The accidental policy

Accidents do happen and when they happen in small business they can do far greater proportional damage.

For the two million or so small-to-medium enterprises (SME) contributing 57% to national GDP and employing at least 70% of Australians, insurance cover for accident and health should be a first-order priority, yet it’s often neglected, particularly when it comes to travel and engaging volunteers.

Business travel and volunteer accident insurance are not measured as stand-alone products within the Australian market so it is difficult to estimate their size. Kevin Kinsella, General Manager at A & H International, an underwriting agency that has specialised in the area since the late 1990s, says it was lumped in with marine classes many years ago and balloons greatly if leisure travel insurance is included, but his SME target market is now worth about $200 million.

Every SME should have an annual corporate travel policy, yet many choose to rely on complimentary insurance from their company credit cards.

“Every SME should have an annual corporate travel policy and ability to provide volunteer accident cover, yet many choose to rely on complimentary insurance from their company credit cards,” Kinsella says. “A good policy should have everyone covered 100km from home, with broader cover nationally or interstate that includes loss of excess on car hire. Many credit card policies have exclusions on that or pre-existing ailments, leisure activities such as skiing, or leisure travel for family members accompanying the client.”

Andrew Nisbet, ACE Group’s Head of Accident and Health for Australia and NZ, agrees and notes many SMEs can rely on single-trip leisure travel policies as well as credit cards for travel cover.

“Accidental death and disability cover available through a leisure travel policy is often limited to between $25,000 and $50,000, whereas the same cover available through a business travel policy would typically attract a payment of at least $250,000. As the policyholder, this amount would be paid direct to the company allowing them to use discretion when dispersing the benefit to the employee,” Nisbet toldIRP.

“Potentially, an SME business could provide a certain level of compensation to the employee’s family along with retaining finances to cover unforeseen costs such as recruiting alternative staff.”

Trends and changes

Although various workers compensation schemes operate throughout Australia’s states and territories [see IRP June/July 2013, pages 70–75], they do not cover volunteers — increasing in number as retirees donate their time to causes — nor commuting to work beyond a certain distance. However, journey insurance, which includes commuting and lunchtime and recess activities, is becoming more topical, at least in NSW, now that it has been taken out of WorkCover.

The emergence of mobile technology is allowing insurers to provide added benefits to business travellers. Apps are now available that provide travellers with useful services like pre-trip planning and itinerary management, while Zurich has launched a new online Business Travel product linked with Ebix’s Sunrise Exchange.

Accidental death and disability cover available through a leisure travel policy is often limited to $50,000, whereas a business travel policy would typically attract a payment of at least $250,000.

Peter Jones, Head Underwriting SME at Zurich, told IRP that this helps brokers get access to real-time travel information, have full control over renewal and links to their own management system. Jones adds that the annual policy covers leisure travel of senior managers’ spouses, dependent or independent children and nominated employees.

Voluntary service, neglected risk

Charities, family businesses and not-for-profit organisations form a substantial part of the Australian SME segment where volunteer work is their lifeblood, yet there is a lack of awareness of the risks and the importance of insuring voluntary workers.

“Typically the A & H insurance component is based on salary or recorded working hours, which is a problem when it comes to factoring in risk management for volunteers. Often they don’t receive the full training and inductions afforded to permanent paid employees,” says Suzie White, Underwriter for Beazley Australia’s Life Accident and Health division.

“In addition, many workplaces assume that workers comp will cover voluntary workers when this may not be the case. However, it’s written into most states’ workplace health and safety legislation that volunteers have the same rights as a employees, including the right to lodge claims for bullying, harassment, injury, etc.”

Voluntary workers’ insurance therefore helps religious, educational, charitable or benevolent organisations meet their duty of care and can cover accidental death and disability, loss of income, emergency home help and capped medical expenses not covered by Medicare.

“Brokers and some of their SME clients can forget that many volunteers have other income streams or full-time jobs, so they need to ensure they have relevant covers such as for income protection,” Ms White says.

The underwriting process for volunteer insurance is not strenuous for relatively cheap cover, she adds.

An eruption of expenses

An Australian working for a multinational attended their annual conference in Germany, then planned to fly on to London to negotiate an important contract. Just as he was about to leave, all flights were cancelled due to the ash cloud from Iceland’s volcanic eruption.

After some days it became clear that flights could be grounded for weeks. He hired a car to drive 1075km to London at a cost of AUD$5800, then had to wait another three days before he could fly home.

After reimbursements from the airline, the unforeseen event cost his company an estimated additional $AUD10,000. A good travel policy would provide 24-hour assistance and cover any additional costs.

— Zurich

Family ties

A university student on holiday in Europe was seriously injured in a motor vehicle accident, airlifted to hospital and admitted to intensive care where she underwent emergency surgery. Her family travelled from Australia to be by her side but her injuries proved fatal.

The girl’s father was the CEO of a small business with a business travel policy that covered the family of senior management or business owners for leisure travel when accompanying them on business trips. This particular policy was also endorsed to cover leisure travel independent of the director. The emergency and medical expenses, repatriation of remains, accidental death benefit and family travel expenses to be with the claimant were therefore covered.

— ACE Insurance Ltd