Learn How the Covid-19 Pandemic Will Negatively Impact your Company’s Risk Profile Abroad
Our parent firm works with clients with expatriates employees who are posted around the world. Some of these clients are in very risky countries or regions. COVID-19 has introduced some potentially increased risks for companies and organizations with expatriate and local populations posted around the globe. Most companies have been impacted by lockdown and have suspended nearly all business travel.
COVID-19 & Special Risk Coverage
The slowdown in the economy as a result of the COVID-19 pandemic and in international postings may give companies the opportunity to examine the application of the current special risk and kidnap insurance policies to “domestic” security risks such as threats and extortions (including cyber extortion).
When governments announce an end to their respective lockdowns, we anticipate many firms will be keen to send people out to emerging markets. Most companies will want to get back to ‘business as usual’, working on an existing business or pitching for new contracts/projects. This will present potential issues for employee safety – especially if insurance programs are overlooked.
Destination Assessments for COVID
It is important to complete a COVID destination assessment of the countries your expatriate and local employees are based in now or will be residing in. Here are some common factors to consider:
- COVID-19 impact
- Pre-travel approval – should you travel to that country and is it essential?
- Country risk ratings
- Public health status in that country
- Travel Restrictions
- Transporation considerations – internal and external
- Societal restrictions
- Emerging security risks
- Financial impact
- Political instability from COVID-19
- Protests and public unrest from COVID-19
SCR and TFG Global
TFG Global Insurance Solutions Ltd. owns and operates Expat Financial – We work with Special Contingency Risks (SCR), which has extensive experience in assisting clients with special risk requirements and has one-third of the market. Their 24/7 insurance crisis response center is one of a kind resource for clients. Additionally, it provides vital advice and assistance in an insured crisis.
They have provided us with risk factors that international employers should consider during the COVID-19 Pandemic. The impact of the COVID-19 pandemic on our markets is still uncertain. The only real precedent we can draw on is the impact of 9/11 where insurers were forced to ‘ration’ capacity across a number of lines, including Special Risks. This meant that some potential buyers had to wait to find the right coverage and pay significantly more than they would have done before.
The COVID-19 Pandemic has Increased Risks for International Employers
The pandemic itself could increase the risks covered by the policy due to the following factors:
- A surge in global unemployment tends to result in rising crime rates. Particularly, violent crime including kidnappings, assaults and home invasions.
- The drop in oil price contributes to unemployment, squeeze government budgets, and under-investment in affected regions.
- Difficulties in obtaining loans.
- Increase in kidnap and ransom threats & events.
- Dissatisfaction with government performance during the pandemic and associated civil unrest.
- Increased sympathy for terrorist / militant groups from marginalized communities neglected by the central government during the crisis.
- Hostility towards alleged ‘carriers’, non-profits, and international organizations. We have already seen this in Latin America and Africa where local communities become hostile to American, European, and Chinese visitors.
- Increase in cybercrime.
- Overstretched law enforcement and military.
- Increase in corruption.
- Before COVID-19 the Special Risks market was already hardening due to the impact of five years of sizeable ransomware / cyber extortion losses. Insurers have nearly finished the process of restricting / retracting coverage for this risk although a limited number of insurers still offer it. Outside of this SCR has recorded more incident notifications and claims in the first three months of 2020 than in any other year of their 30-year history.
SCR’s message to clients and prospects is to consider buying a Special Risks policy within the next few months while prices remain (fairly) stable, cyber extortion coverage is still an option, and insurers are not rationing capacity or imposing strict conditions due to a surge in claims. Moreover, clients have 60 days from policy inception to settle their premiums (providing a bit more flexibility budget-wise) and SCR is taking a combative approach to insurers’ attempts to impose strict payment deadlines and COVID-19 exclusions. Clients can take up long-term agreements that lock-in their premium rate for three years and secure premium reductions.
What is the Next Step?
If your firm would like to talk to SCR and TFG Global on your global risk coverage and requirements during the COVID-19 pandemic, please contact us to learn more. Take this crisis as an opportunity to review your current coverage. More often than not, our associates find gaps that they were not aware of. SCR has 1/3 of the global special risk markets and their own 24/7 insurance crisis center – TFG Global is very proud to offer this to potential clients.