As the old saying goes, accidents happen. But you may be surprised at just how often that rings true for SMEs. In fact, eight in ten Australasian businesses experienced a medical or security incident while their employees were travelling in 2015, according to an International SOS report.
It highlights the importance of the nation’s 2.1 million SMEs adequately protecting their most important asset – their employees – with accident and health (A&H) insurance products.
“Individuals make up a company – without them the company doesn’t exist,” stresses Wayne Anstiss, Underwriting Manager from leading provider Accident & Health International Underwriting.
“And companies often want to provide A&H insurance as an employee benefit to attract and retain staff.”
A&H in a nutshell
When it comes to A&H insurance, there’s a wide range of products available. But the big seller is corporate travel insurance, which covers employees for both international and domestic trips.
Case study 1: WHY YOU SHOULD NEVER BUY INCA-MPLETE TRAVEL INSURANCE
Then you have: journey cover, group and/or personal accident, voluntary workers cover, expatriate medical expenses, sports injury insurance, and so the list goes on.
“A&H insurance is about insuring people and indemnifying them for a myriad of claims that can eventuate,” explains Daniel Kenny, Head of Accident & Health Berkshire Hathaway Specialty Insurance.
“This could range from a lost baggage claim for a corporate traveller, paying weekly benefits for an employee injured under a group personal accident policy, or an expatriate overseas requiring emergency admission to a hospital.”
Globalisation and travel
While annual corporate travel policies can be bought for as little as $700, many businesses still choose to run the gauntlet of risk by relying on sub-par insurance products such as bolt-ons or credit card benefits.
“A common response from SMEs when considering corporate travel insurance is that they do not need this as they have travel insurance as a complimentary benefit on their credit card,” says Kenny.
“The old saying ‘you get what you pay for’ comes into play here. In general, credit card travel insurance has limited coverage, sub-limits and a significant number of general exclusions when compared to a corporate travel policy.”
That said, there’s no shortage of opportunities for brokers as globalisation continues to weave itself into the fabric of everyday business.
For example, up to 70 per cent of respondents in the International SOS survey indicated they were looking to increase their corporate travel.
One benefit a good corporate travel policy provides over your typical leisure travel insurance policy is that you can be covered for acts of terrorism or war.
That’s important, given 14 per cent of respondents reported employees who travelled abroad in 2015 considered terrorism a threat to their personal safety.
“The threat posed by terrorism is definitely an issue for the business traveller,” adds Anstiss.
Opportunities and trends
Nicole Yates, XL Catlin Australia’s Head of Accident & Health, says a recent survey by a large Australian cluster group showed a staggering 60 per cent of SME clients did not have a corporate travel insurance policy.
But it’s not just corporate travel policies that hold potential for brokers. Recent legislative changes in some states and territories mean workers are no longer covered travelling to and from work. This presents a huge opportunity for brokers to sell ‘journey cover’.
With SMEs able to purchase the product for about $700 to $750 a year, it’s gaining traction in NSW, Victoria, WA and SA, adds Kenny.
“Previously, it used to be covered in most states under workers compensation insurance, but workers compensation providers [in the aforementioned states] have carved it out,” he explains.
Adds Anstiss: “Some employees were kind of out on their own when travelling to and from work. But now there’s a real opportunity for them to be covered by journey insurance.”
Most SMEs seem to be aware of their A&H risks, it’s just that they’re often too tied up with other priorities to give them the attention they deserve. This is where brokers can play a big role – providing time-poor SME owners with solutions.
Companies often want to provide A&H insurance as an employee benefit to attract and retain staff.
“While SME clients are becoming more aware of how a relevant A&H solution can support their business, often other more demanding business priorities take them away from obtaining protection against exposure to these risks,” explains Yates.
And while corporate overseas travellers are more informed and prepared than ever before – no small thanks to DFAT’s website smartraveller.gov.au – brokers can play a key role in making sure SME owners are aware of the gaps that they may have in existing policies, such as the aforementioned complimentary credit card insurance and bolt-ons.
“Standalone A&H policies are tailored to the needs of the client,” explains Yates.
“Sometimes this is not the case where the cover is provided as an extension with minimal additional premium or at no cost at all.”
When it comes to evaluating risk in corporate travel, Kenny says most insurers follow DFAT’s country advice levels closely.
“The information provided is comprehensive, relevant and accurate. It really is a one-stop-shop for security, political and health advice,” Kenny says.
That’s not to say insurers aren’t thrown the odd curveball every now and then.
“While we have access to historical data which shows patterns and reveal a level of consistency, we cannot predict the timing of a natural disaster or an act of terrorism,” says Yates.
But by and large, pricing risk for A&H insurance products for the SME market is a fairly straightforward affair for underwriters. And like most underwriting markets, they’re embracing the rapidly evolving global landscape.
“In today’s market, it’s pretty easy to identify an up-and-coming risk and put it in a pricing model,” says Anstiss.
“All insurers are looking for new opportunities. We’re all very keen to come up with new ideas and new benefits to add on as we see things change out there in the world.”
According to Yates, the single largest threat to any SME is under-appreciating the potential cost of having an employee sick or injured – wherever that may happen.
“[Whether that’s] travelling domestically or overseas on behalf of the business, travelling to or from work on a normal day or even outside working hours,” Yates says.
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She adds that some business owners mistakenly think that if it happens outside their premises then it’s outside their responsibility.
“While they are correct in that it may not be their legal responsibility, it could be considered a moral one, or more critically it could have a huge impact on their business if uninsured.”
And if an employee becomes sick or injured while on an overseas journey then that could cost dearly.
“I have seen claims where the bill for medical treatment has exceeded a million dollars,” Yates points out.
“These types of costs do not discriminate by the size of your business. While a large multinational corporation could absorb such without fear of collapse, an SME could become insolvent.”
Value for SMEs
Kenny says one of the great selling points of A&H insurance is that SMEs can have the exact same policy coverage as a large corporation – for a fraction of the price.
“The products they’re recommending their SME client take up are exactly the same as large ASX-listed companies,” says Kenny.
A&H insurance is about insuring people and indemnifying them for a myriad of claims that can eventuate.
“The only major difference is the sums insured can be higher for large companies to reflect their executives and employees’ salaries. Other than that, the benefits and exclusions are not overly dissimilar.”
And if you’re really having trouble pushing a product, Kenny suggests bringing it back to an employer’s duty of care following the recent harmonisation of the work health and safety laws by each state and territory in Australia.
“We know employees are working a lot harder than they were a few years ago – and longer hours,” he says.
“And if you want to be an employer of choice in order to reward and retain employees then you’ve got to be providing employee benefits such as journey insurance to make sure they will be covered in the event of an unfortunate situation.”