots, leading to both gaps and overlaps in coverage.

The Coverage Solution

A comprehensive travel insurance package is more than workers’ comp. It should also include property policies to cover personal items like laptops; general liability and excess auto policies to cover the risks associated with renting a car; and business travel accident to fill in the gaps left by domestic workers’ compensation.

International policies should complement and work in sync with local policies to create streamlined and continuous coverage that meets the United States’ higher insurance standards.

“Take auto liability as an example. The U.S. requires pretty high limits as the norm, but we’ve seen some countries with limits as low as $5,000 in liability cover,” Brutzman said. “We arrange locally admitted policies to ensure compliance with local laws and regulations, but the goal of many international policies is to bring the local coverage up to a U.S. standard.”

Middle-market companies are often unaware of the liability exposure they take on without a suite of international policies. In particular, excess auto coverage is crucial for any employee renting a car.

“It has happened where someone rents a car abroad and causes an accident that results in injury,” Ellis said. “The liability will ultimately fall back to the employer.”

Companies may also be unaware of where exactly their domestic workers’ compensation coverage ends.

If an injury happens during an employee’s personal time, domestic workers’ compensation coverage would treat it as non-work related, even though it occurred in the course of a business trip. And it certainly would not respond to injuries suffered by a non-employee.

Don’t Overlook “Bleisure”

Business travel accident coverage acts a supplement to workers’ compensation, extending coverage to spouses or other travel companions around the clock. In other words, it covers ‘bleisure’ travel.

“The business travel accident supplement is referred to as ‘bleisure’ coverage because it encompasses both business and leisure travel,” Ellis said. “If you bring your family on a business trip and then extend it a little longer for vacation, this policy would provide coverage for everyone for the length of the trip.”

Ellis sees “bleisure” as a rising trend. More executives are opting to take advantage of travel opportunities by bringing along a spouse or friend and tacking on some vacation time. From their employers’ perspective, providing coverage for those traveling companions works for everyone’s benefit.

With the increasing cost of travel, businesses choose their trips and travelers carefully. Typically, business travelers are key executives. They are the decision-makers who need to seal the deal and make it back to the home office safely. It’s in a company’s best interest to provide full coverage for those executives even while they are on vacation time. The same goes for their loved ones. Though not an employee, any injury or mishap suffered by a key executive’s spouse will certainly impact the company.

Support as Critical as Coverage

Coverage, though, is the last thing on employees’ minds if they or a family member gets sick or hurt. Insurance is only meaningful when coupled with the right services. Travelers will need local help immediately if they are robbed, lose something or get sick. And due to time differences, these incidents tend to happen while the folks at home are sound asleep.

“A few years ago, for example, we sent a helicopter to airlift an injured insured out of the Amazon,” Brutzman said. “That’s an extreme scenario, but you can never be too prepared. The geopolitical environment is always changing, as are foreign laws and regulations, so this is not a static risk.”

To make sure they have all necessary coverage and services in place, risk managers should look to carriers with experience and developed expertise in the realm of global travel.

“Lots of carriers offer a comprehensive travel insurance package, but we are unique in how we execute it. We want to be problem-solvers who work with clients and brokers in a meaningful way,” Ellis said.

CNA’s companion services provide resources through every leg of a traveler’s journey, from pre-trip briefings and safety recommendations to emergency medical care if needed, and direction if a passport is lost or stolen. Insureds can access these services anywhere in the world, 24 hours a day, every day of the year.

To learn more about CNA’s international travel insurance, visit https://www.cna.com.

One or more of the CNA companies provide the products and/or services described. The information is intended to present a general overview for illustrative purposes only. It is not intended to constitute a binding contract. Please remember that only the relevant insurance policy can provide the actual terms, coverages, amounts, conditions and exclusions for an insured. All products and services may not be available in all states and may be subject to change without notice. “CNA” is a service mark registered by CNA Financial Corporation with the United States Patent and Trademark Office. Certain CNA Financial Corporation subsidiaries use the “CNA” service mark in connection with insurance underwriting and claims activities. Copyright © 2017 CNA. All rights reserved.
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This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with CNA. The editorial staff of Risk & Insurance had no role in its preparation.




Serving business and professionals since 1897, CNA is the commercial insurance carrier of choice for more than 1 million businesses and professionals worldwide.

Risk Report: Entertainment

On With the Show

Entertainment companies are attractive and vulnerable targets for cyber criminals.
By: | December 14, 2017 • 7 min read

Recent hacks on the likes of Sony, HBO and Netflix highlight the vulnerability entertainment companies have to cyber attack. The threat can take many forms, from the destruction or early release of stolen content to the sabotage of broadcast, production or streaming feeds.

Brian Taliaferro, entertainment and hospitality specialist, JLT Specialty USA

“Cyber attacks are becoming the biggest emerging threat for entertainment companies, bringing risk to reputations, bottom lines and the product itself,” said Brian Taliaferro, entertainment and hospitality specialist, JLT Specialty USA.

For most entertainment firms, intellectual property (IP) is the crown jewel that must be protected at all costs, though risk profiles vary by sub-sector. Maintaining an uninterrupted service may be the biggest single concern for live broadcasters and online streaming providers, for example.

In the case of Sony, North Korea was allegedly behind the leak of stolen private information in 2014 in response to a film casting leader Kim Jong Un in what it considered an unfavorable light.

This year, Netflix and HBO both faced pre-broadcast leaks of popular TV series, and Netflix last year also had its systems interrupted by a hack.

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Online video game platforms are also ripe for attack, with Steam admitting that 77,000 of its gamer accounts are hacked every month.

The list goes on and will only get more extensive over time.

Regardless of the platform, any cyber attack that prevents companies from producing or distributing content as planned can have huge financial implications, particularly when it comes to major releases and marquee content, which can make or break a financial year.

“People and culture are the biggest challenges but also the keys to success.” — David Legassick, head of life science, technology and cyber, CNA Hardy

The bottom line, said David Legassick, head of life science, technology and cyber, CNA Hardy, is that these firms have a combination of both assets and business models that are inherently open to attack.

“Vulnerabilities exist at every point in the supply chain because it’s all tech-dependent,” he said, adding that projects often run on public schedules, allowing criminals to time their attacks to maximize impact.

“The combination of IP, revenue and reputation risk make entertainment a hot sector for cyber criminals.”

Touch Point Vulnerabilities

Film, TV, literary and music projects invariably involve numerous collaborators and third-party vendors at every stage, from development to distribution. This creates multiple touchpoints through which hackers could gain access to materials or systems.

According to Kyle Bryant, regional cyber manager, Europe, for Chubb, there is nothing unique about the type of attack media companies suffer — usually non-targeted ransomware attacks with a demand built in.

“However, once inside, the hackers often have a goldmine to exploit,” he said.

He added targeted attacks can be more damaging, however. Some sophisticated types of ransomware attack, for example, are tailored to detect certain file types to extract or destroy.

“NotPetya was designed to be non-recoverable. For a media company, it could be critical if intellectual property is destroyed.”

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As entertainment companies have large consumer bases, they are also attractive targets for ideological attackers wishing to spread messages by hijacking websites and other media, he added.

They also have vast quantities of personal information on cast and crew, including celebrities, which may also have monetary value for hackers.

“It is essential to identify the most critical information assets and then put a value on them. After that, it is all about putting protection in place that matches the level of concern,” Bryant advised.

As with any cyber risk, humans are almost always the biggest point of vulnerability, so training staff to identify risks such as suspicious messages and phishing scams, as well as security and crisis response protocols, is essential. Sources also agree it is vital for entertainment companies to give responsibility for cyber security to a C-suite executive.

“People and culture are the biggest challenges but also the keys to success,” said Legassick.

“Managing the cyber threat is not a job that can just be left to the IT team. It must come from the top and pervade every aspect of how a company works.”

David Legassick, head of life science, technology and cyber, CNA Hardy

Joe DePaul, head of cyber, North America, Willis Towers Watson, suggested entertainment companies adopt a “holistic, integrated approach to cyber risk management,” which includes clearly defining processes and conducting background checks on the cyber security of any third party that touches the IP.

This includes establishing that the third parties understand the importance of the media they are handling and have appropriate physical and non-physical security at least equal to the IP owner in place. These requirements should also be written into contracts with vendors, he added.

“The touchpoints in creating content used to be much more open and collaborative, but following the events of the last few years, entertainment firms have rapidly introduced cyber and physical security to create a more secure environment,” said Ryan Griffin, cyber specialist, JLT Specialty USA.

“These companies are dealing with all the issues large data aggregators have dealt with for years. Some use secure third-party vendors, while others build their own infrastructure. Those who do business securely and avoid leaks can gain an advantage over their competitors.”

Quantification Elusive

If IP is leaked or destroyed, there is little that can be done to reverse the damage. Insurance can cushion the financial blow, though full recovery is very difficult to achieve in the entertainment space, as quantifying the financial impact is so speculative.

As Bill Boeck, insurance and claims counsel, Lockton, pointed out, there are only “a handful of underwriters in the world that would even consider writing this risk,” and sources agreed that even entertainment firms themselves struggle to put a monetary value on this type of exposure.

“The actual value of the IP taken isn’t generally going to be covered unless you have negotiated a bespoke policy,” said Boeck.

“If you’re in season five of a series with a track record and associated income stream, that is much easier, but putting a value on a new script, series or novel is difficult.”

Companies for whom live feeds or streaming are the primary source of revenue may find it easier to recoup losses. Determining the cost of a hack of that sort of service is a more easily quantifiable business interruption loss based on minutes, hours, ad dollars and subscription fees.

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Brokers and insurers agree that while the cyber insurance market has not to date developed specific entertainment products, underwriters are open for negotiation when it comes to covering IP. The ball is therefore in the insured’s court to bring the most accurate projections to the table.

“Clients can get out of the insurance market what they bring to the equation. If you identify your concerns and what you want to get from insurance, the market will respond,” said Bryant.And according to Griffin, entertainment companies are working with their brokers to improve forecasts for the impact of interruptions and IP hacks and to proactively agree to terms with underwriters in advance.

However, Legassick noted that many entertainment firms still add cyber extensions to their standard property policies to cover non-physical damage business interruption, and many may not have the extent of coverage they need.

Crisis Response

Having a well-planned and practiced crisis response plan is critical to minimizing financial and reputational costs. This should involve the input of experienced, specialist third parties, as well as numerous internal departments.

Ryan Griffin, cyber specialist, JLT Specialty USA

“The more business operation leaders can get involved the better,” said Griffin.

Given the entertainment industry’s highly public nature, “it is critically important that the victim of a hack brings in a PR firm to communicate statements both outside and within the organization,” said Boeck, while DePaul added that given that most cyber attacks are not detected for 200-plus days, bringing in a forensic investigator to determine what happened is also essential.

Indeed, said Griffin, knowing who perpetrated the attack could help bring the event to a swifter and cheaper conclusion.

“Is it a nation state upset about the way it’s been portrayed or criminals after a quick buck? Understanding your enemy’s motivation is important in mitigating the damage.”

Some hackers, he noted, have in the past lived up to their word and released encryption keys to unlock stolen data if ransoms are paid. Inevitably, entertainment firms won’t always get so lucky.

Given the potentially catastrophic stakes, it is little surprise these firms are now waking up to the need for robust crisis plans and Fort Knox-level security for valuable projects going forward. &

Antony Ireland is a London-based financial journalist. He can be reached at [email protected]