Business travel insurance might cover the same risks as leisure policies but, because it underwrites and compensates differently, it places a much stronger emphasis on risk management
Part of the appeal of travelling abroad is delving into the unknown – into new cultures, environments and ways of life. But media reports of horrible travel experiences could give the impression that heading off on your travels is to head into a dark realm of risk.
By and large though, these kinds of stories are limited to the leisure market – very seldom (or ever) do similar reports come out of the business travel market. And there are some very good reasons for that: although the actual risks covered are largely the same, the way policies are underwritten and applied differs dramatically.
“Business travel policies cover the business rather than the individual,” explains Andrew Nisbet, Chubb’s senior vice-president, accident and health, UK and Ireland. “We are underwriting the company profile and its travel profile. The policy does more than just provide coverage. We look to include preventative services which help companies discharge their duty of care to employees.”
The point around the duty of care is an important one in this sector. It is a legal obligation, one that is reflected in the way business travel policies are administered.
Randall Gordon-Duff, head of corporate travel at Collinson, says: “Business travel cover has very few exclusions, mainly because companies sending employees overseas on business need to be able to assist their employees regardless of the situation they find themselves in.
“The products are more generous and there are more assistance services made available. You have a duty of care as an employer and these broader policies work in line with that duty of care.”
But what kinds of risks are insurers exposing themselves to when it comes to covering business travel? And how can they satisfy themselves that those same risks are being adequately managed?
According to Collinson, it’s not the headline-grabbing terrorist attacks or natural disasters that pose the greatest risk to business travellers but road travel.
According to the World Health Organization, 90% of the world’s fatalities on the roads occur in low- and middle-income countries, even though these countries have only around 54% of the world’s vehicles. As the UK’s exporters and importers seek markets further and further afield, the exposure to the inherent risks of these growing economies increases.
But it’s not all road accident risk. For Chubb, the majority of medical claims come from outpatient cases, that is to say situations that don’t result in critical or long-term injury. This is supported by statistics from the Centers for Disease Control and Prevention which suggest that a nasty bout of traveller’s diarrhoea is the most likely reason that a business trip will be disrupted.
So it appears that the risks insurers find themselves exposed to in the business travel market are pretty mundane – the exact opposite of the emotive cases often highlighted by the media in the leisure travel market.
But the difficulty in managing this risk comes from the fact that insurers are underwriting a business’ overall travel profile rather than an individual. Which is why so many of the established players in this market have such a strong focus on risk management and employee education. But that is more easily said than delivered.
For starters, it is not as simple as talking to a company’s ‘people risk manager’, mainly because the role probably doesn’t exist in most organisations. It is far more nuanced and complex than that.
Toni LePine, head of retail accident and health UK & Ireland at Axa XL, says it might be difficult to find where the responsibility for people risk management lies within any given organisation.
“In many companies, people risk does not sit neatly within one department but instead spans several areas. To put effective people risk management strategies in place, risk managers work with experts in other departments such as human resources, security and business continuity.
“It must be looked at in a holistic manner. With travel risk, for example, it is important to remember that it is not just the financial aspects of travel that need to be managed, but also preparing colleagues for situations that might arise while they are away from home.”
So there is a huge responsibility on the company’s part to ensure that its employees are adequately trained and prepared for foreign travel. While insurers like Chubb have invested in applications and online tools to facilitate that training and awareness, whether or not employees take any heed is another matter entirely.
Although business travel policies will react to most claims regardless of whether or not an employee has taken on board the advice and training, the company itself has two very clear and pressing reasons to ensure they do.
First, as they are being underwritten based on the company profile, claims will have an impact on any renewal negotiations and prices – a clear incentive to get internal communications right in this area.
Lack of training
In addition, a lack of clear training and risk management could leave a business exposed to claims against it from employees, explains Michael Botting, global travel underwriting and product development manager at Axa Partners.
“In the event of a liability claim being made by an injured employee over and above any claim made under the travel policy, some form of risk management and/or health and safety should have been in place. If not, then the chance of an employer being liable for damages starts to increase.”
And in contrast to a leisure travel customer, the employee is highly unlikely to have seen the terms and conditions of any travel policy. So it is the employer’s responsibility to provide as much reasonable clarity and information as possible.
“For corporate travel policies, purchased by the employer on behalf of the employee, the protection of the end user is paramount,” says Melissa Collett, professional standards director at the Chartered Insurance Institute. “Yet the employee is not involved in the purchase decision and will rarely know the terms of cover.”
Which is why, although the risks are largely the same across the travel market, in the corporate world, there is a large and growing emphasis upon employee training and awareness. It’s almost a given that the policy will react in some way to support that inherent duty of care. But behind that, there is a real drive to ensure that business travellers, wherever they may be headed, do not become just another road traffic or diarrhoea statistic.
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