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Insurope - multinational pooling

Insurope - multinational pooling. Educational Support. © 2 / 2014 Insurope. Agenda. Insurope The Network Network Partner Presence Customer Comment Pooling Wrap up. What is Insurope?.

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Insurope - multinational pooling

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  1. Insurope - multinational pooling • Educational Support © 2 / 2014 Insurope

  2. Agenda • Insurope • The Network • Network Partner Presence • Customer Comment • Pooling • Wrap up

  3. What is Insurope? • “The Insurope network is a tightly structured association of insurers with formal agreementsof cooperation” * • * Recent description of varying forms of pooling network,Pensions World (UK)

  4. Insurope is ... • A multinational network • Of benefit insurance companies • Operating throughout the world • To provide local group benefit plans • Within the Insurope multinational program • Offered to multinational parent companies • And co-ordinated by the network central office • The Insurope secretariat in Brussels, Belgium

  5. Insurope’s profile • Network of independent insurance companies • Founded in the late 1960’s • Offering Multinational Pooling of local benefit plans to multinational companies • Origins in Europe, but global growth • Strong local partners • Experienced staff & network partner companies

  6. Some statistics • Represented in 80+ countries • Over 600 multinational clients • Network Number 2 in market share • Pooled premium approx. €700 million

  7. Insurope’s structure • Insurope secretariat : • Daily management • Insurope Executive committee : • Strategic decision, budgets, … • General meeting : • “Shareholders” meeting – true platform for input from customers and advisers

  8. Insurope’s central offices • Headquarters in Brussels • Regional offices in: • USA • Asia Pacific • Europe • Scandinavia • UK & Ireland • Germany

  9. Insurope central offices 2/2014

  10. Insurope central offices 2/2014

  11. The inner strength of the network is its people Central office resources Local network partner Insurope unit resources Germany : 1 USA : 10 Latin America : 1 Brussels : 22 UK : 2 Around the world = 40 Around the world = 130 Nordic Region : 2 Asia Pacific : 4

  12. Network partners • Average membership = 20 years(50% are members for over 25 years) • Employee benefit specialists in their home market • Respected insurers locally (usually among top 3) • Dedicated Insurope units • Specialised departments e.g. actuarial & legal services

  13. Network partner worldwidepresence • Western Europe + Scandinavia • Nafta countries (USA, Canada, Mexico) • Asia Pacific • Latin America • Eastern Europe • Risk Benefit areas in development (Middle East, Africa etc..)

  14. Network partnerworldwide presence 2/2014

  15. Network partnerworldwide presence 2/2014

  16. Key strength of Insurope • High quality provision of insured employee benefit plans in 80+ countries

  17. Key strength of Insurope • Effective reduction in the cost of these plans via multinational pooling

  18. To sum up…settingInsurope apart • Flexible pooling solutions • Global free cover and Global rating(or pooling) limits • Quality International & Local Service • Worldwide presence • Wealth of Experience at Central & Local level

  19. Global appreciation • What do our Customers say ?

  20. Customer comment “As a decentralised company our subsidiaries have control of their insurance… Insurope has carried out costing exercises for our Companies gaining their confidence and encouraging them to participate in our Life Pooling arrangements… working directly with our companies or their consultants their patient and helpful explanations of the issues have been invaluable”

  21. Customer comment • “… service excellent… • … objective was to include as many benefit plans as possible without local companies feeling they have lost control… Insurope have handled these issues well without upsetting local managers”

  22. Customer comment “ … a key factor has been to manage and service the Group’s needs in Europe, the Far East and North America with a high degree of technical expertise and account management performance ”

  23. Customer comment • “  … solid relationship… staff fully awareof our requirements… • … access to expertise • … ample back-up ”

  24. Customer comment • "  … tireless and effective efforts as an ambassador around the world "

  25. Customer comment • For more customer comment on Insurope services see homepage of www.insurope.com

  26. A network for pooling • …..and now that you are familiar with Insurope lets move on to the actual concept of multinational pooling itself

  27. Concept of pooling Basic principle of multinational pooling

  28. Multinational pooling • a perfect tool for global risk financing of a multinational’s world-wide employee benefits package • allows multinational companies to benefit from favourable insured claims experience on aworld-wide basis • Underpinned by an Insurope Multinational Program agreement between the multinational company and the multinational network • Consolidation of risks via a multinational profit and loss account

  29. Multinationalpooling account • This multinational account is then protected by a pooling system

  30. Multinationalpooling account F E HK Claims, expenses, taxes & local dividend Multinational dividend Administration charge & Risk Charge

  31. The MultinationalProgram Agreement Multinational Agreement Multinational Company SUBSIDIARY FRANCE SUBSIDIARY SPAIN SUBSIDIARY HONG KONG ESPAÑA S.A. GAN MANULIFE

  32. What can be pooled? • All countries: • Life & Disability • Most countries: • Medical & Accidental Death + Dismemberment (if rider to life) • Some countries: Retirement

  33. Pooling systems • The systems available reflect differing levels of protection for the multinational pooling account

  34. Pooling systems • General condition : minimum of 2 countries • with poolable benefits • Single-employer systems available above 1000 lives • Loss Carry Forward (various) • Stop Loss • “Multipool”, Insurope’s multi-employer system available below 1000 lives

  35. Loss carry forward systems • A negative result in the multinational pooling account, depending upon loss limitation features (or protection) chosen, is transferred to the next years account • Loss limitation features • Aggregate loss limitation options • Limitation in time: roll over options(2, 3, 5 years)

  36. Standard loss carryforward system Loss limitation features • Aggregate loss limitation via a standard loss cancellation level equal to 2 x the pool death and disability premiums (within the global rating limit range) • Flexible – possibility of different aggregate loss limitation options • No limitation in time

  37. Limited loss carryforward system • Loss limitation features • Aggregate loss limitation via a standard loss cancellation level equal to 2 x the pool death and disability premiums (within the global rating limit range) • Flexible – possibility of different aggregate loss limitation options • Limitation in time via roll over options(2, 3 or 5 year basis)

  38. Limited loss carryforward system • E.g. 3 year roll over option • Yr 1 loss 100,000 • Yr 2 surplus 20,000 LCF 80,000 • Yr 3 loss 50,000 LCF 80,000 from yr 1 • LCF 50,000 from yr 3 • Yr 4 surplus 50,000 LCF yr 1 = 30,000 • LCF Yr 3 = 50,000 • Remainder Yr1 = cancelled • LCF to Year 5 = 50,000

  39. Stop loss system • The stop loss system offers the optimum level of protection whereby a negative result in the multinational pooling account is fully cancelled by the Insurope network

  40. Cost of protection • Risk Charge • …taking into account: • Type of protection opted for • Overall number of lives in pool • Margins in premiums

  41. Cost of protection

  42. Insurope charges • Risk charge • Administration charge • Transparent • Shown separately • No additional charge to local premiums • No change of local conditions

  43. Cost of protection All at no additional cost The cost for this protection (“risk charge”) will be subtracted within the multinational pooling account from the premiums paid, it is NOT an additional cost It is important to underline that the risk and administration charges incurred by insurers in Insurope pooling arrangements are an integral part of ingoing premiums and not an additional cost

  44. Administration charge • Represents the cost for the local administration of the insured plans included in the pooling system • Charges are governed by an Insurope worldwide network scale…not simply a question of “local charges apply”

  45. Multipool(multi-employer system) • Multipool – protected by a stop loss system • Max. 1000 lives OR less than € 300,000 in death & disability premium • Dividends shared over all positive individual contracts (!)

  46. Multipool(multi-employer system) • Due to large number of lives in Multipool the risk charge is relatively low • …but deficit results from other companies are offset first

  47. Insurope Multipooldividend distribution • Different from market practice which first offsets the deficit results for subsidiaries of the same multinational • In contrast, Insurope give greater chance of dividends being paid for some, if not all, operations of the same multinational firm each year • …lets see

  48. Multipool dividend distribution Sum positives = 100 Sum negatives = 60 Available = 40 Payout ratio = 40% of + • NL gets 24 • DK & UK get 8 • CH & B get nothing Multinational A Total result = 50 Dividend = 24 Multinational B Total result = -10 Dividend = 16 Multinational A = + 50 NL +60 B -10 Multinational B = -10 DK +20 UK +20 CH -50

  49. Other protection features • Global rating limits • Global rating limits protect the multinational pooling account by excluding premium and claim amounts relative to cover above a certain limit • …this reduces the impact of high individual claims

  50. Global rating limits • Being relatively high, Insurope global rating limits are designed to provide an optimum balance betweenprotectionof the pool result and an increase in the overall amount of premium available for generating multinational dividend • Limits differ for single-employer and multi-employer systems

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