Global programme approach can enhance employee benefits provision

Insurable employee benefits have never been higher on the agenda for companies, and a global programme approach can bring efficiencies, pricing stability and transparency, according to experts at Commercial Risk’s two-day employee benefits virtual conference.

A panel session at the conference tackled the issue of how global insurance programmes can enhance employee benefits management, and panellists stressed that it begins with risk management and HR working together as a team.

Thomas Lienert, regional director, northern central and eastern Europe region, Maxis GBN, said: “What we see that works best is if there is a team effort between the risk manager and the finance side, together with the benefits/compensation manager, in partnership to find the best solution. The benefits manager looks at the benefits levels, ensuring that employees have the appropriate level of cover in the respective markets, while the risk and insurance manager wants to have this financed in the most effective way.”

He added: “It is very important that both functions are fully onboard, because employee benefits is always a local decision. There is no umbrella cover, it is a local solution. So it is crucial that the HR function is onboard and that the local people are teamed up and are supporting the global strategy.”

Moritz Loschner, customer and distribution manager, corporate life and pensions, Zurich Global Employee Benefits Solutions, said employees and employers are increasingly talking about insurable employee benefits. “Health and wellness of employees has always been important for the employer but now it is so tangible, and it is important for the employee that their employer takes care of them. And for the employer, the employee benefits package focusing on protection proves how important your employees are,” he said.

“Protecting employees globally is top of the agenda for multinationals and CEOs, largely as a result of the Covid-19 pandemic, which is raising the profile of insurable employee benefits and taking a global approach. And it is becoming a more centralised approach to employee benefits,” he said.

This centralised approach is an important part of global programmes, as Frederik Van Den Eede, head of client services, Generali Employee Benefit Network, explained: “Global programmes have an element of central coordination, so this allows you to have one central point of contact and access to a provider and a network.”

He noted a number of advantages for employee benefits, including economies of scale that can be achieved, as well as transparency on employee benefits spending and access to data.

He pointed to the three options for employee benefits: “There is the global underwriting model that allows the corporation to optimise the spending on a local basis to give benefits or discounts in local areas. There is also the traditional pooling setup, where the financial incentives come from a global dividend payout. And thirdly, there is the captive, which allows the multinational to dictate the underwriting and the decision-making about the risk in each country.”

On the costs side, Mr Lienert explained: “Risk managers tell us they are fighting for every euro that they can save on their property and casualty (P&C) programmes, but they tend not to look at the employee benefits spend, which is usually multiple times the spend they have on P&C. With better coordination, the savings can be much bigger than they can achieve on the non-life side.”

Mr Van Den Eede said that working long term with providers means stability: “If you want to just minimise costs, for medical benefits, the best way is to go to market every year, re-tender your medical scheme and go for the cheapest provider. But what is more suitable for companies is not to just look for the lowest cost, but look for predictability and stability by removing the volatility from pricing.”

Adri Van Der Vaart, director global insurance, Arcadis, agreed: “It is more effective to fix your programme with an insurer and maintain that for several years. I am a big fan of the long-term relationship because then if something is not correct, or insufficient, then you can make improvements for the next year. So, the global programme approach is more about efficiency, terms and conditions, and guidance, rather than just finding the cheapest solution.”