Special report: Insurance

Business travel sends employees to diverse destinations for a multitude of reasons – making it all the more important to ensure the right insurance policy is in place. Bob Papworth reports

When the Corporate Manslaughter and Corporate homicide act 2007 came into force on April 6, 2008, Britain’s corporate travel community went into one of its frequent flash-in-the-pan frenzies – hours of debate, discussion and deliberation, followed by the dawning realisation that the statute would have minimal, if any, effect on everyday business.

Like deep vein thrombosis before it, manslaughter dropped off the radar. Indeed, in the first four years of the act’s existence, there were only two successful prosecutions – neither of which involved companies with even the remotest connection with travel.

In the past year, however, five more prosecutions have been started and, according to lawyers’ website Lexology.com, “all indications are that cases are on the increase” and “undoubtedly further companies will be charged”.

Corporate manslaughter concerns may be set to make a comeback, reopening the entire duty-of-care can of worms that so pre-occupied the industry back in 2008. In fact, death may be the least of the business travel industry’s worries – of the roughly 6,000 Britons who died abroad last year, the majority were elderly expatriates – but a renewed focus on more general traveller health and safety issues may be long overdue.

MULTIPLE POLICIES
I asked a dozen UK travel managers about travel insurance – not surprisingly, all said their companies provided travel insurance for employees, but most said travel cover formed part of a wider company insurance policy over which they had little or no influence.

For Buying Business Travel’s legal expert Ian Skuse, that sets alarm bells ringing. “Insurance is not a one-size-fits-all product, and there may be specific exclusions for certain types of claim or claims arising in certain jurisdiction,” he says. “The traveller may well be able to argue that even in the absence of an express term in his employment contract regarding provision of proper insurance, such a term may be implied – and that in the absence of adequate insurance cover, the traveller may have a claim for breach of contract or negligence.”

Even the insurers are inclined to agree. Alan Stokes is regional director with insurance giant Ace Group. He says: “In the past, businesses have often relied on a single global insurance policy, issued to the parent company, to protect all of its employees worldwide. In some countries, however, insurance regulations can undermine the effectiveness of this approach – a more prudent approach may be to combine a master policy with local policies issued to subsidiaries in the countries in which they operate.”

Lisa Wild, underwriting manager at Aviva, underlines the point. “Policies can be tailored to take into account the country the employee is travelling to, and the cost of the cover varies depending upon which countries are to be visited,” she says.

“For example, medical treatment is more expensive in North America than it is in Europe, and even though the cost of treatment may be cheaper in Africa, the availability of that treatment is not as common as elsewhere – therefore the cost of getting someone to a treatment centre may be higher.”

OUT ON A LIMB
Travel insurance tailored to a company’s specific needs, therefore, not only fulfils those duty-of-care obligations, it can also save money – and, in at least one case, a limb. Stokes’s colleague at Ace, regional director Stephane Baj, recalls: “On one occasion we were able to stop someone in Africa signing an acceptance form that would have resulted in the removal of their leg. Our local language medical expert was then able to get the patient moved and treated without the need for amputation.”

Such incidents are mercifully rare, but they do highlight the need for company-specific policies, and the insurers are more than willing to negotiate. They do, however, insist on full and frank disclosure of corporate travel data – exactly where travel managers’ input could be crucial.

“Before any negotiations take place, it is very important that companies undertake proper risk assessments and are clear about the procedure they follow to mitigate risks before their employees travel,” says Stokes.

Those assessments need to include details of travel patterns, the number, ages and health profiles of the travellers themselves, and the destinations to which they are travelling – and almost anything else one can think of.

“In some cases, companies tend just to advise on the number of employees travelling,” Stokes continues. “However, by providing higher levels of detail, insurers have more underwriting information and are, therefore, able to produce a more accurate – and usually lower – premium. The more an insurer understands your business, the more tailored the insurance solution can be.”

EFFECTIVE COMMUNICATION
The travel manager’s role does not stop there. Aviva’s Lisa Wild warns: “In general, corporate travel policies tend not to be effectively communicated to employees, meaning that travellers do not know what they are, or are not, covered for. This can lead to unnecessary complications if a claim occurs.”

Negotiation and communication are crucial. The Chubb Group of Insurance Companies says: “We remain one of the few insurers that continue to offer cover in the event of terrorism acts using biological, chemical and nuclear weapons. You may think that these are unlikely scenarios, but airlines have been known to delay flights because of such threats.”

Aviva’s Wild takes an arguably more pragmatic approach. “Don’t pay for cover you don’t want or need,” she insists. “Make sure the basics are covered and then look at all the additional covers and extensions and decide if you really want them.

“Some companies, Aviva included, offer a ‘basic’ insurance product with all the additional covers removed to create a cost-saving. Ensure you or your broker look at alternative quotes and do this – as a minimum – every three years.”

One such “extra” arises when travellers tag on a leisure break to the end of a business trip. Ace says such cover can be offered if it is pre-agreed, while Aviva will cover leisure as an add-on to a trip, but draws the line at covering a holiday with a bit of business thrown in.

Again, much will depend on the destination, although high-risk areas are not always the most contentious. Relatively short journeys within Europe, for example, are more likely to be subject to disruptions than flights to long-haul destinations.

And it’s not true that business travellers are necessarily a ‘better risk’ than holidaymakers. “Business travellers may be more experienced than leisure travellers, but statistically they are just as likely to fall ill while abroad,” Wild points out.

And if things do go seriously wrong, Chubb will insure not just against nuclear attacks but also against hijack and, in the very final analysis, “repatriation of mortal remains”.

That may seem a tad on the excessive side, but it will at least accord with the Advisory, Conciliation and Arbitration Service (ACAS) guidelines. “Employers have a duty-of-care to their employees, which means that they should take all steps which are reasonably possible to ensure their health, safety and wellbeing,” ACAS says.

“Demonstrating concern for the physical and mental health of your workers shouldn’t just be seen as a legal duty – there’s a clear business case, too. It can be a key factor in building trust and reinforcing your commitment to your employees, and can help improve staff retention, boost productivity and pave the way for greater employee engagement.”

To date, the Corporate Manslaughter Act has had little direct bearing on the corporate travel industry. However, if it re-ignites the duty-of-care debate, its indirect effects could be far-reaching.

THE COST OF CALAMITY
The average cost of overseas medical care for three of the most common health claims – an ear infection, gastroenteritis, and a broken bone following a fall – could run into thousands, according to Axa Insurance UK. The costliest places for hospital treatment include:

Source: Axa Insurance UK

INSURANCE BY NUMBERS
UK insurers are now paying out £187 million every day to customers, according to 2013 figures published by the Association of British Insurers (ABI).

Of that impressive total, only £1 million a day is paid out under travel insurance policies, considerably less than the £1.2 million a day paid to cat and dog owners under pet insurance schemes.

The ABI’s figures nevertheless highlight the importance of travel insurance. Back in July, the association warned: “In Spain, an overnight hospital stay to treat an allergic reaction can cost £3,000. In the US, the medical bill for treating a broken leg can be around £40,000.”

In 2012, ABI members came to the financial aid of a weekly average of 4,600 travellers who required emergency medical treatment, and the weekly bill for emergencies averaged £4 million. Over the year as a whole, 3,689 UK residents were treated as in-patients in overseas hospitals.

Nick Starling, ABI’s director of general insurance, said: “Every traveller’s worst nightmare must be to fall ill or get injured abroad. Not being able to speak the language, and not knowing how or where to get the right treatment adds to the trauma.

“This is why travel insurance is a must-have for anyone travelling abroad – an essential, not a luxury purchase.”