UK 
United States
The cost of insuring employee benefits (death and disability/income protection benefits, medical programmes and retirement benefits) for staff of multinational organisations has increased significantly over the past years and the trend shows that this is not likely to stop anytime soon. Furthermore, pressure on first pillar retirement schemes forces corporations to take a closer look at their liabilities in terms of retirement packages. These elements together have caused a shift in the employee benefits world in such a way that an increased involvement of Finance and Risk managers has been apparent.
Many companies have, over the past few years been working on mapping their employee benefit covers and spend on a regional or global scale. Typically these mapping exercises would show there are synergies possible in the different countries/regions that would already result in a reduction in cost and an increase in visibility of the corporate liabilities.
On top of that, companies can save additional money on these insurance coverages by leveraging their global size by way of working with a Multinational Pooling organisation
What is a Multinational Pooling provider?
A Multinational Pooling provider is a network of insurance companies that operate throughout the world. Typically these insurance companies would have exclusive relationships with one or two Multinational Pooling providers. For example, despite being based in Brussells, IGP works in the UK with Canada Life Group Insurance for group risk benefits and AXA PPP for private medical insurance benefits.
There are three types of Multinational Pooling providers:
• Integrated - these Multinational Pooling providers only work with their own subsidiaries around the world. Typically these are the global insurance companies that would have an integrated Multinational Pooling network
• Non-integrated - these Multinational Pooling providers only work with independent insurance companies around the world. This means that the Multinational Pooling network is the binding factor for these insurance companies, and this network is often set up by way of co-insurance or reinsurance.
• Hybrid - these Multinational Pooling providers have about a 50/50 split between using their own subsidiary insurance companies and working with independent insurance companies.
By working with the leading group risk and medical insurance providers in the UK we believe that we offer a unique proposition and service offering as we have selectively chosen the best partners for the parent and subsidiary client base that IGP has.
What is Multinational Pooling?
Multinational Pooling is a financial arrangement that allows organisations with employees in two or more countries to ‘pool’, or spread, the risk of providing insurance coverages among the participants of the pool.
Larger multinational accounts are normally self-experienced; for example, their dividend is
based on their own experience. Multi-employer Pools typically help protect smaller more volatile accounts from adverse claims fluctuations by combining the experience of participating companies to determine the overall surplus.
If the experience of the pool is favourable, a participating company may be eligible to have a portion of its premium returned as a dividend. Any losses incurred by the pool may be carried forward to be offset by future years’ margin or, in some cases, absorbed by the pool.
How to get started?
Step 1 – Assess scope of your own organisation
There are a number of questions organisations can ask themselves to assess whether Multinational Pooling would be the right solution for them.
• Is my company based in more than two countries?
• Do we have more than 1,500 employees globally?
• Do we have on average more than ten employees per country?
• Is there a dedicated person within the HQ that can manage this project?
• Is there support from higher management to make this a corporate project?
• Do we know what is currently in place in terms of benefits?
• Do we know who are the local decision makers with regards to the local insurance policies?
Step 2 – Find the right Multinational Provider for your organisation
There are a number of Multinational Providers available and it really depends on the strategy, the expectations, the size of your organisation, the service level required, and the match on locations, which provider(s) you feel would be the best one.
The trend in the past has been to set up ‘pools of convenience’ with several Multinational Pooling providers, sometimes even as many as seven. However, the more Multinational Pools you have running, the smaller the risk spread becomes and the smaller the potential on International Dividends. As such, a lot of corporations with pools of convenience have in recent years been going through a pooling study (either direct or via a consultant) in order to reduce the number of Multinational Pools to one, two or three. This is more manageable and will be clearer for the local subsidiaries in terms of introducing corporate guidelines for employee benefits.
Step 3 – Actively manage your Pool
Setting up pools of convenience is one method that has been tried before and it works to a certain extent, however, it will not allow corporations to really benefit in full from the advantages of Multinational Pooling. Actively managing the Pool(s) is therefore key to the success of the pooling project. The clearer the project is outlined, the better the different players in the project understand their respective tasks, the more streamlined it will be and the more success corporations will have in getting their local subsidiaries to participate in the Multinational Pool.
Each Multinational Pooling provider has their own suggestions of how to approach actively managing the pools; it is important that the corporate strategy and vision matches the one of the Multinational Pooling provider.
Step 4 – Multinational Pool
Once a well-managed pool is in place for a number of years and the corporate guidelines and processes in terms of global employee benefits have been set up and approved/supported by top management, the next step typically is that of exploring the inclusion of the employee benefit risks in the company’s captive. In effect a company-owned insurer that buys the services of the insurer while taking the financial risk themselves is perhaps only for larger organisations. Several of the Multinational Providers can make the switch from a Multinational Pool to Risk Ceding to a client’s captive in close partnership with the client, its captive managers and its consultant.
If you would like to enter a football-oriented IGP prize draw to win corporate hospitality at the Charity Shield or an Arsenal League game enter the draw here: https://nl.surveymonkey.com/s/igp
