On eve of war, accident insurance reviewed

Feb 10, 2003  •  Post A Comment

As news organizations prepare to cover the looming U.S.-led invasion of Iraq, they are facing sharply higher insurance costs to cover reporters being sent to the Middle East and other political hot spots.
Journalists employed by major U.S. media companies who are sent overseas on assignment typically have basic workers compensation coverage, which legally cannot exclude war risks. But brokers say many media companies are buying additional coverage such as foreign voluntary workers compensation and accidental death and dismemberment insurance to ensure their reporters are adequately protected.
Numerous media companies contacted by declined to comment on their coverage arrangements.
The cost of AD&D coverage has been soaring because employers are being forced to pay substantial additional premiums to remove war-risk exclusions that have been added since the Sept. 11 terrorist attacks.
Furthermore, AD&D policies for journalists are now being issued for shorter time periods, with most written on a monthly basis. They also include either seven-day or 10-day clauses that let underwriters change rates if conditions deteriorate.
But while the full-time employees of the major U.S. news organizations typically would be covered should they be hurt or killed while reporting on conflicts around the world, free-lancers and many journalists from Third World countries are not.
The Washington-based Committee to Protect Journalists, which has been tracking journalist casualties since 1992, estimates that 389 journalists were killed while carrying out their work between 1992 and 2001. Only 62 of those reporters died in crossfire; the majority were murdered in reprisal for their reporting, according to the CPJ. Other journalists were killed outside of war zones, such as while covering violent street demonstrations.
The CPJ estimates that 19 journalists were killed last year. The International Federation of Journalists, a similar organization based in Europe, estimates that 70 journalists were killed on assignment in 2002.
Underwriters are skittish about insuring journalists sent to cover war because “it’s a high-risk occupation,” explained Lloyd Young, senior VP and chief underwriting officer in the domestic accident and health division of American International Group in New York.
“Everybody else is running away, and [journalists] are running toward,” said Anthony Galioto, president of AIG’s domestic accident and health division. “It’s their job.”
But workers comp insurers in many cases are required to offer some coverage for the reporters. The protections of the state-based workers compensation system stretch beyond U.S. borders if the journalists meet two eligibility requirements: They must be in harm’s way because of job requirements, and they must have a connection with a specific state.
“If the initial hiring of the employee took place in a specific state, the nexus with a state could be satisfied, even if the worker is living in a foreign country on a more regular or long-term basis,” explained Nancy Schroeder, assistant VP, workers compensation, for the National Assn. of Independent Insurers in Des Plaines, Ill.
Which state’s law applies also could be determined by where the employee lived or worked before being sent overseas, according to Vickie Dorsey, senior counsel with the National Council on Compensation Insurance in Boca Raton, Fla.
State comp systems also vary in how they distinguish between “temporary” journalists stationed abroad and “permanent” ones, she added.
Overall, “The laws that cover traveling employees are much broader than those for employees living in the area,” Ms. Schroeder said.
Typical workers comp benefits for wounded journalists include evacuation to an adequate medical facility, such as a military base, and full medical benefits. Journalists also receive wage-loss compensation and in the case of a death a burial allowance and stipends for survivors.
Employers seeking to provide workers compensationlike benefits to journalists not covered by their domestic comp programs can purchase coverage known as foreign voluntary compensation/repatriation insurance, Ms. Dorsey said.
The policies are written on a manuscript basis and are rated based on the location and concentration of employees, with underwriters taking into consideration safety precautions and the particular risks they face, explained Kevin Behan, senior VP in the casualty division of AIG Worldsource.
In addition to workers comp, most major U.S. media organizations purchase AD&D or travel-accident insurance for the reporters they send overseas.
War-risk buybacks
However, since Sept. 11, war risks have been excluded from these policies, forcing the organizations to buy back the coverage for an additional premium. And the cost to do so can be substantial.
While most news organizations do buy back the war risk coverage, some are self-insuring the risk because of the cost, said Michael Klein, president of MMG Agency in New York.
The premiums for buying back war risk coverage can be as much as $12 per month per $1,000 in coverage, compared with 75 cents per year per $1,000 for a policy without the buyback, he estimated.
Most media companies purchase policies with limits of $1 million, so a year’s war risk coverage could total $144,000, compared with $750 for coverage without the war risk buyback. But the buybacks also are offered on a short-term basis, with their cost depending on the volatility of the region where the reporter is being sent, according to Mr. Young of AIG.
“We provide quotes for 30-day periods of time, and then watch how the war escalates or develops,” he said. “For example, if a reporter is sent to Iraq, we would provide coverage for shorter terms than if somebody was just going to South Africa.”
Many of the buyback provisions also have 7-day or 10-day clauses allowing underwriters to increase the premium if conditions in a particular region deteriorate, according to Mr. Klein.
“They’re limiting their liability now,” he said. “You can’t get $5 million on a guy anymore unless you can show that his earnings are at least one-tenth of that. If a reporter makes $500,000, we might get $5 million, but if he makes $200,000, he gets $2 million.”
Insurers are also limiting the scope of coverage. In the past, most AD&D policies also included repatriation and medical evacuation, but those coverages now must be purchased as endorsements.
While most U.S.-based journalists sent on overseas assignments are covered by workers comp or an AD&D policy, and sometimes even a kidnap and ransom policy, freelancers and foreign reporters in third-world countries generally are not. For example, news organizations are having trouble persuading their insurers to include so-called “permanent free-lancers,” according to Mr. Austin.
“Up until this year, we have been able to include the permanent freelancers, those who are on retainers. But, unfortunately, this year we just haven’t found a carrier willing to provide coverage,” he said.
Because of the dearth of insurance coverage for journalists not employed by major media companies, a coalition of media companies, journalists and press freedom groups led by the IFJ are creating a global risk-management program to protect journalists. Part of that initiative is to ensure that journalists and their assistants working in war zones or dangerous areas are covered by insurance.