International Group Insurance Products with Full Description:

Who helps you today to navigate international risk management and global benefits for expatriates, TCNs, foreign nationals and global travelers?

The 3 most important reasons to team with us for international group insurance needs are outlined below:

There is no cost to have McKinley International on "retainer" and we share advice with clients every day with no consulting fees.

If you employ expatriates and other international assignees, you never know what may cross your desk and you need a partner that can navigate ANY issue that may come your way.

Your current broker or consultant may lack international experience (99% do), and there is no conflict because we do NO U.S. domestic benefits.

This page describes the necessity of providing admitted insurance for local nationals and for placing legal foreign national insurance plans.

There are thousands of companies out there right now that are in violation of local laws because they have illegal plans for their foreign national medical insurance.

Many cultures and countries take local national insurance very seriously, and if you fail to use a locally admitted insurance company for hired foreign nationals you may end up in front of a judge like this one, that does not care how big and powerful your company is. Sanctions against your entire operation can be put on right at this level in many countries.

For a review of what your global strategy is for foreign national insurance, simply call us.

We are always pleased to discuss and share information without insurance consulting fees.

You need legal and compliant local national insurance plans. Working with the right international insurance broker can avoid the legal problems associated with non-admitted foreign national insurance.

When hiring local nationals abroad and designing a benefit structure to meet their needs there are several important factors to consider: 1. Will you be using an admitted carrier or non-admitted carrier to provide the local national insurance? Today, all developed countries in Europe and Asia as well as most developing countries require local nationals to be insured with a locally licensed and admitted carrier. We go into detail on this more below.

2. How will you secure the benefits for local nationals? Assuming you need to use an admitted insurer will you allow the placement to be managed with employees locally or do you wish to control the process from the U.S. or Canada, and pay premiums from the home office. In many instances a foreign insurer can only issue a policy to a local entity and a locally licensed broker or intermediary needs to be used.

3. What are similar organizations in your industry providing local national in the same or "like" industry? Of course, this is based on what the local insurance market looks like in the foreign country and what benefits are provided by the government through the local form of national health insurance or social security. For example, in some countries it would not be expected for an employer to provide disability benefits and if so, certainly not the type of salary replacement we know in North America where benefits can be paid to age 65 if totally and permanently disabled. What needs to be provided by law? What needs to be provided to attract and retain good employees in your industry? Trying to create continuity between what U.S. employees get an foreign employees is a mistake. The U.S. benefits should never be used as a starting point or even a benchmark.

4. Will any of the local national employees be traveling outside of the home country, or traveling to your home office in the U.S. or Canada? In most instances local coverage is not portable and certainly would not pay for care inside the United States in almost all instances. In most cases the local national would need to secure travel coverage. This can be done on a specific (case by case) or blanket basis. What coverages are needed will depend on where the local national may be traveling and for how long. An employer that brings a local national into the United States faces all of the following types of exposure liability:

Accident and Emergency illness coverage in the U.S. (or anywhere outside the home country) may be an unexpected expense for the employer. Typically, home country health plans are not portable and national health insurance is never able to pay a U.S. hospital. An unexpected $20,000 expense can be avoided by purchasing a simple travel plan for foreign nationals coming into the U.S. This issue extends beyond those traveling to the U.S. A French national traveling to Germany would have benefits through extraterritorial provisions found in the European Union, but this same individual may have no coverage when traveling to Japan, Jordan, Canada, or Mexico. "

Insurance for Local Nationals Must Be Placed Correctly!

We have seen fines and sanctions placed against a company for providing non-admitted and unlicensed insurance to just a small handful of local nationals.

You do not want to explain to the President of your organization that your companies future in a country has been put in jeopardy because of the wrong medical or life insurance program. Local national insurance should be taken very seriously and problems can be correct if working with an expert.

More issues with insurance for foreign nationals

Liability coverage. Do not assume your corporate policy will pick up foreign nationals and even if the plan does provide some degree of coverage, 70% of the time they will be spending in the U.S. will be considered "personal time." If a foreign national employee commits a negligent act in the U.S. that causes damages the plaintiff will go after the much deeper pockets of your organization vs. going after the employee that they know will soon return to the home country making them essentially judgment proof.

An international personal liability includes defense costs and can eliminate potentially large claims. " If the employee will be residing in the U.S. for an extended period of time, say 90 days to 3 years other benefit decisions need to be made. Can the employee, as a foreign national qualify for the U.S. domestic life insurance or disability insurance? Most likely, the employee will not be able to participate in the U.S. pension plan and contributions may need to be made to an offshore account.

Local National Insurance Mistakes, Punishment Scale

Providing coverage to local nationals is a delicate matter. Most countries in the world today REQUIRE that local national employees be insured with a locally licensed and admitted insurer. Failure to do this is criminal. Your company would be breaking local law. The penalties for breaking local admitted insurance law can include all of the following from mild to more severe as you move down the list

  1. A cease and desist order from local authorities forcing the local national to seek admitted insurance in concert with the immediate termination from the non-admitted plan.

  2. A special tax levied on the company using non-admitted insurance

  3. A fine and judgment passed against the local country operation

  4. The benefits paid out by a non-admitted plan can be taxed at a punitive level.

  5. The local national can be charged with a criminal offense

  6. Your local country operation can be charged (and convicted) of a crime. This criminal offense in # 6, on it's own, or in conjunction with another violation of local law (visa, work permit, or other) could force expulsion of your company from the country where you are doing business.

  7. Death by hanging.

(OK, let's scratch off number eight, but I was once told by a broker that had been in the business for over 25 years that an old law still exists on the books in a province in China, where a local national that participates in non-admitted insurance is subject to a maximum penalty of death by hanging. As much as I would like to laugh about this, there is something deep down in me that believes she may be right) If you remove number seven and eight, at first glance, you may not be too concerned with these penalties and the chances of getting caught are still small, right? In many countries they may be small, but the outcomes of the list above are more unpleasant than they may first appear. Depending on the country, items 3 through 7 above COULD have an affect on your ability to do business in the country.

Do you want to explain to your CEO why your organization is being watched by the authorities, and another legal mistake could jeopardize your entire future in the country over something like non-admitted insurance? Number 4 above doesn't seem very bad. Let's walk though a real life example. A local national is insured for life insurance at 3 x salary through a non-admitted insurer. When the employee dies tragically, the death benefit is paid to the spouse in Latin America. When the spouse receives a check for $200,000 USD, she takes it to the bank for deposit. The bank legally needs to follow certain procedures when a foreign currency check of that size is taken for deposit. When it's reported to the local insurance authorities that the check was cut by a non-admitted insurer, it's seized and taxed at 60% leaving the widow with only $80,000. Of course, even in a non-litigious society her next step is obvious. Your company is sued for $120,000. Of course, you would be much better off settling immediately and paying the widow $120,000 before this goes to trial, becomes public, and additional fines are levied by the court in punitive fashion. The benefit department or risk manager then needs to explain to the CFO why $120,000 is needed because the department did not do it's job property. If you are reading this knowing you currently insure local nationals, don't feel too bad because you are in good company.

Thousands of companies are currently insuring local nationals under non-admitted schemes. Most are doing it without an understanding of the risks. We actually empathize when it's done out of necessity. For example, what does the "insurance department" look like in Serbia, Algeria, or Uzbekistan? There very well could be an insurance law on the books there that prohibit non-admitted insurance, or require a tax or fee be paid if one does not use local solutions, but how would one be expected to research this? Hire an attorney before the hire of each local national, of course not.

The point is, there are still some scenarios where companies are forced to use non-admitted solutions. However, those aware of the issues can take certain steps to at least mitigate the risks we described here. Several things can be done if you are working with someone that knows the issues. In summary, there is no question that the local admitted market should be the preferred way of insuring local nationals in every case. The non-admitted market will need to be used in many situations internationally out of necessity. Under either scenario, it's important to work with a company that can eliminate (or at least mitigate) the risk to your local operations.