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| Expatriate Group Insurance - An Overview |
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David G Tompkins |
Expat Financial / TFG Global Insurance Solutions Ltd.
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info@tfgglobal.com; http://www.expatfinancial.com;
phone 1-604-913-1150
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Sending an employee overseas is a huge investment for an organization – large or small. The cost of failure can run past $500,000 once all the costs are accounted for. Thus, it makes sense to invest in your employee’s safety net – their expatriate group insurance.
When you are sending your employee(s) overseas, the last thing you want to do is invest in a plan that doesn’t pay when you want it to or is difficult to administer.
Some companies operating offshore use a local insurance company, but this can be fraught with inconvenience and danger. In some countries, supervisory bodies or cartel arrangements strictly regulate insurance firms. Other countries have blocked currencies or significant foreign exchange regulations.
Does your employee really want to receive his/her benefits in a shaky currency? This is not a problem if the insurance company is reimbursing health or dental expenses, but currency payments for Life and disability insurance for an expatriate should be made in a stable currency, such as US dollars or UK Pounds.
Also, employees may not be in a particular country long enough to qualify for membership in the local insurance plan or there may a citizenship requirement. Having a pooled offshore plan simplifies reporting, administration and communication because the benefit manager will have one single-source-clearing house and he/she does not have to negotiate with several foreign insurers.
Finally, do you want to deal with a highly stable European or N. American Insurance company or a third world company?
Compounding the preceding issues, statutory requirements imposed on benefit plans vary from country to country and many states have no reciprocal social arrangements or don’t allow the transfer of benefit entitlements abroad. Insurance schemes put in place at the various countries may vary so substantially that it is impossible to conduct product/price comparisons.
All of the above points to the need to pooling or consolidating international insurance polices with one offshore benefit provider that will provide solid, portable and continuous protection. This helps streamline risk management, cut administration and communication costs. Pooled expatriate plans also harnesses savings potential through higher economies of scale by insuring several operations in various countries under one plan. Perhaps most importantly, expatriate plans should offer portability of benefits and bring the quality and security of benefits your employees need. Quality benefits are a reasonable price for expatriates is an imperative. If your employee becomes injured and has to be evacuated or is permanently disabled, they will come to the employer for help. Benefit payments can be made in the local or a set currency such as US dollars.
You don’t have to be big to obtain these plans.
Expatriate plans are available for as few as 3 employees who may be in different countries. Once you have over fifty employees, the plan design can be even more flexible. Also, the larger the number of employees the more important the claims experience becomes part of the renewal premium. With some plans, if the annual international net results are positive, the dividend can be paid to the head office of the multi-national. If the claims results are negative, it can be written off if stop loss protection was agreed, or carried over to a new accounting period. For most small and mid-size offshore companies, their claims experience will not affect their renewal rates.
Most group insurance plans include life and accidental death & dismemberment (AD&D) coverage – usually a multiple of annual salary. Having at least some life and AD&D is required by most insurers. Short and Long Term Disability coverage is recommended. The health insurance portion of the plan usually provides comprehensive in-patient care (hospital cover). It should also provide good out-patient care covering services such as doctors visits, scans, x-rays and drugs. Another vital benefit is the evacuation coverage.
Dental can be added to the plan to cover basic dental services such as cleaning, scaling and extractions. Crowns and Bridges are usually covered at 50%, as is dependent orthodontics. We will discuss the above benefits in more detail in another article.
Choosing an expatriate benefit plan not only depends on price. Other factors include ease of administration. One will want a plan with a 24-hour helpline for employees with queries about their membership or medical coverage. Personalized membership cards and booklets to effectively communicate the plan are also important. Employees are also impressed by a plan that has prompt claims settlement in any currency. Once the employee repatriates back to their home country, the coverage usually ends. Most expatriate plans are not in compliance with State and Federal law such as HIPAA, COBRA, and ERISA – check with your international insurance broker for guidance on this.
Finally, is the expatriate insurer financially stable? How are they at claim time? This is of obvious importance, especially for employees who become sick or disabled and will be receiving payments for many years. International group insurance is a vital part of your remuneration package for your expatriate employees, so making sure that the plan is well received by your employees should be an important part of their success.
David G. Tompkins, B.A., of TFG Global Insurance owns and operates Expat Financial with web sites www.expatfinancial.com and www.tfgglobal.com . David is a Chartered Life Underwriter (CLU). He has worked in the insurance and financial services business since 1991. Expat Financial has individual and group expatriate clients around the world. He may be reached by telephone at (604) 913-1150 or via email at info@tfgglobal.com
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Edwin Cohen
Publisher & Editor
GLOBAL HR NEWS
www.globalhrnews.com
phone: +1.619.297.5700
email: news@globalhrnews.com |
President
COMARKETING PARTNERS
7910 IVANHOE AVENUE
SUITE 432
LA JOLLA
CALIFORNIA
92037
USA |
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