Article by Damian Ross, Regional Manager – UK, Ireland & Nordics, Generali Employee Benefits Network
Trying to accurately pinpoint employee health and wellbeing needs and intervention outcomes when the workforce is spread across multiple sites in one country is challenge enough. Imagine then, if you will, how that is achieved by a business spread across multiple countries. For many, this represents an insurmountable challenge.
Not so, however, for those who’ve discovered multinational pooling. Once the preserve of very large multinationals, pooling is now available to companies with subsidiaries in as few as two countries.
Most benefits across the group insurance range can be included in a pool, such as life assurance, accident cover, medical insurance and short-term and long-term disability cover. Business travel insurance can also be included in many pools.
Pooling can help companies realise cost savings in the shape of dividend payouts when the experience of the pool is positive. Where it’s negative, losses are absorbed – in the case of multiemployer pools - or some element carried forward to the next accounting year, in the case of standalone pools (although there are stop loss options to help reduce risk).
Research from Willis Towers Watson suggests that top quartile pools can achieve cost savings – in the form of payable dividends - of 15% or more. This can vary hugely though. Generali’s multiemployer pool, for example, has achieved an average payout ratio since its inception in 2013 of over 20% for each country with a positive experience.
Pooling also brings many non-financial benefits, such as: centralised insights into how benefits programmes in each country have performed; global reporting that offers a snapshot overview of all territories; access to comprehensive claim and financial data in order to drive optimisation; greater control over local service quality and programme governance; not to mention access to a leading network of insurers and therefore improved access to products.
The network is the entity that organises, controls, administers and runs the pool on behalf of clients. There are currently eight global networks, each partnering with local insurers in countries around the world to offer clients local knowledge and expertise.
Another important role of networks is the access to information that they afford, not only to multinational companies but also to the local insurance companies that are part of the network, plus brokers and consultants. This information is useful on an ongoing basis, and especially for those companies looking to expand their business into new countries.
The length and breadth of this information varies according to the network, but generally includes things like an overview of benefits provided by social security systems, in addition to supplementary benefits typically covered by employers in each country in which the network operates.
Thanks to the combination of the global overview and claims analysis, plus local knowledge and best practice insights, networks are perfectly placed to help companies identify and reverse any negative trends. That might include putting in place targeted wellbeing initiatives.
This experience is borne out by one of Generali’s clients DNV GL, a global company with its head office in Oslo, Norway, that specialises in the safety and sustainability of businesses. With a 10-year experience of an existing pool, this company is fully up to speed with what’s involved in administering a pool and what they get out of it.
Kari Ekvall, HR Specialist at DNV GL, comments: “Pooling is a very low risk initiative that has a great upside from both a financial perspective – in terms of the dividend, global overview of benefits and also having all the information to hand for any merger and acquisition activity – and also from a sustainability perspective, in terms of helping us build relevant wellbeing programmes.”
Kari adds: “The claims experience is now a lot easier to follow. In fact, risk-related premiums have gone down drastically, some by around 30% during the past 10 years.”
5 steps to getting started with pooling
- In order for a network to design a tailored solution on a global basis, they first need some information upfront. Gather together as much data as possible on the benefits you currently provide on a local level, including information on premiums and claims experience. If you have subsidiaries in many countries, it might be wise to first focus on a small number and slowly build up. You may also want to consider appointing a local broker to help. Alternatively, select a network to help you gather data by providing it with local operating company contact information.
- Consider whether you would also like the network to help you investigate cross-border solutions. If you have a number of subsidiaries in Europe, for example, it’s definitely worth a look.
- Do you know whether your current benefit offerings are compliant in every country in which you operate? If you are in any way uncertain, this is also an upfront discussion to be had when selecting a network, as they should be able to provide locally compliant policies.
- Next it’s time to start talking to the networks, if you haven’t done so already during the data gathering process. There are only eight worldwide networks. You can either approach them directly or you may want to appoint a consultant to have these discussions on your behalf. Either way, provide the networks or consultant with your data and ask for simulations to show what they can do for you. This is also the time to find out about the Four S’s – in other words: Solvency (on a local basis and, if applicable, on a global basis), Service, Solutions (do they meet local and global requirements?); and Spread (i.e. is the network in the countries in which your company operates?). It’s also worth noting here that it may even be possible to get a ‘Natural Pool’ going. The network or consultant will contact all local insurers to ask if they have business with the potential client already. If any do, the pool can build from there.
- Finally, good communications are essential to ensure buy-in at both a global and local level. If your company is centralised, consider writing into policies that the local subsidiaries must consider pooling networks in the tender process or come up with a very good business case why not. If your company is decentralised, provide good and regular information on the benefits of pooling.