French companies under pressure to provide social protection as costs rise and budgets fall

According to Damien Vieillard-Baron, CEO of Gerep, French workers have become increasingly worried about their future because of the economic crisis and, as a result, companies are increasingly under pressure to complement social protection schemes provided by the state. The coverages requested include income guarantee in case of death, health insurance and private pensions. The challenge is even bigger for firms that are expanding to foreign markets and need to provide homogeneous benefits for workers based both in France and abroad. The growing concern about the risks and insurance strategies related to human resources at French companies is certainly on the minds of Association pour le Management des Risques et des Assurances de l'Entreprises, AMRAE. Last June, for example, it organised a meeting on the subject in the coastal town of La Boule.hideThis concern is growing for risk managers at large companies as well as among those at French SME firms. In recent years these smaller companies have purchased more complementary benefits for workers. According to a research by think-tank Crédoc, three out of every four firms with a payroll of between 1 and 249 workers already purchases complementary health insurance for their employees. "The main risks in this area faced by companies in France are the death of workers, work incapacitation, long and short-term disability, healthcare costs and retirement," Mr Vieillard-Baron said. "We have here a mandatory system that covers part of the social protection needed by workers. But, even if it provides significant coverage compared with other countries, it does not meet all the needs of the employees of French firms," he added. Mr Vieillard-Baron noted that the amount of compensation paid by the state-sponsored system in case of death is small, while in the case of long-term disability is not enough to guarantee that the worker will be able to maintain his or her lifestyle. The state health system, for its part, is more thorough when it comes to hospital costs, but not in areas such as dental treatments, where costs for patients can also be very high. At most pensions paid by social security amount to 60% of a worker's monthly wage, or as little as 35% for executives. "Demand for employee benefits has been on the rise, and it tends to go up even further in difficult times like we see today," Mr Vieillard-Baron said. "On the other hand, companies need to meet such demands under budgetary constraints." He also warned that prices for insurance-based solutions for employee benefits are on the rise as insurers look to reprice cover in the face of ageing populations and mounting healthcare costs. "There is competition in the market, but insurance companies need to balance their risks and to re-organise themselves with views of Solvency II," he remarked. "Our challenge is to find the best possible deals taking into account the constraints faced both by our clients and the insurance market." Gerep helps companies to identify human resource risks linked to the social protection of employees, as well as devise insurance strategies to provide the complementary coverages that meet company social policies. The Paris-based broker has also targeted international markets as French companies of all sizes have increased their presence abroad in a quest to find sources of growth to compensate the sluggish domestic market. Here the challenge lies in identifying the weaknesses and strengths of social protection systems in foreign markets with the goal of looking for solutions that will help companies to harmonise the benefits enjoyed by employees abroad with those at their French offices. In September, Gerep announced a partnership with Asinta, an international network of employee benefit advisors, as part of its strategy to boost capabilities outside France. "With the support of the Asinta network we can provide our services to companies that operate in other European markets, but also in emerging economies like China, Mexico and Brazil," Mr Vieillard-Baron said.

French companies under pressure to provide social protection as costs rise and budgets fall

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