With extremist factions at work in various parts of the world, the threat to doing business on a global scale seems at an all-time high. Insurance is a key consideration for companies doing business in high-risk areas
With the recent Islamic State-inspired atrocities in countries such as France and Germany, or militants such as Boko Haram in Nigeria, Abu Sayyaf in the Phillippines, or any number of extremist factions at work in various parts of the world, the threat to doing business on a global scale seems at an all-time high.
Recent headlines have certainly resonated within the business community. A recent McKinsey & Co. report revealed that 84 per cent of 1,316 executives surveyed, the largest share in the survey's history, are of the opinion that geopolitical instability will have an important or very important impact on global business, up from 61 per cent just three years ago.
On top of that, almost half of them (49 per cent) believe this trend to be very important, doubling the 23 per cent who held that view in 2013.
As such, Canadian companies that employ people overseas need to be fully cognizant of the risks in the countries they operate in and take extra precautions.
David Tompkins (below), president of TFG Global Insurance Solutions Ltd. in Vancouver, says that, though he has seen a slight uptick in quote requests, he is not sure that Canadian employers take the risks seriously enough.
(TFG Global Insurance Solutions)
He adds that most Canadian plans that include travel medical coverage will exclude terrorism or war-related claims, and too many employers in Canada who send people overseas are relying on these group travel policies when they should be using a business travel plan that covers those risks.
"The levels of terrorism in countries where you should expect it, along with where you shouldn't expect it [such as France or Belgium], should make employers think more about having terrorism included in their expat and business travel policies," he says.
Another consideration: While some expat employers may not consider consultants who work for them overseas to be employees technically, Mr. Tompkins cautions that if something happens "they will probably be viewed as employees."
Mr. Tompkins gives examples of some situations that TFG has worked on with companies, especially those with employees working in high-risk countries such as Iraq, Afghanistan and Somalia.
In one situation, Mr. Tompkins says he had a client operating in Iraq where a number of employees were being transported by a security company when their convoy was hit by a terrorist IED, or improvised explosive device. The explosion sent a projectile through both sides of the armoured truck, killing some employees instantly. TFG was then contacted and worked with an assistance company to repatriate the bodies.
In another, a Canadian company operating in Afghanistan employed an unarmed security guard in Kabul. While he was in a grocery store, a gunman burst in and started shooting before blowing himself up, killing a number of bystanders. The security guard was injured by shrapnel, received treatment and TFG arranged to have it taken care of by its underwriter for high-risk zones, Lloyd's of London.
"Like any client in a high-risk zone, we made sure that passive war and terrorism were covered," Mr. Tompkins says. "Passive, meaning one doesn't actively take part in terrorism."
In that vein, he had to turn down one request for coverage from someone who wanted to go and fight Islamic State with the Kurds a year or so ago.
"That wasn't something we could accommodate; you're kind of an active participant," he says. "Obviously you're not a terrorist, but in that sort of situation it wasn't something we could do."
Kidnapping is another key consideration for employees operating in certain spots, though Mr. Tompkins says he doesn't think it is that prominent, and that a lot of companies go without coverage for kidnapping.
Mark Woodall, president and chief executive officer of Special Risk Insurance Managers in Langley, B.C., cautions that, before launching into a business venture in a high-risk country, companies should consider whether there is a risk to the long-term health of the company.
"Will it allow your business to continue?" Mr. Woodall says. "If you're dealing with contracts with foreign companies, is it going to allow you to fulfill your agreement?"
Beyond geopolitical risk, companies should also consider simple health issues of employees when operating outside developed-nation health services. Though getting health insurance in another country can be complicated and expensive, it is important, and additionally, can be a key recruitment and retention tool, Mr. Woodall says.
He tells the story of a client in Africa who broke his back. While the medical provider there wanted to perform surgery there and then, Mr. Woodall says he consulted with the client and ended up flying him back to Canada on a private jet with a nurse.
It's that sort of coverage that can make all the difference to how a company is perceived, both by its employees and those outside the organization.
As Mr. Tompkins says: "Any expat employer has a moral and fiduciary responsibility for the employees it employs overseas."