Global Travel Assistance Could Cut Losses. If We Could Get Employees to Use It

There are numerous services and insurance coverages to support global business travel. The problem is that employees may spurn them.

By: Dan Reynolds | October 9, 2019

Technology and risk management have happily come together to offer a range of services to support global business travel. Unfortunately, many business travelers think they know better or are too focused on their jobs to take advantage of these services and better protect themselves.

Peter Hindmarsh, vice president of global benefit solutions for Pacific Resources, a division of Brown & Brown, said it’s a fairly common practice for companies to make available to business travelers well-researched information on the risks they may face in various countries and what services the company can make available to them.

“Despite the best efforts in communicating that and reinforcing it, employees don’t typically take advantage of it,” Hindmarsh said.

Car accidents, muggings and serious health incidents can happen to any traveler, whether they’re traveling from Boston to Beirut, or merely hopping a commuter train for a 45-minute jaunt to a business meeting.

“Unless they have a serious pre-condition, they don’t think these things can happen to them,” Hindmarsh said. “So, despite people’s best efforts, the employee is not prepared for what happens.”

When something does happen, according to Erika Weisbrod, director, security solutions, Americas, for International SOS, the costs to businesses can be substantial.

Here are just a few of the risks facing organizations that fail to prepare employees for travel risks or protect employees traveling overseas.

Legal/Financial Penalties

First, according to Weisbrod, are the direct legal/financial penalties that can befall companies when they face a lawsuit from an injured worker or the family of a worker who in the most tragic of cases is killed while traveling on the job.

“If that traveler says that their employer did not provide sufficient duty of care, that they were not providing awareness of the foreseeable risks in the destinations they are traveling to, there could be a lawsuit,” Weisbrod said.

Missteps Can Impact Reputational Risk

If an international incident attracts media attention, the name of the injured party’s employer will be broadcast, and reputational damage will result.

There is also the risk that company morale will suffer when a respected colleague suffers an incident while abroad.

“We have the concern of, ‘Do I want to travel for business if this happened to my colleague?’ ” Weisbrod added.

Erica Weisbrod, director, security solutions, Americas, International SOS

What if key producers start balking at travel assignments? What if business relationships that thrive due to face-to-face meetings start to whither due to a lack of personal contact?

“We look at the cost for expatriates and longer-term assignments,” Weisbrod said.

“If you look at the cost of a failed expatriate assignment, it’s not just that you’re paying for that individual to come home — it could be medevac, it could be a security situation — but then someone is not doing that job and the cost to fill that position, of not having someone in that role, the business costs can be quite significant,” she said.

As always, there are well-versed business minds working to address the risks of business travel.

Jeff Delmore, a vice president and corporate risk manager for FM Global, strategically developed a cross-functional team of FM Global’s loss prevention engineers and IT professionals back in 2017.

The team set a goal of providing all traveling FM Global employees with mobile access to up-to-date business travel risk information.

After 15 months of work, the company now has Travel Shield, the company’s enterprise-wide global travel risk management program that provides a risk-based heat map, pointing out health and security risks for FM Global employees going abroad.

For his work, Delmore was awarded a Risk All Star Award from Risk & Insurance^® earlier this year.

Products Providing Protection

In addition to dashboards that use the latest analytics to provide employees with up-to-date travel risk information, there is an umbrella of travel risk insurance products to give companies an extra layer of protection.

“A lot of employers have a business travel accident plan,” said Pacific Resource’s Hindmarsh. “It’s a lump sum payment for a large event.

“But the key thing that we talk to employers about is having group international travel insurance for all of their employees,” he said.

Companies like International SOS provide detailed information on medical capabilities in various countries.

But there are some events, whether they be health or security-related or both, that require evacuation, and that can get very expensive — well into the six figures. Group international travel insurance is designed to cover just such an event.

“Many are not aware of the risk,” Hindmarsh said.

“They think their U.S.-based health insurer is going to cover it. Either they don’t — in the case of medical evacuation costs — because the benefits are U.S.-based, or even if they cover someone overseas, they would make such a mess of the claim payment it’s not worthwhile even trying to get the claim paid,” he said.

According to Hindmarsh and Smita Bhargava, a senior vice president with Clements Worldwide, there are a large number of carriers offering group international travel insurance. Capacity is ample and rates are reasonable.

Bhargava recommends streamlining policies as much as possible, so that human resources and other professionals overseeing employee benefits know exactly which broker or carrier to turn to when there is an event.

Close examination of policies is also important, she said. Bhargava has seen instances where an incident happened to an employee in one country, and the company’s travel risk policy excluded that country.

“So, on the front end, it looks like the right policy, but on the back end, it actually excludes all the countries that are high risk,” she said.

Coverage Is Affordable

Hindmarsh said risk management and medical care continue to evolve and become more sophisticated and companies continue to see a favorable rate environment for purchasing cover.

“These plans are very inexpensive for the coverage you get,” he said.

“The level of risk and use is not that great, and the number of critical incidents might be declining over the years as health care gets more sophisticated throughout the world and people have more of a handle on how they should [approach] a medical situation,” he said.

“Most of the employers that we work with, especially when we inherit an older plan, we are usually negotiating for the price to go down, not up.” &

Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached 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.