Going international? Pool your employee benefits
2010-10-08
This is written by our channel sponsor, Swiss Life Network
Life, health and retirement benefits are a vital competitive tool in the battle to attract and retain the best staff. But these also represent major items of expenditure, not only in terms of cash, but also when it comes to management time and attention.
So whether a company is facing the demands of coordinating employee benefits worldwide, solving the complexities of expatriate arrangements, or looking for sophisticated asset management services, multinationals today need an international service provider capable of delivering transparent, cost-effective and added-value solutions to meet their specific employee benefit requirements.
Multinational pooling adds value
One well-established international solution is multinational pooling. This is a sophisticated technique exclusively available to international corporations, which allows them to draw added value from their employee benefit plans around the globe. By building a virtual insurance portfolio, companies can gain important cost savings and valuable information and underwriting benefits from their global insurance plans.
Multinational pooling – also known as international experience rating – is based on the fundamental insurance principle of spreading risk. The various insurance and savings contracts of a company's subsidiaries insured with a network of partners around the world are combined into an international portfolio, called a pool, specifically for that company.
Almost every type of group benefit can be included in a pool, including retirement; widow's, widower's, and orphans' pensions; lump sums; and disability, medical, and accidental death and disability coverages.
By measuring the performance of the contracts in a pool (which is done by balancing income against expenditure), insurance actuaries can release risk margins which are then returned to the multinational corporation’s headquarters in cash.
Potentially significant cost savings
As a result, multinational pooling provides potentially significant cost savings, since clients effectively pay net costs for their insurance coverage around the world. Local premiums, administration charges and local dividends remain totally unaffected.
In addition to these cost savings, however, there are several more advantages available to multinational companies when placing their employee benefit solutions with a worldwide insurance service provider.
Advantageous local underwriting conditions
For example, multinational pooling permits the provision of special local underwriting conditions, including waiver or liberalisation of medical evidence requirements. This can result in reduced administration for local subsidiaries, while at the same time ensuring coverage of all personnel.
Customised reporting and information
A global solution for employee benefits will also provide valuable information for the multinational corporation. Comprehensive annual profit and loss accounts report on the company’s local benefit plans so that head office can ensure compliance with corporate guidelines on employee benefits, and control how these are managed.
In addition, these reports also provide relevant information on local risk conditions and liabilities. Given today’s strict disclosure and accounting rules, this information can help to uncover any hidden liabilities, and provide important data when planning adjustments to the design of corporate retirement plans in order to reduce these liabilities.
Local experience and expertise
Last but not least, no global solution will work optimally unless it is based on profound local knowledge and expertise. This is fundamental to ensuring that all local legal and other requirements are considered, and that the solution provided is truly the best available for the local situation. A well-established global solution provider, using a network of local insurance partners, will be able to offer this.
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