According to the 2017 Benefits Survey for Internationally Mobile Employees, more than three quarters of the companies responding stated they offer life cover to their international assignees. However, of these, less than half are covered on international plans. In other words, close to 75% of companies do not provide international life cover to their long-term assignees, and almost 70% of companies do not provide international cover to their global nomads.
The majority are therefore using local cover either on a host or home basis, possibly unaware that this can pose complications in terms of compliance and appropriateness and effectiveness for a mobile workforce. Here are a number of things to consider when considering life insurance policy providers.
Is the insurer comfortable with the overseas exposure?
Local (domestic) insurers are increasingly reluctant to cover overseas employees, especially in locations that are less developed. International insurers have premium calculators that take into account morbidity and mortality rates for both international assignee populations and their location.
Insurers often have rules on keeping someone on local cover that you may wish to check. For example, they must be employed by the local or home company, remunerated there, and possibly pay tax. For short-term assignments, this is usually the case. However, long-term assignees are often employed and paid by their host company.
Even if an insurer explicitly accepts the overseas risk, this does not mean that they are an appropriate and compliant solution. These questions need to be considered.
- Local regulations – is the domestic insurer authorised to conduct business in the location of the assignee? A growing number of countries only permit insurers registered in that country to provide insurance to local residents including assignees.
- Money movement – can money such as claims payment be paid into the country? For example, where is the beneficiary for a life payment? China and Russia have restrictions on money paid in and out of the country.
- Could there be tax implications on benefit payment if it is made from overseas?
- Is the insurer actually capable of paying benefit payment out of country? Do they have the mechanism and processes, or will they pay to the company or, in the UK, to a trust that will then need to send the money overseas?
- Finally, claims handling and investigation is becoming more specialized, requiring multilingual processing and investigation. Can the domestic insurer process documentation such as death certificates and accident reports in Arabic or Mandarin?
Also of note is how a company pays premiums. If there is local internal accounting, it may not be possible for money to be transferred between local companies. For example, if a host country is responsible for the cost of benefits to an inbound assignee, they may look to claim this as a tax expense locally. When a premium is transferred locally, this is unlikely to be possible.
Finally, let us look at the individual members themselves. By moving from one local policy to another, is there a risk that cover will be dropped or that underwriting may exclude pre-existing conditions? HR and global mobility teams should be aware of the potential headaches for the company.
If you have queries or would like assistance on an opportunity, please do not hesitate to contact Paul Andrews.