While insurance experts noted that companies with overseas operations are not retreating back to their domiciled countries in the face of the recession, companies are cutting back on sending individuals overseas for business, which is affecting a different segment of the international market.
Lloyd Yavener, vice president of Marketing for Washington, D.C.-based Clements International, which provides insurance for expatriates, international schools, multinational businesses and relief organizations, said corporations are pulling back on expenses, and so they have decreased their presence abroad with respect to sending employees overseas. This has in turn reduced the opportunities for insurers who provide coverages to these individuals as they travel to foreign locations.
Mr. Yavener said the market has not pulled back dramatically, but it has flattened in 2009.
He said it is tough to tell whether that trend will reverse, as companies budget such travel annually, and the 2009 budgets have already been put together. "As [we] go into 2010, we'll have a good idea what that [market] will look like," he said.
However, another block of business– providing insurance coverages for not-for-profit and non-governmental organization relief aid and development workers–is faring better as global conflicts drive the need for aid and reconstruction. For example, Mr. Yavener said money is "pouring into" Afghanistan for these services.
Coverages typically include a lot of vehicle coverages that will protect the workers as they travel across borders, and political risks like kidnap and ransom and war and terrorism.
Kidnap and ransom risks are on the rise as they are correlated to civil conflicts, Mr. Yavener said. The incidents are "soaring" in parts of Asia, Africa, the Middle East and are typically high in Latin America, he explained. They are also increasing in Pakistan as foreign aid workers are specifically targeted.
The increased risk has led to a greater demand and higher prices for political risk coverage in these areas, while an area like Iraq is seeing more favorable pricing recently reflecting the improving environment there.
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