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By HARRY ENNEVOR, president of E.G. Bowman Co. Inc., a full-service commercial lines brokerage based on Wall Street in New York

When an employer sends its employees on trips, it has a moral obligation--and perhaps a legal obligation--to make them whole if they are injured while traveling or become seriously ill abroad and need to be returned to the United States. It has also an obligation to the employee's family if the employee dies from an accident while traveling on the job.

Common at most large companies and nonprofit institutions, the benefit is being purchased by more and more medium-sized firms. In a recent survey by the Society for Human Resources Management, nearly 50 percent of employers said they offer travel accident insurance to their employees.

This coverage appeals to employers and employees alike because it covers accidental death and injury while traveling on business--whether to an exotic location overseas or the town next door. Besides death and dismemberment benefits, policies typically provide medical payments, temporary disability payments, and coverage for costs associated with repatriating employees from foreign soil. The coverage is not integrated with workers' compensation.

There are two basic types of policies. The broadest type of travel accident insurance provides 24-hour worldwide coverage for both business and pleasure; it can cover almost any kind of accident. Employees are covered 365 days a year. The other type, which is less expensive, is a 24-hour business-only policy, which means that an employee is only covered while on business for the company. In general, coverage begins the second employees begin a journey and stays in force until they return to their home or office, whichever happens first. Even outside directors can be covered for accidents occurring while traveling to company board meetings.

VOLUNTARY OR COMPANY-PAID

Nearly all major corporations and institutions buy travel accident policies and typically pay the full freight themselves. Smaller employers, though, often offer it as a voluntary benefit, with premiums fully or largely paid by participating employees. The amount of accidental death and dismemberment benefits may vary and can be chosen according to the employee's liking and budget.

Another possibility is for the smaller employer to buy insurance for a select group of employees. For instance, the business owner may want to cover only the higher-echelon personnel and/or those individuals who may travel frequently within the country or abroad.

Buying travel accident insurance can be simple. There is such an array of benefits made available these days that most employees aren't aware of all the coverages offered to them. The human resources department, in cooperation with the risk manager, who usually buys the product, should regularly communicate with employees so they are aware of the benefits. Human Resources should also promote the policy to both prospective and current employees so that they'll view it as an important ancillary benefit, like dental insurance or vision care.

A broker who specializes in travel accident insurance can design a contract that matches the firm's risk profile. For instance, 24/7 accidental death and disability coverage may apply to traveling and/or non-traveling employees. Death benefits may go up to $500,000 or higher. Contract terms may also extend coverage to an employee's spouse and children if they were traveling with the employee on company business or were relocating for the employer.

Some carriers also offer weekly indemnity amounts and medical benefits for accidents. Moreover, coverage is available for all modes of transportation: ground and air, private and public, and common carriers and private conveyances such as trucks, cars, and aircraft, whether owned by the company, employee, or a third party.

A policy may cover hijacking and/or skyjacking. War risk is another key coverage. Typically, war coverage is automatically included without extra cost for peaceful countries like Britain and France, whereas coverage is routinely excluded for high-risk nations. Employers can buy back the coverage to remove the war exclusion. For instance, a news organization sending reporters and crew to Afghanistan, Pakistan or Iraq would want to be sure war-related losses are covered. The price and availability of war coverage fluctuate based on the political climate and availability of reinsurance.

Before Sept. 11, 2001, travel accident policies were fairly liberal in covering acts of war for all countries except for the superpowers of the world, as defined by each carrier. Companies could routinely purchase war-risk coverage for employees on an audit basis. A deposit premium was charged at the start of the policy, and the carrier would audit it periodically. At the end of the policy year, the insurance company would negotiate a new premium based on the amount of travel to war-risk zones during the prior year.

Since then, because of the restrictions placed on primary carriers by reinsurers, employees must inform the insurer before leaving on a trip to any of the war-risk countries listed by the carrier. This has created a big problem for risk managers, who now must keep tabs on who is traveling where and when. And even when the risk manager knows where U.S.-based employees are traveling, he or she may not know where employees based in, say, Moscow or Singapore, are going.

OPTIONS, ENHANCEMENTS

Many optional enhancements are available. For instance, a policy may pay a benefit to a deceased employee's spouse for professional financial planning and psychological counseling. Other options may include permanent total disability benefits, vocational rehabilitation benefits, and repatriation of remains. Payments may be made in a lump sum or over time.

A child-care benefit provides employees with financial assistance for the care of young children. A college education benefit helps pay tuition if one of the family's main income earners is seriously injured or killed. Extra benefits such as these, in conjunction with the basic policy, allow employers and their staff the peace of mind necessary to freely conduct their day-to-day affairs, knowing that their family concerns have been addressed.

What if the happens to an employee's spouse who needs to get back into the job market if the employee is killed or permanently disabled by a travel-related accident? The spouse training benefit can pay for training in new job skills.

Medical coverage enhancements can be very valuable. For instance, a burn benefit assures that a burn victim will receive the finest care possible at a premier burn center, which may be distant. The rehabilitation benefit reimburses accident victims who need extensive physical therapy.

The adaptive home and vehicle benefit can greatly aid newly handicapped accident victims by defraying the cost adapting their home and/or vehicle. The repatriation of remains benefit pays for the return of remains to a loved one's home.

The emergency evacuation benefit applies to an employee who becomes incapacitated and requires an evacuation. And it can pay for repatriation of a sick employee if medical treatment can't be obtained locally, even the ends of the earth. In April 2001, an AIG Life policy covered evacuating an ailing doctor from the South Pole. AIG reimbursed the employer, Raytheon Polar Services, for the $400,000 it paid the U.S. government to fly the doctor home before the Antarctic winter set in.

Prior to purchasing optional medical coverage, employers should also examine their current medical benefit policy. Some carriers, such as UnitedHealthcare, include coverage for emergency medical situations for members who are traveling overseas in their standard benefit plans. The company also offers more comprehensive expatriate medical benefit plans for members who are looking at more long-term overseas commitments.

"We offer a variety of coverage options to meet our members' needs, whether they are traveling overseas for a short or long period of time," said Stephen Gage, chief marketing officer, UnitedHealth International.

"Having a health issue or an emergency in a foreign country can be stressful. To better support our members who are overseas, we have created dedicated teams that can provide everything from clinical and claims support to helping with logistical needs, such as finding a local hospital or specialist. Our goal is to provide the same level of service the member would expect if they were stateside."

Travel accident insurance is a valuable employee benefit and risk-management tool that continues to evolve. It has become more complicated--and more crucial--since international terrorism reared its ugly head. With research and expert assistance, you can get the program that fits your organization best at a cost it can afford.

November 1, 2010

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