Expatriate Employees in a World of Risk

Insurance packages specifically designed for expatriates - once an after-thought for busy corporate administrators - are becoming a key feature in competitive expatriate compensation packages. Estimates indicate that there are approximately 18 million working expatriates worldwide. Add their families and dependants, and that number swells to approximately 30 million. Canada is one of the primary exporters of expatriate talent, along with the U.K., France and the U.S. Expatriate workers are valued employees: higher-than-average income earners with promising futures, on temporary assignments that average three to five years. These employees eventually amass high levels of disposable income, largely because of generous financial incentives and expense coverage provided by employers. Typically, they earn more than their counterparts in the home country even before adding the additional expense items associated with the typical expatriate assignment.

FOREIGN STRESS

While an expatriate assignment may represent a lucrative career advancement opportunity, it is hardly without its challenges. While companies make significant investments in order to offset the financial burden of uprooting a worker and his/her family to another country, the stress and anxiety associated with relocating country-to-country in an unstable world can take a significant toll. In fact, fewer than 50% of employees remain with their companies following repatriation, with assignment failure, including family concerns and low satisfaction levels among the expatriate's partner or "trailing spouse," being primary causes.

To compensate for potential hardships, companies provide their expatriate employees with generous packages that include home-leave travel allowance, cost of living adjustments, tax equalization payments, schooling and housing allowances and a "hardship allowance" if the post requires location in a "developing" country. Such high attrition rates, left unmanaged, constitute intolerable financial and strategic risk exposures for these international companies. As for the employee, the challenges of working in a foreign country are significant. These challenges can be exacerbated by the difficulty of securing vital services - such as doctors and dentists - for their families, and dealing with and understanding the complexity of insurance coverage that their employers provide.

For the corporate human resources and risk manager, the situation is no less complex. Specialty products such as expatriate insurance can be expensive, particularly because they are normally offered on a "one-off" basis even for large multi-national corporations. Delivery of necessary products and services has traditionally been fragmented and often inadequately supported. Some insurance companies offer international moving and personal insurance only. Others offer international travel. Others still offer international health and medical insurance, as well as political risk insurance. Expatriate employees have a need for additional, broader coverage that simply does not apply to "in-country employees" - such as vacant property coverage for the homes they leave. Recent developments on the global stage have merited further consideration of kidnap and ransom insurance with specific respect to expatriate assignments.

EXPATRIATE COVER

Covering risk exposures relative to the expatriate employee often falls to the corporate human resources and risk management departments, which are not typically designed to support such a diverse and demanding population. One very workable solution is to aggregate and outsource the needed services - buying a bundle of insurance coverage and value-added services through a provider that specializes in servicing expatriate workers. This streamlined approach eliminates many of the administrative functions that are incredibly time consuming and highly resource inefficient for HR and risk professionals, enabling them to focus within their areas of expertise while expatriates receive more informed and comprehensive service through specialized providers.

In particular, Internet technology has created new opportunities for companies, working with one-source providers, to aggregate expatriate-specific insurance products, relocation services and online information on web-based platforms that allow the expatriate easy access to necessary services and information - anywhere in the world - and reduce the burden on corporate administrators.

Though these opportunities exist, few companies are currently taking advantage of them. According to a recent National Foreign Trade Council survey, 91% of companies surveyed have intranet sites, yet 42% have no section designated for the expatriate. The Internet also creates the opportunity to deliver information to expatriates that may be only tangentially related to benefits concerns, but that supports a whole host of personal and family needs. Some companies, for example, are utilizing their Internet platforms to inform expatriates on such topics as:

- security information about one's particular country destination;

- advance information about cultural affiliation groups in-country;

- up-to-date news on business and politico-economic events for new locale;

- easy to access language translation guides and where to locate language instructors; and

- resources for household needs such as where to shop and how to acquire household service vendors (plumbers, housekeepers, etc.)

EXPATRIATE BENEFITS

Moving abroad is tough enough for the expatriate employee, and tougher still in today's environment. Companies that rely on this senior-level expatriate expertise are looking for ways to manage benefits and risk in a manner that makes the assignment less stressful for all stakeholders. Insurance products and services are critical components of any incentive package that indicates the company will stand behind an employee once they have made the journey abroad. By outsourcing these functions in a web-based environment, astute practitioners of corporate risk management can more easily offer these comforts to employees overseas and include the 24/7 service features of the Internet as an added, yet cost-free benefit.

Some degree of risk to expatriates is a given in an increasingly dangerous world. But, there is no need for companies to compromise on the comfort and security of expatriate employees and their families - or their own need to apply corporate resources for efficiency and value in serving this essential population. The needs of the expatriate, and the corporation alike, can be well served by one-source providers as well as technology that preserve a strong link between the employee and their corporate "home". This will reinforce the corporation's commitment to a comfortable transition out of country, a smooth and productive expatriate experience, and a safe return.