Risk and Insurance Considerations Employees on Overseas Assignments Foreign Voluntary Workers Compensation Coverage Kidnap & Ransom Risk Business Travel Accident Coverage Presented September 24, 2013 Jeffery Bond AIG Worldsource 1
Introduction For multinational companies, protecting human capital has become an integral part of their risk management strategies. With more and more employees traveling and relocating overseas, protecting the personal safety and well-being of these employees is critical for companies to succeed in today s global business environment. 2
Employee Classifications U.S. Employee: An employee who is a citizen or legal resident of the U.S. wherever hired or an employee who is a U.S. hire who is not a U.S. citizen whose contract of hire was entered into in the U.S. US Employee Traveler A U.S. Employee who is hired for, and assigned by you to work primarily within the United States who is temporarily in the Coverage Territory while on a Business Trip for you Canadian Employee An employee who is a citizen of Canada wherever hired and an employee who is a Canadian hire who is not a Canadian citizen and whose contract of hire was entered into in Canada Canadian Employee Traveler an employee who is a citizen of Canada wherever hired and an employee who is a Canadian hire who is not a Canadian citizen and whose contract of hire was entered into in the Canada Third Country National An employee, who is neither a U.S. employee, Canadian employee, nor Local Hire or National, who is hired or assigned by you to work outside of his or her country of hire or permanent residence if other than the U.S. or Canada. Local Hire or National is an employee who is hired by you to work within his or her country of hire or permanent residence and whose usual workplace is located in the Coverage Territory. 3
Determining Options What is the nationality of the employee? Where is the payroll generated and reported (benefits)? Is the assignment temporary or long-term? Will the employee be taking a personal deviation or returning home during the trip? Will they be traveling or working in high risk areas? 4
Coverage Options US Statutory Workers Compensation Policy Foreign Voluntary Worker Compensation Endorsement on US Domestic WC policy Standalone Foreign Voluntary Workers Compensation Coverage. Local Statutory Compensation Coverage for Third Country and Local Nationals Defense Base Act and Jones Act Coverage Kidnap and Ransom Business Travel Accident 5
Why purchase a FVWC Policy? Certainty Domestic WC carrier may only provide FVWC extension on their program for incidental travel. Specific state or country laws may limit extra territorial coverage. Definition of extra territorial coverage will vary by state. Employer s Liability coverage may not be provided for an overseas incident. Coverage Travel specific issues, such as endemic disease vary by state or may not be available. Executive officers, sole proprietors and partners may not be covered on the Domestic WC policy. Employers Liability coverage may not be available or limited for injury overseas Medical Evacuation and Repatriation in the event of an injury may not be covered. Coverage is not granted for local hires or third country nationals ( Reverse Trip Travel ) Lack of Travel and Medical Assistance to coordinate employee care and ensure proper Duty of Care Ease and Flexibility Domestic WC Policy may only can provide indemnification for overseas expenses, not pay on behalf of. Overseas medical providers may not recognize coverage or payments made by a Domestic WC Carrier. Claims can be resolved more quickly than typical workers comp schemes as it is not subject to governmental administration or approval. Losses do not effect Domestic Workers Compensation Experience Modification Factor. As coverage is voluntary, benefits can be provided in a different fashion than as legally mandated. 6
Foreign Voluntary Compensation/ Employers Liability FVWC policy is not a statutory workers compensation policy and is not meant to replace or meet any statutory obligations. The benefits payable under the policy are calculated in accordance with the benefits available under the workers compensation law of the state or country of hire of the employee as if the employee was eligible for the benefits of that state. The policy also extends additional coverage beyond what is provided under statutory workers compensation policies, adding an extra layer of protection for the employer and the employee. Coverage for Endemic disease Medical Repatriation Expense Travel Assist Service AD&D Coverage Reverse Trip Travel 24/7 Travel Accident and Sickness Coverage Option Security Evacuation Coverage Option 7
Foreign Voluntary Compensation Part One. Pays on your behalf compensation, medical and other benefits of the Employment Injury Benefit for employment-related injuries. Employment Injury Benefit is Calculated Based on benefits of State, Province or Country of Hire Benefits can be paid on a Primary Basis unless the employee makes a claim for statutory benefits. Coverage is 24/7 for Employment related injuries. All claims are evaluated under the following: Was the employee in the course and scope of their employment furthering the interests of the employer. Was the activity which caused the injury an activity which could be reasonably expected while the employee was traveling? 8
Foreign Voluntary Compensation Part One. Supplemental Repatriation Expense For a covered Injury pays for expenses related to repatriating a covered employee to their country of citizenship, hire or permanent residence. We will pay excess the normal cost of transporting the employee if he was not injured up to the Limit of Liability. Key Exclusions to Part One: Payments in a jurisdiction where this policy is prohibited by statute, regulation or local law. Statutory benefits under any compulsory local scheme i.e. Domestic WC law, UK EL, etc. No War or Terrorism exclusion applicable to Part One 9
Foreign Employers Liability Part Two Covers suits against the insured for injury arising out of the course of their employment to an Covered employee. Key Exclusions: Payments in a jurisdiction where this policy is prohibited by statute, regulation or local law. Statutory benefits under any compulsory local scheme i.e. Domestic WC law, UK EL, etc. War and Terrorism exclusion applies but can generally be removed by endorsement. Federal Acts including: USLH (includes DBA) FELA Migrant & Seasonal Workers. 10
FVWC Best Practices Enhanced Coverage for Travelers Coverage for Endemic disease Medical Repatriation Expense with Per Person Limits and No Aggregate Employers Liability coverage. Travel Assist Service provided by Service Provider AD&D Coverage for both occupational and non-occupational Repatriation Coverage provided for work-related injuries and possibly for non-occupational. Reverse Trip Travel for Foreign Based Employees traveling into the US or Canada. 24/7 Travel Accident and Sickness Coverage Option including 14 day personal deviation. Family Travel Benefits in the event of an injury. Security Evacuation Coverage Option International Claims and Travel Assistance Service Dedicated Center of Excellence Claims Team Access to Travel Assist Websites including security alerts, pre-trip planning and country profiles. Worldwide global claims network with access to local providers, counsel and adjusters. 11
Q&A
Kidnap and Ransom Coverage Reasons for Kidnapping Kidnapping Trends Who is Responsible Areas of Greatest Risk New Developments 13
Reasons for Kidnapping They are all economic in nature Drug Cartels Mexico Quick Money Low Level Criminal Gangs Religious Insurgencies funding Al Qaeda, Abu Sayyaf and Boko Haram Guerilla Groups FARC, MEND, insurgent groups focused on economic issues in their countries 14
Trends Kidnap for ransom has increased 70% in the last 8 years (Source: Lloyds of London) Highest Frequency in Venezuela, Mexico, Nigeria & North Africa Significant Domestic Activity Kidnappings of foreign nationals worldwide have increased by over 60% in the past five years. Involve Wealthy Individuals Most common victims include dependants and business employees. Size of ransoms have increased - $5M avg. Largest known ransom demands worldwide in the past five years ranged between $20 million and $125 million. Relatively very small numbers of kidnappers are ever caught The price of releasing a hostage can range from large cash payments to requests for cab fare Kidnappers are becoming more aggressive and greedy Kidnapping is a way of life in some countries 15,000 to 20,000 kidnaps annually many go unreported 15
Target Selection Wealth Whether is Real or Perceived Type of Vehicle Color, Popularity and Frequency of Theft Political any ties? Publicity Routine Time and Place are they predictable? 16
Who is Responsible? Threat Drug Cartels (i.e. Mexico) Organized Criminal Gangs Low Level Criminal Groups Street Gangs Insurgency Corrupt Law Enforcement Sources 17
What makes a country a Kidnap Danger Zone? Areas of greatest risk Political Unrest or Upheaval Extreme Poverty Questionable Rule of Law and Judicial Process Weak Democratic Institutions 18
Risk Areas 2012 Severe Mexico Venezuela Afghanistan Pakistan Colombia Somali waters High Risk Philippines Sahel Region Yemen Nigeria Iraq Somalia / Kenya Democratic Republic of Congo Sudan and South Sudan Syria 19
New Developments Children as Targets Social media as a way to track Middle class as targets (i.e. Mexico express kidnappings) More amateur involvement More violence More extortion 20
K & R Incidents by Region 9% 1% 11% Latin America 25% North Africa & Middle East Africa 40% 14% South West Asia South East Asia / Asia Pacific Europe As shown in the graph, the most dangerous region for K & R of the cases recorded was South West Asia, particularly the Pakistan/Afghanistan border. North Africa & Middle East came second with 25% and Africa third with 15%. Though Latin America placed fourth with only an 11% share, in reality it should be far higher, as most cases concern domestic nationals and thus go largely unreported in the media. 21
Incidents Kidnapping Outcomes 2011 9% 11% 2% Ransom Paid Release without payment Killed 13% Rescued Escaped 65% As shown in the graph, of the cases recorded the majority of K & R incidents ended in a ransom being paid to the group, followed by a release without payment (12%) and victim successfully rescued (11%). A minority but still considerable proportion of cases ended with the victim being killed at 9% (some of which during a rescue attempt). Victims are rarely able to escape successfully (2%). 22
Kidnap Ransom Are you prepared to ensure the safe, timely and secure release of a victim? Could you effectively liaise with all parties (law enforcement, families, other third parties)? Can you cover the costs associated with a kidnap, extortion, detention or hijack event? Fees of a crisis management and kidnap response firm Independent communicator Interest on loans raised to meet an insured loss Travel costs to the country of which the event occurred Independent psychiatric care and/or medical care 23
Terms/Exclusions Low Limits Specifically Excluded Country Endt Subject to a country travel advisory Travel to any country after an advisory has been issued Failure to evacuate from host country within ten ( 10 ) days after issuance of advisory
Kidnap Seizure or detention of an insured person for purposes of demanding ransom payments 25
Extortion Payment demands following a threat to cause bodily injury of an insured person Threats may also be damage of property, contamination of products, exposure of trade secrets, destruction of electronic data, cyber sabotage or terror Divulge any confidential, private or secret information unique to the insured person(s) 26
Wrongful Detention Involuntary confinement by a government entity or insurgent group resulting from an arbitrary or capricious act of an agent or with the tacit approval of said entity or organization 27
Hijacking Illegal holding under duress of an insured person for more than six hours while traveling on any aircraft, motor vehicle or airborne vessel 28
Kidnap Ransom As kidnap, detention and extortion events become more of a reality for companies operating in both foreign and domestic markets, the need for expertise in protecting those assets becomes critical. Kidnap, ransom and extortion insurance is the only way to manage the consequences associated with a kidnap, extortion, detention or hijack. It provides the protection and peace of mind needed. 29
Kidnap Ransom Ransom / Extortion payments Death or dismemberment benefits Loss in-transit of payment / delivery Judgment, Settlement and defense costs Related Expenses Ex. Travel, Crisis Response Team, Psychiatric, etc 30
Related Expenses Consultants Salary continuation Personal financial loss Medical expenses Rest and rehabilitation Travel and accommodation Loan interest payment Reward Interpreter Forensic analysis Other reasonable and necessary expenses 31
Kidnap and Ransom Role of the Consultant Assessment of the situation as it develops Formulation of an effective response strategy Communication with the perpetrators and handling the threats Dealing with the media, local and international authorities and legislation Care of victim s family members and other employees Preparation for ransom payment and safe release of the victim(s) Future risk mitigation 32
Endorsements Child Abduction Threat Express Kidnapping Evacuation and repatriation Hostage Crisis Response & Expenses Assault Expenses Legal Defense outside Limits Medical Expenses extended period Value of Products 33
Risk Management Planning a kidnap can be difficult and complicated or easy (depending on source and nature) Why kidnappers rarely fail! 34
Kidnap Avoidance Five Basic Mitigation Principals Stay Informed Know the Country Know the Risks Information Security Stay Unpredictable Stay low key Stay Alert Have a Plan ( Evacuation Plan ) 35
Customer Profile Any company with employees either traveling to or based overseas, particularly Latin America, Asia, Eastern Europe, Africa Officers and directors Cash rich or high-profile individuals or companies Situations where families are accessible Student groups Families, relatives, residents of household, guests Relief or charitable organizations 36
Q&A
Business Travel Accident Travel insurance is insurance that is intended to cover medical expenses, unexpected costs incurred before or during your trip ( ie including lost baggage and trip cancellation ), and other losses incurred while traveling, either within one's own country, or internationally. Source: http://wwwnc.cdc.gov/travel/yellowbook/2012/chapter-2-the-pre-travelconsultation/travel-health-insurance-and-evacuation-insurance.htm Why should I a traveler or company buy travel insurance? Travel insurance offers travelers coverage for unforeseen problems, from a cancelled flight to a serious illness or in rare cases, even an act of terrorism or the financial default of a travel supplier. If an illness, accident, or other covered unforeseen circumstance forces a traveler to cancel or interrupt their travel plans, they face two potentially major financial losses money invested in nonrefundable pre-payments and medical expenses that in many instances may not be covered by health insurance. 38
Business Travel Accident The most common risks that are covered by travel insurance are: Medical emergency ( accident or sickness ) Emergency Evacuation Repatriation of remains Return of a minor Trip Cancellation/Trip Interruption Accident death, injury or disablement benefit Overseas funeral expenses Lost, stolen or damaged baggage, personal effects or travel documents Delayed baggage (and emergency replacement of essential items) Flight connection was missed due to airline schedule Travel delays due to weather 39
Optional Coverage Some travel policies will also provide cover for additional costs, although these vary widely between providers. In addition, often separate insurance can be purchased for specific costs such as: Pre-existing conditions ( ie. Asthma, diabetes ) Sports with an element/high hazard ( ie skiing, football, scuba diving, zip lining, etc ) Travel to high risk countries ( ie due to war, natural disasters or acts of terrorism ) Additional Accidental Death & Dismemberment coverage Acute on-set of pre-existing conditions - This term is very different from Preexisting conditions. It means a sudden and unexpected occurrence of preexisting medical conditions without any prior warning from a medical professional. Travel insurance companies, especially in USA, do not offer coverage for pre-existing coverage but they do offer coverage for acute on-set of pre-existing conditions. If you have pre-existing conditions, make sure to get this coverage to protect yourself against any emergency situation that arises due to pre-existing conditions in spite of taking care 40
Common Exclusions Pre-existing medical conditions but a lot of companies now cover for "acute on-set of pre-existing conditions" War or terrorism - but some plans may cover this risk, and some do cover for acts of terrorism Injury or illness caused by alcohol or drug use Usually, the insurers cover pregnancy related expenses, if the travel occurs within the first trimester. After that, insurance coverage varies from insurer to insurer. TAS endorsement is critical because not every occurrence is covered by FVWC such as non-occupational events such heart attack, appendicitis, pancreatitis, etc. Having a TAS along with FVWC provides a complete package of benefits. Travel insurance can also provide helpful services, often 24 hours a day, 7 days a week that can include concierge services and emergency travel assistance. 41
Business Travel Accident A dedicated Travel Risk Consultant will assess every aspect of a clients program including: Communication Strategies Travel Policies & Procedures Conduct interviews with HR, Security and Risk Managers Perform gap analysis Compare with industry best practices Compile report to review findings and recommendations 42
Business Travel Accident Customized Country Reports If a client is traveling to a specific country, a customized pre-trip country report can be provided to include: Case Coordination Evacuation/Case Management Process Map Evacuation Procedures Detailed Country Map Pre-Trip Information includes: Recommended Vaccinations Infrastructure Cultural Consideration Risk Rating 43
Carrier Considerations Experience New to market or history of writing this class of business Consulting expertise Pre/post event client briefing Home security analysis Close personal security for travel to hot spots Staff on the ground in hot spots Coverage territory Ability to write and respond Willingness to write relief or charity organizations Non-governmental organization Volunteers may not be covered make sure they have coverage Liberal coverage Definition of named insured Financial strength Can they offer the limits that your clients will really need? 44
Other Considerations What is their Global footprint? Do they have access to regional networks? Customer Service Simple? Web Presence
Q&A
Thank You Bring on tomorrow 47