Avoid Disaster Overseas With a Few Simple Steps

Too many franchise companies ignore hidden risks when traveling abroad

By Jeannie Hylant and Tammy Green

American franchise companies are increasingly looking abroad to grow their businesses as technological advances continue to enhance logistics and communications. There has never been a greater time to expand globally, but the hidden risks inherent with even an exploratory visit overseas can be significant, and many executives simply take those risks for granted. Case in point, an employee becomes ill overseas and their U.S. health insurance does not cover medical care outside of the United States. When a Medevac air ambulance is needed, it will cost well over $100,000 — out of pocket!  And that doesn’t even consider other issues such as car accidents, workers’ compensation claims or kidnappings. Many companies think it’s pretty easy. You send a senior vice president of development (and their staff) overseas for an extended visit to several countries. They study new markets, meet potential partners and consider possible sites. What’s the harm, right? Ask These Questions Before You Leave The problem is that many risks are never identified, analyzed or even taken seriously until a problem occurs. At that point, the cost and operational impact can be devastating. Many business owners believe that their domestic insurance policies cover international incidents, or worse yet, many think they don’t need to spend the money because chances of mishap are slim. In reality, neither are true. The majority of U.S. insurance policies do not cover these types of international claims. For an employee injured overseas, the repatriation expense can be enormous depending on the type of unique services needed to return an employee back to the United States. Below are some questions all international business travelers need to ask before they leave:

• How will travel be arranged?
• Is there a language barrier?
• How well do they know the political and legal climate?
• What will employees do in case of emergency?
• How good (or accessible) is the health care system?
• How will hospital bills be paid?
• Is there a contingency plan?

Advanced Planning Nothing good happens without advanced planning. Whether it’s Russia, Iraq, Mexico, India, China or Brazil, it’s critical to understand your destinations, the local business practices and their cultures. Do your homework. When the due diligence is complete, develop an emergency plan in case something does happen. To avoid or mitigate a significant loss, it is critical that employees establish risk management policies and procedures and understand exactly what to do in case of an incident. A comprehensive global insurance program will respond not only to an injury or accident, but it also offers crisis management services, which can be essential in time of need. Plus, it provides added confidence for those traveling abroad. A Foreign Package, as it’s called, or an Exporter’s Policy, provides affordable comprehensive coverage. Rates are based on the number of travelers, amount of travel, length of stays and countries visited. For employees traveling internationally on behalf of a company, the policy should be included in their insurance program. Below are some key benefits and insurance coverages included in a Foreign Package policy:

• Property Insurance — unscheduled property such as laptop computers or trade show equipment.
• General Liability — broad protection for foreign occurrences.
• Foreign Voluntary Workers’ Compensation – primary protection for U.S. employees traveling outside the United States for business purposes, including 24/7 global medical assistance and repatriation costs. This also extends to immediate family traveling with employees.
• Commercial Auto Liability — excess for hired/non-owned and leased autos.  You must purchase primary coverage from a rental company.
• International Blanket Accident — 24-hour accident insurance outside the United States.
• Kidnap, Ransom & Extortion — negotiation services and ransom money.
• Political Risk – types of coverage can include: political violence, expropriation, nationalization, currency inconvertibility and export credit.
• Access to Traveler Assistance Services — medical services, repatriation, translators, claim coordinator, travel assistance and more.
• Crisis Management Services
  • Emergency contact service and translations services,
  • Access to a crisis management firm or public relations firm,
  • Emergency transport expenses,
  • Emergency psychology expenses, and
  • Emergency security and political evacuation expenses.

Comprehensive Global Insurance There are hidden risks associated with all activity when a company expands internationally. Purchasing insurance overseas can be complicated, and it is difficult to integrate foreign coverage into a domestic plan. Insurance regulations and laws vary greatly by country, and there are critical compliance, tax and legal considerations required to avoid fines, penalties or even jail. Global expansion is becoming a large priority for company leadership not only in sending employees abroad, selling and purchasing products, but also in establishing owned operations. Franchisors who are concerned about the U.S. economy see great opportunity for revenue growth in overseas markets.  As franchisors begin setting up businesses in emerging markets, it is also critical to make sure they are protecting their local operations, employees and are in compliance with local compulsory insurance requirements.  This can be achieved by putting in place a comprehensive global insurance program.  We have found the most efficient way to achieve this is having your domestic U.S. broker partner with a broker network, such as the Worldwide Broker Network.  The WBN has global brokers that are located in countries around the world and understand the local business, legal and insurance environment. This makes the insurance and risk management process much more cost effective, saves time and allows you to focus on the core activities of your business. Expanding a franchise overseas can be rewarding and highly profitable, but be sure to consult a knowledgeable insurance agent with specific expertise in foreign insurance to avoid costly missteps along the way.

Jeannie Hylant is executive vice president and franchise practice leader and Tammy Green is client service executive, global risk practice of the Hylant Group.

A Foreign Package, as it’s called, or an Exporter’s Policy, provides affordable comprehensive coverage.