Cruising at Perilous Altitudes: Why Employers Must Provide Safe Working Conditions for Traveling Employees

Today’s firms must take every precaution when sending their employees abroad.

By: Alex Wright | November 16, 2022

The world has never been a riskier and more uncertain place to do business.

Global threats have grown more pronounced in recent years — from the COVID-19 pandemic and climate change-induced natural disasters to the war in Ukraine and the supply chain crisis.

These problems have been fueled both internally by countries’ citizens and externally by different states, often in a sudden and unpredictable manner, resulting in unrest and conflict.

Caught in the crosshairs of all this are the employees who have been sent overseas or even just to another state by their companies. This was evidenced in a recent survey by Constella Intelligence, which found that organizations are being confronted by a staggering increase in travel risks for their executives.

If their employers make one mistake and put them in harm’s way, the consequences can be devastating, not only for the individual concerned and their family but also in terms of the losses incurred by the business. That’s why, as travel restarts post-pandemic, it’s vital for firms posting their staff to different countries or regions to have a robust risk management strategy and insurance coverage in place to ensure their safety and well-being.

“The world is a rich tapestry of risks for today’s business traveler,” said Scott Bolton, director of crisis management at Aon. “These can be grouped into two distinct categories: external risks — such as medical, security, natural disasters and geopolitical — and internal risks, which include the employee themselves.”

Employer Duty of Care

There are a host of different dangers and losses the company and the employee can expose themselves to, particularly if they operate in high-risk environments such as oil and gas firms drilling in remote areas. The chief one is the worker sustaining an injury or being killed in the line of duty.

Bolton said that, as a basic requirement, businesses need to ensure they provide a duty of care for the employee. That means preparing and supporting them in the foreign environment, as well as having the right infrastructure to respond should something adverse happen to them while they are performing their duties.

“Employers sending their staff to an unfamiliar location need to do their utmost to ensure that they don’t unwittingly put themselves in harm’s way through their actions or behaviors,” said Bolton. “Failure to ensure duty of care can result in companies exposing themselves to the potential for negligence and, therefore, liability, opening them up to claims, prosecution and reputational damage.”

To fully understand their exposure, organizations should first carry out a risk assessment of the place they are sending their employees to — including the political climate and potential for natural catastrophes — as well as their workplace and the duties they are expected to perform there.

Then they need to look at how they can minimize the opportunity for that individual to be affected by a security, medical or geopolitical issue, and plan for and provide them with the training and information necessary to ensure they mitigate these risks.

Denise Balan, head of U.S. security risks, AXA XL

“If an employee is not familiar with a particular location, the problem can easily be compounded,” said Denise Balan, head of U.S. security risks at AXA XL. “Add to this the element of being in an international location where the employee does not speak the language and does not understand the implications of the events transpiring.

“Again, traveling employees should be educated on the laws and threat profile of the region they will be visiting. And they should understand the limited ability of their respective government to intervene in other jurisdictions.”

Staying In Touch

Employees should also be provided with emergency contact numbers and asked to check in with their employer on a regular basis to keep them updated on their travel plans and itinerary. Details of incident response, evacuation and repatriation plans are a prerequisite too.

Additionally, firms should use the technology at their disposal (such as smartphone tracker apps and geotags) to monitor an employee’s movements and automatically send out relevant real-time alerts and incident reports of potential risks in that area, including states of emergency, terrorist incidents, civil unrest, natural catastrophes, disease outbreaks and traffic problems. There are a range of platforms that enable this by giving users detailed information about current and potential exposures.

“The key is to keep tabs on employees, wherever they are, at any given time,” said Taryn Kramer, growth and transformation leader at Mercer. “Then, in the event that something happens, companies need to be able to contact them and provide them with the support they need.”

The information provided by this technology can also be used to give evidence to support any relevant claims that may arise, as well as to manage future risks — for example, to prove the location, timing and extent of a hurricane, earthquake or terrorist attack.

“Investigations into claims rely on evidence,” said Joe Frederick, operations manager at A2 Global Risk. “Apps are designed to geolocate the user with a high degree of accuracy, and this could be crucial evidence for investigations into terror-related cases.”

Where mobile signals and Wi-Fi aren’t readily available, employees need to have a fallback. This means having a map to the nearest emergency contact — whether that’s the U.S. consulate, embassy or local branch office in that country — and, where possible, access to a landline.

Should the worst happen, the worker will require assistance, whether it’s a medical, security, evacuation or other type of emergency. Insurance coverage affords direct access to crisis management experts in these fields, as well as claims resolution.

“Business travelers want to know what will happen if they get sick while traveling or have to quarantine, and who will handle the logistics and cover the expenses,” said Daniel Durazo, director of external communications, U.S., at Allianz Partners. “As a result of this new concern over what may happen during a trip, travel insurance is being considered as a way to mitigate the risk that business travelers and their employers face.”

Specialist Coverage

Insurers also provide various specialist policies that cover specific risks, such as kidnap, ransom and extortion, foreign voluntary workers’ compensation and business travel accident, as well as endorsements for the likes of natural disaster evacuation. These may include prevention consultation, country-specific information, and advice and training on local laws, customs and protocols.

“Domestic property/casualty and health insurance coverage may not be sufficient to address the international risks that U.S. organizations face when they have employees traveling or transacting business abroad,” said Brooke Guralnik, director, international benefits at Marsh McLennan Agency. “As such, they often purchase business travel accident policies, which provide first-dollar emergency medical coverage should an employee fall seriously ill or get hurt while traveling abroad.”

Michael Dangler, national specialty benefits practice leader and U.S. affinity leader at Willis Towers Watson, advises using business travel accident programs in conjunction with travel assistance service providers, adding: “Travel assistance service companies that are aligned with a business travel accident insurance program have become a primary focal point for many organizations recently. This includes providing 24/7 call center services for those traveling across the globe, and medical and security assistance as well as medical, political, security and natural disaster evacuation and repatriation support.” &

Alex Wright is a UK-based business journalist, who previously was deputy business editor at The Royal Gazette in Bermuda. You can reach him at [email protected].

Why Insureds Might See an Uptick in M&PL Claims

George Schalick, Jr., Senior Vice President of the Management and Professional Liability Division, Philadelphia Insurance Companies

The current soft market might come as a bit of a surprise as it does not track with previous underwriting cycles and economic conditions. Afterall, many privately held and non-profit organizations struggled during the early days of the pandemic with shutdowns and rapidly declining revenues. But the Government assistance programs, like the Paycheck Protection Program loans, helped keep many afloat during the tough times.

“During COVID many organizations stopped doing business until they were able to sort out all of the health and safety challenges,” Schalick said. “They were forced to lock down, but then all the government assistance programs allowed them to keep people employed. The increased volume of claims we anticipated we would see coming from the lockdowns and restrictions that were imposed upon businesses in the U.S. didn’t manifest at first.”

“Just because there wasn’t an onslaught of reported claims at the beginning of the pandemic, doesn’t mean the circumstances that would give rise to a claim being reported didn’t occur. Courts and the judicial system were closed or slowed and now that they are back open, we’re starting to see the circumstances that occurred during the COVID lockdowns becoming claims today,” Schalick said. “Litigation is progressing.”

Added to the delayed pandemic litigation is a concern over newer claims that might be filed as the country inches toward an economic downturn. Though a recession was avoided in 2023, experts think a soft dip could occur in 2024, with 76% of economists saying there’s a 50% or less chance of an economic downturn this year — that almost always results in more management liability claims.

“During the Great Recession in 2008, we saw an almost immediate spike in claims because of the economic conditions and the pressure it placed on organizations. They were making personnel changes with significant belt tightening almost immediately.” Schalick said.

What’s in Store for M&PL Policy Rates in 2024?

Despite an uptick in claims and increased economic uncertainty, management liability rates haven’t increased, resulting in market-wide pricing levels that may not meet the increased pressure of rising settlements and jury verdicts.

“Rates are going the other direction and settlement values are not falling,” Schalick said.

The mismatch between rates, claim frequency and severity is, in part, because carriers experiencing the dramatic soft market in the public D&O market are seeking premium gain in the private and non-profit market.

“In the public company market, the rates have been decreasing significantly. The rates were increasing in the private, not-for-profit market, and rightfully so, but there’s a desire to supplement overall mid-size D&O for carriers who also write private not-for-profit, and they see that as an opportunity to aggregate premium,” Schalick said. “So the always competitive landscape in the private, not-for-profit market has dramatically increased in the last 18 to 24 months.”

Still, companies of all sizes and types should be concerned about management liability rates in the future. Legal system abuse is resulting in increases in both the amount of litigation and the size of verdicts plaintiffs are receiving.

Certain areas of the country are particularly vulnerable to this type of legal system abuse. As a result, insureds in these localities are likely to be vulnerable to rate increases.

“The environment is so positive for the plaintiff that forces premium increases so carriers are able to stay in that market long term,” Schalick said.

Why a Tenured Carrier Partner Can Help Insureds Navigate An Uncertain Market

It’s clear that insureds are facing an uncertain M&PL market over the next few years. Fortunately, carriers with a long history in the M&PL space will be there to offer stability.

Philadelphia Insurance Companies has been supporting this market for 35 years. PHLY is committed to offering long-term rate stability, even as economic and claims trends start to push premiums upwards. They have an appetite for all sorts of companies, large and small, for-profit and nonprofit alike.

“We’ve been at this game for a long time and are one of the most tenured underwriters in this space,” Schalick said. “We like to stay very consistent.”

PHLY has worked with both for-profit and non-profit on management liability policies. With dedicated M&PL teams throughout the company’s 13 regions, PHLY provides the support agents and brokers are looking for on behalf of their clients. The teams know their regions well and can respond to local trends. They’re also dedicated to making the renewal process as easy as possible for their partners and policyholders.

“We have real confidence in our results, so we focus a lot on making the renewal experience as painless as possible for all agents and insureds,” Schalick said.

The company is also investing in tools to help insureds avoid losses. Earlier this year, they launched a new online risk management platform, PHLYGateway, which offers resources for insureds on how to create an employee handbook and trainings on issues such as recognizing workplace sexual harassment and discrimination.

If insureds have questions, they can consult a Best Practices Help Line, provided via the platform. That way, they can get on the spot risk management guidance to help them prevent claims.

To learn more, visit: https://www.phly.com/mplDivision/managementLiability/default.aspx.

This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Philadelphia Insurance Companies. The editorial staff of Risk & Insurance had no role in its preparation.