As a marketing executive for cruise and tour companies most of my career, I thought that managing risk on the job was a relatively benign duty.
Risks usually focused on ROI of a direct mail campaign, or going out with empty cruise ship cabins and taking appropriate actions to mitigate that possibility. Sure, there was some risk in making sure we had talented employees or suppliers and enough of them to get the work done to make our sales forecast. But you would be hard pressed to say these sorts of risks were career or life threatening.
Recently, while serving as the director of the industry association IAATO, I was introduced to other types of risks and risk management tools. One of them – Foreign Voluntary Workers Compensation Insurance – caught my attention, and I think it’s worth writing about. I’d like to hear your comments on this issue, too.
What's Covered and What's Not in Domestic Workers Compensation
Most employees are familiar with Workers Compensation (WCI), a type of insurance carried by US and Canadian employers that covers work-related accidents including medical benefits and, perhaps just as important, wage continuation. This means that the coverage includes a percentage of your salary during a period of incapacitation or rehabilitation therapy when you can’t work. This insurance is mandatory for companies and the terms vary from state-to-state, province-to-province.
As an employee who spent most of my hours behind a desk, I never thought much about it, figuring the insurance was primarily intended for factory or construction workers who were more likely to suffer a debilitating accident on the job. But with cruise and tour operators sending staff overseas in greater numbers and to ever-more-remote destination the past few decades, workers compensation insurance has taken on a new dimension.
When workers have assignments in foreign countries, they face risks on the job that they might not be subject to while working at home. This might include an auto or chartered aircraft accident, a mishap caused by a local supplier’s equipment, or even an endemic disease such as malaria or dengue fever.
While US domestic workers compensation policies may provide some medical and wage benefits for these traveling employees, depending on the state or province, that insurance is rather limited in all probability. The terms for foreign incidents are generally not defined in domestic policies, don’t provide around-the-clock coverage as needed for business travelers, and don’t cover endemic diseases. And while emergency medical treatment may be covered, the cost of evacuation and repatriation likely wouldn’t be included in a basic domestic WCI policy.
I expect that most reputable cruise and tour operators carry adequate emergency medical, evacuation and repatriation insurance to get injured or sick employees home from afar. Similarly, most likely carry foreign general liability and foreign auto liability insurance, should an employee cause an accident or some other sort of damage for which they would be deemed liable by local authorities, not an unheard-of situation. Some might even carry insurance covering ransom or kidnapping of employees working overseas.
However, it is the longer-term ramifications – i.e. rehabilitation and wage continuation – that could be necessitated by a serious overseas accident or travel-related illness that makes these foreign voluntary packages worth a close look.
Foreign Voluntary Workers Compensation Insurance Can Fill in the Gaps
Jim Grace, president and CEO of InsureMyTrip.com, says, “Foreign voluntary workers compensation insurance is important for employees working internationally, but it is rarely afforded by small and mid-size employers. We’ve only seen large multinational companies make the investment.”
According to Mandy Smith, vice president at RCM&D, a large insurance advisory firm, this sort of supplemental coverage benefits the employer in many ways: it greatly reduces the company’s exposure in a general liability claim for wage continuation, and can cover a number of non-specific traveling employees based on the destination, frequency and duration of overseas travel. Robust emergency medical and repatriation coverage – even from remote locations – can also be packaged in these policies.
She also pointed out that accidents or illnesses occurring to independent contractors or subcontractors is the responsibility of the company that directs and pays them for that foreign work assignment, so the “he’s-not-my-employee” rationale isn’t an effective legal defense.
Most travel companies I know – even if they weren’t providing such coverage – wouldn’t think twice about carrying an injured or ill employee’s rehabilitation and salary for several months or even longer. But who in the company wants to decide at what point the salary should be reduced or terminated? Even with the best of intentions, it would be a balancing act that would be hard to pull off in order to avoid potential litigation.
S.F. Ting, an insurance expert long associated with expedition cruise companies, agrees with the others as to the value of foreign voluntary workers compensation insurance, in spite of the premium. He points to the potential for litigation as the primary reason. According to Ting, some cruise operators have such coverage in place as part of a vessel’s P&I (protection and indemnity) insurance through a P&I club, a cooperative insurance association that provides coverage for its maritime members.
I’m curious to hear the viewpoints of cruise and tour operators on foreign voluntary workers compensation insurance, and whether it is coverage they currently have in place or are considering. My sense is that this issue remains under the radar for quite a few small and mid-size travel companies. What do you think?