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For a benefits manager, some of the most difficult challenges arise when employees traveling in a foreign country on business become sick, find themselves in potentially dangerous situations or need to evacuate from a politically unstable country.
Consider these scenarios:
An American employed by a U.S.-based multinational company is injured while on business in Spain. The executive, who is insured under a U.S. business-travel accident policy, seeks care at a local hospital. A U.S. insurance policy issued by a U.S. insurer that is not licensed in Spain may not be able to directly pay the Spanish hospital for the employee’s health care services.
A Mexican national employed by the Mexican subsidiary of a U.K.-based multinational company dies in a car accident in Mexico. He is insured by a group personal accident policy issued to the U.K. parent company by a U.K. insurer that is not licensed in Mexico. The U.K. insurance policy may not directly pay the personal accident policy’s covered death benefits to the deceased’s estate in Mexico.
To avoid these issues, benefits managers will want to be sure that employees and their families are protected and that the company’s business-travel accident policy will deliver the promised benefits.
Challenges to a One-Policy Solution
Businesses have often relied on a single insurance policy issued to the parent company to protect all employees worldwide. In some countries, however, insurance regulations can undermine the effectiveness of this approach, opening the door to problems with benefits and claim payments.
The question then becomes whether the policy will deliver on the promise of worldwide insurance protection and address potential tax and regulatory consequences. In many cases, a single-country policy may not be enough.
A more prudent approach may be to combine a master insurance policy issued to the parent company in its home jurisdiction with local policies issued to subsidiaries in the nations in which they operate.
A Benefits Evolution
Global business travel has expanded significantly in recent years with the growth of multinational trade. Where companies once sent employees on long-term assignments as expatriates, today it is much more common for executives to take short-term trips.
These business travelers are typically the company’s top talent: leading sales executives, high-potential professionals and the C-suite. Increasingly, they are traveling outside developed nations to emerging markets in Asia, the Middle East, Africa and South America, where medical care and evacuation may be challenging.
As the scope of travel has broadened, business-travel accident policies have evolved to cover a variety of risks. At one time, these policies primarily provided accidental death and dismemberment (AD&D) coverage. Today, the policies typically offer out-of-country medical coverage, medical and nonmedical evacuation, and inconvenience benefits, as well as the AD&D benefit.
Benefits other than accidental death and dismemberment may be included in policies as secondary benefits. However, businesses are taking a more holistic approach and are looking to add these coverages, in a comprehensive form, under one policy.
A Flexible Solution
Benefits managers and risk managers alike are often familiar with the cross-border execution issues facing multinational companies. Master policies combined with locally admitted policies have been used in other lines of insurance and have been very effective at resolving the difficulties that can emerge with a single policy.
A locally admitted insurer issues a local policy that complies with the country’s insurance laws, and also calculates and remits applicable insurance taxes and fees. Claims under such local policies are adjusted and paid locally.
An effective global program includes locally admitted policies issued to the parent company’s subsidiaries, affiliates and joint ventures, with local covered benefits and limits insuring the risks of local employees.
These locally admitted policies are combined with a master policy issued to the parent company in its jurisdiction to insure the parent’s employees. The master policy may contain provisions that address potential coverage gaps in the local policies. Claims under the parent’s policy may be paid in the parent’s jurisdiction.
Under this approach, multinational businesses can be confident that they have acquired comprehensive coverage that simultaneously protects employees and meets the requirements of local jurisdictions. With a global program that complements a master policy with local policies, benefits managers can help ensure that valuable professionals will have the care they need when they need it most.
Suresh Krishnan is general counsel for the ACE Multinational Client Group, where he has global legal oversight for matters connected with the company’s multinational products and services.
James Walloga is vice president, Global Accident and Sickness, ACE USA Accident & Health Division, where he oversees underwriting and risk management, with an emphasis on international risk and benefits insurance product offerings.
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