Accident and sickness insurance
Risk location guidance for accident and sickness insurance.
Individual personal accident & sickness insurance
If a contract is taken out by an individual insured to cover themselves, the risk is located in the country where the insured is “habitually resident” at the time the contract is taken out, ie their normal place of residence.
Group personal accident & sickness insurance
If the contract is taken out by a corporate body and claims are payable to the corporate body, the risk is located in the country where the insured company or other entity purchasing the insurance is established. However, if individuals covered by the insurance are able to make claims under the policy directly, the location of risk is determined using the “individual” rule set out above.
These approaches are not affected by the geographical scope of the contract. It is common for personal accident contracts to give worldwide cover, but this does not make them global contracts.
- A UK company takes out a worldwide accident and health policy insuring itself against executives and staff being unable to work because of injuries sustained though an accident. The UK company is the sole insured covered. An injury or other loss to a staff member could take place outside the UK, but the risk is located in the UK, as the establishment of the corporate body purchasing the insurance is in the UK. The residential addresses of members of staff covered by
the contract are irrelevant.
- A UK company takes out a worldwide accident and health policy covering group staff. The contract identifies the UK company as the principal insured and also covers group subsidiaries in France and Germany. The subsidiary companies employ their own staff. As the subsidiaries are parties to the contract and the insurance contract is a global contract (see below), with risks located in the UK, France and Germany.
A Global contract is a contract insuring risks located in more than one country.
The approaches to determining the location of risk for a personal accident and sickness insurance contract means that it can be a global contract only if it has more than one person or corporate body to where claims are payable.
A group personal accident and sickness contract is a global contract if:
- Claims are payable to the corporate bodies taking it out, and they include corporate bodies located in more than one country.
- Individual insured persons can claim under the contract, and they are domiciled in more than one country.
A global contract may give rise to regulatory and tax exposures in different jurisdictions. Compliance with these requirements requires the overall premium to be apportioned between the countries in which risks are located. Guidance on premium apportionment is provided here .