By Michael Braun and Jeremias Lauterbach, Mercer
We outlined six challenges in connection with international project assignments in part 1 of this article. To extend the overview of issues to be considered when administering international project assignments, we will now dive deeper into another obligation for companies and their global mobility managers: the duty of care.
Challenge 7: Duty of Care
Companies are obliged to ensure the employees’ safety, health, and wellbeing abroad. Appropriate location information, safety briefings, security trainings, and health insurance need to be provided when transferring project assignees internationally, especially if they are transferred to hardship locations. Mobility managers should consider synergies when setting up such health and safety programs. Travel insurance, for example, can be offered to both business travelers and international assignees staying abroad for less than a certain amount of days (usually 90 days). Furthermore, a group insurance for the remaining assignees ensures a cost efficient funding. You also profit from security and assistance programs offered by many health insurers in addition to their core insurance service. And did you know that security providers usually extend their service beyond the medical service? They often provide information about the security situation in a given location and make tracking solutions as well as security updates available. Some providers even offer practical assistance, for example, in case of an evacuation.
The mobility of employees in global business life has become "borderless" in many respects. In order to take this development into account, the forms of insurance are constantly changing and expanding. The increasing number of projects, for example, which occur with a different frequency depending on the industry, represents a special challenge insurance-wise. The assignment period, the home country and the desired scope of coverage play a major role in the choice of an insurance solution. In the following, we will examine health, disability and death cover options available for international project assignments and other types of international assignments.
In order to minimize complexity, we focus on business travel assistance and international private medical insurance/expat health insurance for long-term assignees.
Business Travel Assistance
International insurers offering business travel assistance use their existing global networks to master the challenges of global coverage. Compared to traditional travel health insurance, business travel assistance offers a number of advantages. Employers can, for example, extend the number of covered travel days to up to 1 year and significantly increase the number of potential benefits to include such as the following:
- Flat amounts are paid in the case of an accident and for surviving dependents. They are regarded as immediate aid for direct costs incurring and are intended to pre-empt the company accident insurance which offers higher benefits but also requires longer examination processes.
- Liability insurance is necessary in certain countries as an obligatory requirement for obtaining a visa.
- Compensation for loss of luggage and/or travel delays is an additional goodie for travelers. If these aspects are covered by insurance, any claims will be addressed directly to the insurance company – reducing the administration effort in your company.
These additional benefits are tailored to the specific needs of business travelers and international project assignees. However, the main part of business travel assistance and its risk premium remains the medical emergency including some assistance services. Existing assistance agreements have to be harmonized with a business travel assistance and transparently communicated. Processes, reimbursement practices, cost management, and the collection of recourse claims have to be clearly defined to effectively reduce administration.
The payment of benefits within business travel assistance is linked to so-called "unforeseeable" events. This excludes any pre-existing condition or the reimbursement of regular medication. Individual registration is not required for such group plan. Though unusual in international project assignments, accompanying family members can also be covered by business travel assistance.
Medical Solution for Long-term Project Assignments
If an international project assignments is planned for a longer period of time or improved coverage is required for individual reasons, we recommend using an existing expat health plan or obtaining an individual solution. Precautions for safety, health, and integrity are the hallmarks of a company, especially when working on projects in hardship countries. A number of globally active and specialized international providers are available. The benefits of a robust expat health plan are comparable to those of a comprehensive global private health insurance plan.
Use the criteria described in this article to choose the most appropriate insurance solution and a provider offering the period of coverage as needed. Ideally, the level of coverage provided for an international assignment or an international project assignment is outlined in the company's policy guidelines.
Disability and Death Cover
Though medical insurance is of major importance for international assignees in most companies, disability and death cover should also be considered.
For employees who are no longer covered by their home-country’s social security system, there is a risk of gaps in the benefits coverage with regards to disability or death – that is, securing an adequate long-term income for assignees in case of permanent disability and for their families in case of death. The potential gap is even bigger if supplemental home country plans are simultaneously discontinued.
Even if employees join the host country’s social security system, you should note that these systems often include waiting periods for death and disability coverage. If such waiting periods do not exist, for example, due to European agreements, be aware that the benefit levels can still significantly differ to what has already been accrued in the home country. Employers need to identify and close gaps, either through local coverage or supplemental global risk coverage plans.
Gaps also exist for so-called ‘global nomads’, those assignees going on numerous consecutive assignments. Global nomads are facing benefits fragmentation at its worst, especially gaps in state and supplemental pension benefits due to not being enrolled in local plans or not reaching local vesting conditions. In addition, those employees typically do not have access to suitable long-term financing vehicles that allow for building up adequate private retirement savings with the flexibility to contribute from multiple locations. Companies with a larger global nomad population can use offshore International Pension Plan arrangements to close this gap. As the market has developed significantly over the last decade, streamlined products are available today also for smaller groups of assignees and with limited required administration.
These are demanding and challenging times for mobility experts. The number of international project assignments is increasing and calls for special arrangements. However, these are also great times to demonstrate your expertise. To make things easier, look at what you already have: Some solutions are already available for internationally mobile employees in your company and can be used for international project assignments as well. In the long run, mobility managers should focus on finding and implementing appropriate international project assignment solutions to ease the initial pain mainly caused by the additional workload. As is often true in global mobility, there is no-one-size-fits-all approach, but many options to tailor your (almost) perfect one.