BENEFITS BUSINESS
By Len Strazewski
Agents need to be ready to provide
travel-related coverages to corporate clients
For the first time in decades, employers are taking a new look at their business travel accident and emergency services benefits and reviewing their executive risk management plans.
Since September 11, 2001, no one looks at commercial air travel the same way. As they walk through multiple levels of airport security, travelers can't help but be reminded of the tragic terrorist attacks that cost thousands of lives and destroyed every American's sense of personal security. Although it may be a relatively minor consequence of terrorism, some aspects of employee benefits and employee risk management have also changed.
For the first time in decades, employers are taking a new look at their business travel accident and emergency services benefits and reviewing their executive risk management plans, say coverage experts. And insurers that market business travel-related insurance products are raising rates, tightening coverage terms and asking more underwriting questions of their policyholders.
However, the situation poses both challenges and opportunities for agents, brokers and their clients, says Harry Ennevor, executive vice president of E.G. Bowman Co. in New York.
E.G. Bowman, the first minority-owned insurance brokerage on Wall Street, has about 40 employees and is a leading marketer of business travel insurance products and services in New York.
Ennevor says business travel insurance--usually a package of accidental death and dismemberment (AD&D) insurance issued for multiples of employee salary and emergency services that provide medical evacuation and related assistance--has become a more complex employee benefits and risk management problem in the past two years.
While the AD&D coverage itself has changed only slightly, insurers are now recognizing a broader range of emergency needs for business travelers, such as medical rehabilitation for injured travelers and support for dependent children and spouses in addition to the standard medical consultation and evacuation services.
But underwriters are also recognizing the increased risk of travel to areas known for terrorism activities or war. Business travel insurers usually do not exclude terrorism from coverage but usually do exclude travel to countries listed by Lloyd's of London as "war risks," he says.
War risk surcharges to eliminate the war exclusions now range from 50% to 250% of base premium for high-risk countries.
"In the past, 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 on a regular basis. At the end of the policy year, the carrier would negotiate a new premium based on the amount of travel to war risk zones during the prior year," Ennevor points out.
Now, insurers want information from employers in advance about prospective travel to dangerous areas and employee activities within those regions. This poses new problems for human resource executives, employee benefit managers, risk managers and their agents and brokers, he says.
While risk managers are involved in the purchase of business travel insurance, they rarely are involved in executive travel decisions and are unlikely to know when or where employees travel. Human resource executives may know more about employee travel and relocation, but they generally do not deal with insurers.
In the meantime, employees are asking their employee benefit managers questions about the extent of their coverage and the services that may be available to them in an emergency, and the benefit managers may not have all the information, Ennevor says.
In these situations, some of the burden may fall to an agent or broker to develop a communications plan to keep both the insurer and client management informed about coverage status and benefits, he says.
The good news for producers is that, despite the new underwriting concerns, insurers are still actively competing for business travel insurance business. Ennover says, "The business travel market is doing much better than the property/casualty market. The coverage is very profitable and insurers definitely want to write more. And employers are more interested than ever in improving their coverage as their employees express their concern about their business travel."
Several large insurers continue to market business travel AD&D and supplemental emergency travel assistance programs, including American International Group in New York, Chubb Group in Warren, New Jersey, and Hartford Life Insurance Co. in Hartford, Connecticut, among others.
Chubb is one of the largest and most active marketers of the coverage and offers both business travel AD&D and emergency medical and evacuation services, according to Jay Hamilton, vice president in the Chicago office of Chubb & Son, a division of the Federal Insurance Co.
Hamilton says the AD&D coverage has evolved only slightly in the past five years as the emergency service component has become more popular with employers and a more important component of the benefits. However, he confirms that since the emergence of terrorism as an international threat, and wars in the Middle East, underwriters have become more strict about demanding information regarding employee travel and work activities abroad.
Chubb offers accidental death benefits of up to $2 million and can structure coverage in multiples of salary, but requires a minimum premium of $1,000 and two covered lives. Emergency medical services are provided by MEDEX Assistance Corp. in Towson, Maryland.
AIG is also one of the largest markets for business travel insurance and operates its own emergency medical services division to supplement AD&D coverage.
Lloyd Young, chief underwriting officer of the AIG accident and health division, says rates have been trending upward for the coverage as underwriters become more concerned about the increased risks of international travel.
Capacity has become reduced and reinsurers are more actively interested in underwriting information as well, he says.
"There is indeed much more of an awareness of travel risks around the world, both from insurers and employers who are concerned about the well-being of their employees," he says. "Underwriters want to know where employees are going, what they are doing and if they are going to be active in areas of greater risk."
But the concern is not unique to insurers, he notes. Employers themselves are also gathering more information about employee travel and resulting risk management issues.
However, most agents and brokers probably do not have to become experts in international affairs and military campaigns. Domestic business travel is more common than international travel, notes Susan Peterson, underwriting director at Hartford Life.
Only about 10% of policyholders need war risk coverage, she says, and concerns about terrorism and domestic travel are starting to fade.
UnumProvident in Portland, Maine, does not market traditional business travel AD&D, but does provide one of the broadest packages of emergency travel assistance services in conjunction with long-term disability insurance (LTD), group life insurance and voluntary AD&D that employers sponsor for employees.
Coverage is available to any employee eligible for LTD, group life insurance or voluntary AD&D and costs less than $2 per employee per year. Services include:
* Multilingual contact services available 24/7
* International access to U.S-style medicine from 600,000 Western trained, English-speaking pre-qualified practitioners, medical consultation and evaluation
* Prescription transfer and replacement
* Guaranteed hospital admission
* Emergency medical evacuation
* Critical care monitoring
* Economy round trip transportation for a friend or relative if the policyholder is alone and expects hospitalization for more than seven days
* Transportation of minor children left unattended after an accident or illness
* Return of mortal remains if death occurs during coverage
* Lost luggage assistance
* Return of vehicle
While the coverage does not include payment for medical services, it does not set a cash limit on the value of other services. Coverage also includes immediate family members of an employee--even if they are not traveling with the insured employee.
The coverage, provided by Assist America, a specialty service company, has become especially popular in the past two years, says Jim Vicenzi, director of group life products. About 85% of corporate buyers of long-term disability insurance also provide the emergency travel assistance to employees. *
The author
Len Strazewski has been covering employee benefits issues for more than 20 years and is employee benefits editor of Human Resource Executive magazine. He has an M.A. in Industrial Relations from Loyola University.