Many employers consider international Insurance when considering companies with offices, factories, and warehouses in multiple countries. However, not all global exposures are created equal. Some companies have significant international exposure even though they do not have physical locations outside their home country.
According to Engineering News-Record Publication, the Top 250 International Contractors earned $473.07 billion in contracting revenue from projects outside their home countries in 2019. This is 2.9% less than in 2018 when it was $487.29 trillion. These contractors are primarily involved in large-scale infrastructure and construction projects. Many smaller companies are still working abroad on a contract basis. Sometimes they work as subcontractors for larger companies. This could include electricians, security personnel, equipment installers, and skilled cabinet makers.
What types of specialized Insurance should a company offer employees? This will depend on the type of work and whereabouts these employees are working.
Let us look at two scenarios:
Types of Work: Renovating buildings in countries other than the home country
Contract Length: 2 months
Keep you safe, Corp.
Types of Work: Security work in an embassy abroad in a country ravaged by conflict
Contract Length 12 Months with a possible extension of 12 Months
Liability Insurance at Home and Abroad
Are your employees liable for property damage or injuries? You should ensure that your employees have international liability insurance policies to cover any incidents in countries other than their own. Who could sue them in the country where the incident occurred, or would the suit be brought back to their home country’s court? You can be sued in any of these countries. The insurance policy should respond in both cases.
Admitted vs. non-admitted Insurance in a foreign country
Many countries around the world have laws prohibiting the sale of non-admitted Insurance. This is Insurance sold to individuals or businesses in their country by companies that do not have licenses from the insurance regulator.
Fixitup is employed by country A for the 2-month contract. Should Fixitup get local Insurance from an A-rated insurance company? The laws may allow them to, but it could be problematic for the contractor to obtain coverage in a country they are not registered. It is rare for contractors to be granted insurance policies in another country unless it is stated explicitly in their contract terms.
Keep you safe Corp. is a company that works for one year in another country. Whether they should buy local Insurance is more difficult if there is no strong insurance market. These are some points to remember:
- Is it necessary for the law to provide local coverage? What is the common practice?
- Does the contract require local coverage?
- Is local coverage available on the insurance market? Is the coverage available adequate in terms of policy language and limits? Can local insurance companies provide adequate financial strength, reinsurance backing, professional reputation, and professional integrity?
- Are local services, advice, and claims handling required?
- Is the contracting firm legally established in the country?
- Should you buy Insurance locally?
- Are local laws applicable if work is done on the diplomatic property or military bases?
Although most people want the rules about admitted and non-admitted Insurance to be clear and straightforward, it is often more difficult to give sound advice to clients. It can sometimes take longer than initially thought.
Sickness and Injuries to Employees
Will, a domestic workers’ comp policy cover employees? Workers’ compensation policies in the United States typically cover medical expenses and lost wages for workers who are temporarily working outside the country. They are not intended for international travel and do not cover employees who work abroad on long-term assignments.
Companies with international employees should ensure they have Insurance designed to cover medical emergencies.
Domestic policies may offer some coverage but won’t cover expenses such as emergency evacuations or endemic diseases. What would the worker’s compensation policy do if an employee is hurt while out on a weekend or evening trip? Most likely not. Is the employer under a moral or legal obligation to help the employee? Quite likely. Many companies purchase Business Travel Insurance policies that provide the following:
- Provide coverage for emergency medical expenses
- Provide helplines and apps for travelers to find medical care
- Insurance will cover the cost of emergency medical transport if an employee is injured at a remote location.
- Coverage 24 hours per day, so the employee is covered throughout the trip and not just during work hours
- Monthly or lump-sum benefits for work-related injuries or deaths
Foreign Voluntary Workers Compensation policies (FVWC) will cover injuries sustained by employees working in the United States. It typically mirrors worker’s compensation benefits available in the country of employment. An FVWC policy can provide more benefits than a Business Travel Accident insurance. For example, it may pay a permanently injured employee a portion of their salary for life. Who can use Business Travel Accident policies to cover work-related and nonwork-related injuries? They also have greater flexibility, such as coverage for spouses traveling abroad.
Limitations on Compensation for Personal Accidents and Foreign Voluntary Workers
Is the medical expense for illnesses or accidents covered?
- Can you be injured while sightseeing?
- Will death and injury from terrorism be covered?
- Are medical expenses for Covid-19 for employees covered?
- What is the trigger for evacuation coverage? What about evacuations due to political turmoil or natural disasters?
Defense Base Act Insurance
The contract will likely include a clause that the contractor must purchase Defense Base Act (DBA), Insurance if it is with the US government, embassy, or base. All US government contractors and subcontractors who work on US military bases or government property must purchase workers’ comp insurance. It doesn’t matter if the company is owned or whose employees are. The Defense Base Act is the only requirement in a contract.
Most contractors who work on US Government property abroad require a DBA policy.
Over the years, courts have ruled that DBA coverage does not limit to just working hours. It is wise to purchase additional Business Travel Accident Insurance that covers non-work-related injuries and emergency medical transport costs.
International Health Insurance
Fixitup, like the other companies mentioned, is unlikely to purchase Insurance for routine doctor visits or non-emergency coverage for absent employees for more than a month. Is it possible to delay non-emergency visits so that they can return home?
Are your employees covered for health care while abroad?
To keep you safe, you will need to sign a longer-term agreement. You may be able to provide routine medical care, such as annual checkups, allergy treatment, or maternity care, in addition to emergency coverage.
Does their domestic medical/health policy provide enough coverage? Do they have direct payment arrangements with providers and doctors in the area, or must employees pay upfront and submit claims?
Are foreigners allowed to work temporarily in a country that provides ‘free’ healthcare?
If you need to provide emergency medical care, who should you consider buying an international insurance policy? Employers want to offer benefits like vision, dental, preventative, and mental health, as well as maternity coverage.
While it may seem safe to assume that the contract is located in Switzerland, abduction can still be a severe threat. Virtual kidnapping can happen anywhere, even if it seems safe. Who do you contact if you’re out of the country and get a call that your children have been abducted and threatened with harm? Is this real or a fraud? A company can buy a Kidnap & Ransom policy to get professional advice and financial protection.
Countries with kidnapping activities have a higher risk of kidnapping when the contracts are longer. This is because kidnapping groups like to take time to study victims and learn their travel patterns to snatch them at a safe time.
International Insurance is typically taught as a combination of factories in different countries and manufacturers. Companies that cross national borders to work for short- or long-term contracts must be aware of the risks. These risks can lead to unexpected outcomes, which are unsuitable for Insurance. When sending workers overseas, planning for and preparing for all possible risks is best.