Multinational Benefits Pooling

M. PONZI KAY
3/20/2006


                                 1
Planning ‘The Grid’


•   Globalization is here, industry searches for
    cost efficient labor that is often times outsid...
Key Issues for HR

• According to a recent Hewitt Associates
  study (HR Magazine, May 2004) 45% of 500
  senior finance a...
Multinational Pooling: Is it Right for you?



• How do I plan the ‘Grid’ a network of providers
  supporting my company’s...
Elements of ‘The Grid’

• International assignment policies to
  foster mobility
• Benefits package to support them
• Glob...
WHAT’S A COMPETENT
HR PERSON TO DO?




                     6
The Vision: A Grid of Global
Plans




                               7
What’s your firm’s objective?

• Operations located appropriately to
  markets and customers
• Company able to seize the
 ...
What is Multinational Pooling ?


•A method of pooling financial experience
across borders
•It is an aggregation of local ...
Key Outcomes for HR

• Maximize efficiencies of employee benefits
  programs
• Achieve consistent annual financial savings...
Key Outcomes of Pooling

Savings through:
Finding new pooling provider or restructure existing
 pools
Optimization of cu...
You must think infrastructure:
 What do you currently have in place to
 achieve ‘The Grid’?
• Benefits have intricate comp...
Cost-Effective Global Benefits

• Conduct an audit of your insurance
  programs globally
 -Are they set up to facilitate e...
Why should a global audit be performed?


   •Opens up the lines of communication
   about efficiency of the current netwo...
Multinational Pooling analysis
                                                                    Annual
                ...
Proposal Phases

Phase I Baseline Analysis Report with:
  •Current pool charges
  •Analysis of pooled contracts
  •Identif...
Proposal Phases



Phase III Negotiate improved pooling parameters
•Restructure pools and set up new contracts for any
poo...
What are the stages in the process?
Stage 1: Analysis of Local Contracts and
existing pooling arrangements, audit and cont...
What resources are needed ?
A combination of internal and external resources can be
used depending on current HR/Benefits ...
What are the questions to ask?

1.  How long have they been providing pooling?
2.  What is their current portfolio of clie...
What are the questions to ask?
9. Describe a typical accounting cycle. Please confirm if network will
    guarantee to del...
What are the measures?


    Pct. of Measured Countries
                                  100%
                           ...
Measures: Overall Dividend Projections

                        Consolidation Using Assumptions
# of Countries pooled
# of...
The Finalists

Network Overview
  Background; Structure and Team
  Capabilities
  Geographic Match with company
RFP Respon...
Next Steps

Communicate with your Finance Team
  Show the results of the financials
  Have them evaluate your analysis
  L...
Ongoing Support

Data Collection
  Make sure you have a way to refresh the data
  Provide feedback to new networks on any ...
Global benefits deployment

• You have competitive world-class benefits
  accessible to employees.
• Your global team is h...
Strategic global benefits

• You can offshore or inshore at will
• You can outsource or insource as you wish
• You can acq...
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Multinational Benefits Pooling

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description of the process to follow in order to pool benefits worldwide

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Multinational Benefits Pooling

  1. 1. Multinational Benefits Pooling M. PONZI KAY 3/20/2006 1
  2. 2. Planning ‘The Grid’ • Globalization is here, industry searches for cost efficient labor that is often times outside the U.S. • Companies must look to grow globally in order to obtain return on investment: • They must be closer to the market • They must consider raw materials costs • They must have the right talent to manage effectively 2
  3. 3. Key Issues for HR • According to a recent Hewitt Associates study (HR Magazine, May 2004) 45% of 500 senior finance and HR execs surveyed said their firms are offshoring or considering offshoring in the next few years. • Only 8% of those surveyed considered their current offshoring completely successful. 3
  4. 4. Multinational Pooling: Is it Right for you? • How do I plan the ‘Grid’ a network of providers supporting my company’s growth? • How to gather data worldwide to perform an evaluation? • Preparing the RFP for the process • How to evaluate potential pooling providers • Analyzing the data from the various plans • Achieving immediate and ongoing savings • Selling the process internally to diverse geographic locations/businesses 4
  5. 5. Elements of ‘The Grid’ • International assignment policies to foster mobility • Benefits package to support them • Global operations able to access equivalent benefits platforms • Cost-effective consistent plans • Future cost containment in order to continue to provide competitive programs 5
  6. 6. WHAT’S A COMPETENT HR PERSON TO DO? 6
  7. 7. The Vision: A Grid of Global Plans 7
  8. 8. What’s your firm’s objective? • Operations located appropriately to markets and customers • Company able to seize the opportunities for development and expansion • Personnel willing to strategically deploy corporate directives • Employees able to access standard benefits platform 8
  9. 9. What is Multinational Pooling ? •A method of pooling financial experience across borders •It is an aggregation of local contracts: experiences of several countries can be pooled if local contracts can be written with insurers who are participating in the same network •Local benefits plans / levels do not need to be changed (only carrier might change) •Expenses and Risk charges adjusted to reflect pooling of benefits 9
  10. 10. Key Outcomes for HR • Maximize efficiencies of employee benefits programs • Achieve consistent annual financial savings (average of 10% of pooled premium) • Reduce internal administrative work and costs • Improve service on global employee benefit programs through use of limited number of insurance networks • Improve management and control of global risk programs through use of multinational pooling 10
  11. 11. Key Outcomes of Pooling Savings through: Finding new pooling provider or restructure existing pools Optimization of current pooled contracts- reducing risk charges, administration& commissions, optimization of claims experience, premium levels, investment returns, local profit share Review of the contracts that currently not pooled and identify preferred insurers networks Proactive management of the pools in the future 11
  12. 12. You must think infrastructure: What do you currently have in place to achieve ‘The Grid’? • Benefits have intricate complexity • Each country has regulations, state- mandated benefits, pensions • How to benchmark? • How to choose surveys? • Use internal or external sources • Applicable tools, software? 12
  13. 13. Cost-Effective Global Benefits • Conduct an audit of your insurance programs globally -Are they set up to facilitate easy management? -Do they leverage your size/geography? -Are they consistent across locations and boundaries? - Do they support mobility and growth? 13
  14. 14. Why should a global audit be performed? •Opens up the lines of communication about efficiency of the current networks •Creates a process to identify coverage gaps and duplications •Ensures coverage is in alignment with the larger company objectives •Facilitates participation of local companies in corporate growth and changes required for success 14
  15. 15. Multinational Pooling analysis Annual Lives Country Type of coverage Insurer premium, insured USD, 2002 EUROPE BELGIUM Death/Accident Retirement pensions Fortis AG 418 1,448,095 Health Ins urance FRANCE Death/Accident GAN Health Insurance EUROCOURTAGE 51 115,202 Disability VIE NETHERLANDS Retirement pensions Delta Lloyd Widow's and 107 249,936 Levensverzekering orphans' pension NORWAY Retirement pensions Widow's and Storebrand Life 47 110,530 orphans' pension Insurance Co Ltd Disability POLAND Death/Disability Commercial Union 2 1,633 AMERICAS CANADA Disability Standard Life 78 45,331 Grupo Nacional MEXICO Death/Accident provincial 33 2,632 TOTAL 944 2,082,359 15
  16. 16. Proposal Phases Phase I Baseline Analysis Report with: •Current pool charges •Analysis of pooled contracts •Identification of loss leading contracts •Review of funding Vehicles •Analysis of non-pooled contracts •Estimation of ROI expected from expanding and managing pools proactively. Phase II Pooling questions and RFP framework •Analysis of responses •Attend finalist presentations 16
  17. 17. Proposal Phases Phase III Negotiate improved pooling parameters •Restructure pools and set up new contracts for any pools created Phase IV Pool Implementation •Project management •Globally switching contracts to new network or networks •Outlining strategy to proactively manage going forward 17
  18. 18. What are the stages in the process? Stage 1: Analysis of Local Contracts and existing pooling arrangements, audit and contact with local insurers (3-4 weeks) Stage 2: Depending on results of Stage 1, either identify new provider or plan to re-structure existing pools; obtain and review bids from pooling networks (6-8 Weeks) Stage 3: Implementation: switching of contracts to preferred network or networks (6-12 months*) *existing contracts may have to expire 18
  19. 19. What resources are needed ? A combination of internal and external resources can be used depending on current HR/Benefits staffing and optimizing cost for results. External expertise can be used at different stages: • analysis of current financial arrangements • develop framework and bid specifications • analysis of bids • negotiation of improved pooling arrangements • create strategy for managing pools in the future Proposals can be considered from consultants, and providers themselves. 19
  20. 20. What are the questions to ask? 1. How long have they been providing pooling? 2. What is their current portfolio of clients ? 3. How many clients with stand alone pools do they have? 4. How many clients are in small group or multi client experience pools? 5. What has been the average dividend experience of the stand alone pools over the last 3 years? 6. Their small group or multi client experience pools over the last 3 years? 7. What is their structure in serving pooling clients. 8. How are country specific questions answered? 20
  21. 21. What are the questions to ask? 9. Describe a typical accounting cycle. Please confirm if network will guarantee to deliver the annual pooling report within 6 months of the end of the last accounting period. 10. Can accounting reports be customized to the client's specifications? 11. Please detail specifically, by country, any countries and coverages that are unable to be pooled. 12. Please explain any guarantees you offer on your risk and administrative charges shown. 13. Please describe what service standards and guarantees are available. 14. Do they reinsure the pooled contracts risk with a central insurer? If so, what is the name of the central insurer and at what levels of risk is the contracts reinsured? 15. Please supply the names of three (3) companies and a contact person that we may call for references. 21
  22. 22. What are the measures? Pct. of Measured Countries 100% 95% 95% 90% 92% 85% 80% 75% 70% 65% 60% Jul-04 Aug-04 Sep-04 Oct-04 Nov-04 Dec-04 Medical Claims TAT Lif e Claims TAT Graph 1: Percentage of Measured Countries Meeting Local Standards on Medical Claims and Life Claims Turnaround Time (TAT)* 22
  23. 23. Measures: Overall Dividend Projections Consolidation Using Assumptions # of Countries pooled # of Lives Premiums Poolable income Claims Reserves Investment Income Risk Charge 23
  24. 24. The Finalists Network Overview Background; Structure and Team Capabilities Geographic Match with company RFP Response Financials Questionnaire Implementation Procedures involved in setting up new pooling contract Procedures to set up new local contract Major tasks, roles, responsibilities and timeframe Questions and Answers 24
  25. 25. Next Steps Communicate with your Finance Team Show the results of the financials Have them evaluate your analysis Let them meet the network providers Communicate with your Country Heads/Regions Don’t forget who makes this happen Gain buy in, resolve issues, overcome objections Implementation Kickoff meeting for all key participants/contributors Ensure all contacts/info has been distributed Set timeframe for results/cost savings Communicate to organization 25
  26. 26. Ongoing Support Data Collection Make sure you have a way to refresh the data Provide feedback to new networks on any issues Schedule analysis meeting to check on progress Updates Have there been any network changes? Any world issues that need resolving-entry into new countries, etc.? Management Consensus Remember it’s the discontent outliers who can cause problems going forward Stay on top of any disconnects with remote regions and providers 26
  27. 27. Global benefits deployment • You have competitive world-class benefits accessible to employees. • Your global team is highly motivated due to being able to access appropriate benefits. • Your finance team and shareholders enjoy the cost containment effects on the bottom line. • Your ‘high potentials’ profit from the benefits infrastructure supporting global displacement and retention. 27
  28. 28. Strategic global benefits • You can offshore or inshore at will • You can outsource or insource as you wish • You can acquire new companies or operations for growth knowing you can accommodate benefits plans • You have just the right plans in the right place at the right time, you have... 28

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