Post on 08-Feb-2017
global-benefits-vision.com December 2016
Knowledge & Wisdom for Global Employee Benefits Professionals
10 Global EB WatchChris Bruce
18 Death in Service PensionsPaul Avis
22 Starting an Employee Benefits Captive
Marc Reinhardt, Sven Roelandt, Philippe Viénot, Mark Cook
28 What is the Difference between a Migrant and an Expat?
Amanda Klekowski von Koppenfels
32 IGP Sao Paulo Conference Report
6 Global Benefits Vision - December 2016
Profiles of Contributors
He has been a speaker at various IEBA conferences, as well as at the most recent European Captive Forum.
sven roelandT roelandt@geb.com
geB - generali employee BenefiTs Regional Manager WEMEA
Sven Roelandt joined the Generali Employee Benefits Network as Area Manager
for the Nordics and Benelux back in 2012. He is currently holding the position of
Regional Manager with responsibility for the Brussels Regional Office team, which
overlooks the WEMEA region.
Sven holds a degree in mathematics and physics, but has been active in the field
of Employee Benefits for over 20 years. After 10 years of activity on the Belgian local
market, he moved on towards the international employee benefit environment where
he gained experience in the areas of multinational pooling arrangements, captive
programmes, global underwriting models and solutions for expatriates.
Marc has worked with Generali since 1991 in Germany, Italy, and the
USA. While in Germany, Marc specialized in Tax and Labor Law as well as
actuarial aspects of employee benefit plans for international companies
based in Germany. His assignment in Trieste, Italy, focused on the
technical aspects of multinational pooling & captive business in the central
reinsurance department of Generali's home office.
Marc was permanently assigned to the U.S. where he had operational
responsibility for the Generali Employee Benefits’ (GEB) Americas region
which includes Canada, USA, Central and South America. In addition, he
was responsible for ongoing and future partnerships for the network in
the region. Effective April 1, 2016 he was appointed Director of Sales &
Distribution with the responsibility of managing GEB’s commercial teams
in 11 regional offices across the globe.
Marc Reinhardt has the equivalent of a combined Post-Grad/Master’s
Degree in Economics and Insurance from the University of Frankfurt.
marC reinhardTreinhardt@geb.com
geB - generali employee BenefiTsDirector - Sales & Distribution
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Profiles of Contributors
Philippe was trained as an aerospace engineer with a MBA. He worked
6 years with Astrium (EADS) as satellite architect and system’s engineer.
In 1996, he joined Marsh France, managing the space practice for 6
years, before becoming deputy head of FINPRO.
He was hired by AIG France in 2006 to manage the Financial Institutions
and the Professional Liability lines, then he managed all Financial Lines
for the middle market.
He joined BNP Paribas in 2009, as corporate risk manager.
philippe vienoT
Bnp pariBas
Risk Manager
Mark Cook is a Director in Willis Towers Watson’s Global Services and Solutions group
based in London and advises on a range of international employee benefits issues.
He is an international benefits expert and has worked at Willis Towers Watson for over
20 years.
Mark leads Willis Towers Watson’s benefit financing group globally and assists a variety
of clients from different sectors with the optimisation of employee benefits financing.
This includes a wide range of self-insurance, insurance, multinational pooling and captive
related assignments ranging from annual management/ governance such as premium
setting and claims/ reserving analysis to the set-up of successful and sustainable benefit
captives, global underwriting models or multinational pooling arrangements. Recent developments in this space
include the transfer of retiree medical assets or retirement pension liabilities to a captive, the bulk portfolio transfer
of certain EB risks to a single insurer or the transition to a cross border regional benefit plan.
He also facilitates the annual Captive User Group forum each May in London that now has over 750 members from
risk, finance and HR. The key objective of this group is to exchange information among companies that use captives
for employee benefits (or companies that are considering use of captive for employee benefits).
Mark regularly speaks at industry forums and is a frequent author of related articles on the above topics.
mark Cook mark.cook@towerswatson.com
Willis ToWers WaTson - gloBal serviCes and soluTions groupDirector, Global Services and Solutions
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Marc Reinhardt Sven Roelandt
The management of employee benefit plans through captives continues to gain traction with multinational corporations in
all sectors of industry. Captives are rarely the beginning but generally the end point of a risk management journey. Every
journey has a starting point, of course.
This year’s European Captive Forum (ECF) in Luxembourg included several employee benefit related breakout sessions.
One was called “Getting Started – What Do You Need to Consider and What Is the Role of HR?”
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Philippe Viénot Mark Cook
24 Global Benefits Vision - December 2016
Starting an Employee Benefits Captive
At the outset of the project, several basic but
essential questions had to be asked:
q Where is the company today in terms of
managing its employee benefit programs?
q Where would the company like to go in
terms of managing its benefit risk in
the short, medium, and long term?
q Does the company have sufficient premium
volume and the global footprint to make
a captive solution financially attractive?
q Is an adequate risk management
structure in place already?
q What are the motives for selecting
a captive solution and what is the
company’s risk appetite?
q Who are the stakeholders and decision
makers and how do you get them
to work together?
BNP Paribas started where many multinational
corporations begin their captive journey. Prior
to 2015 benefits were not managed centrally
and there was no harmonized HR policy.
Multinational pooling was introduced but on
a “natural” or “convenience” pool basis only.
HR and risk management cooperated in few
if any areas.
With 190,000 employees in 74 countries,
BNP Paribas certainly has the corporate
profile to gain efficiencies from a more
centralized approach to global benefit and
risk management, and leveraging its global
purchasing power. Attendance at previous eCf
workshops on benefits as well as interaction
with other companies utilizing captives at
a Willis-Towers-Watson client roundtable
raised awareness and interest in the captive
concept. Risk management and HR began
working together to convince top management
that a captive was the way to go as it aligned
with the group’s initiative to streamline
internal processes and reduce cost. Mark from
WTW as well as Sven and Marc from GEB
confirmed and underlined the importance
of close cooperation between risk and HR
The session, moderated by Sven Roelandt of GEB (Brussels), included Phillipe Vienot, risk manager at BNP Paribas (Paris); Mark Cook of Willis-Towers-Watson (London); and
Marc Reinhardt of GEB’s USA office. It encompassed the corporate, consultant, and insurer’s perspective on getting a captive program off the ground.
The panel discussion centered on the recent experience of Philippe and his risk management and HR team at BNP Paribas in setting
up a captive for the company’s international employee benefit plans.
ECFEuropean Captive Forum
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management in the successful operation of
captive programs. Bringing HR into the boat
can’t be stressed enough as a success factor.
Attaining this level of cooperation
certainly poses one of the major
challenges given the different
perspectives and priorities in
managing benefits.
As a first step of the journey,
a captive implementation project plan w a s
drafted with the help of WTW. This encompassed
the mapping of eligible group risk benefits
(life, disability, accident, and medical) worldwide,
a technical analysis of contracts to be
included in the initial phase of the
captive rollout, and a recommendation
for a limited number of employee benefit
networks with which to partner. The selection
criteria for the insurers were global reach and
experience in working with captives.
The next step entailed setting clear objectives
and a governance structure for the
project. A dedicated underwriting
committee (with HR participation) was
created; the captive’s risk management
strategy was defined; and the reinsurance
framework with the selected benefit networks
was contractualized. Philippe and his team
understood that clear communication to all
stakeholders involved in the captive project was
crucial. All local BNP Paribas entities, insurers,
and local brokers were informed about the
captive’s objectives.
In terms of the initial strategy, it was decided
not to centrally impose decisions
on local entities at the outset.
They were simply asked
to include the local insurers of the selected
network partners in the benefit tenders. Should
a local entity choose a different insurer, a
rationale for this decision (plan
design, price, service) had to be
provided. The other panelists
confirmed that communication
throughout the various project phases
is a key success factor and that this
“arm’s-length” approach is not uncommon.
That said, some captives are more centralized
in their decision-making processes. All
participants agreed that there is no
“right or wrong” way to manage a
captive, as so much depends on the
structure of a company, its corporate
culture, and the underlying governance
philosophy. A captive is a work in progress and
the risk management approach may evolve and
change during different project phases.
The captive is now entering the next phase,
with an assessment of the overall benefit risk
composition (less weight of medical premium) and
analysis of the achieved cost reductions. The
ideal future world as described by Philippe
would entail the ability to control
the decision-making process more
centrally and harmonize HR benefit polices
across the group where feasible. Based on their
vantage points as consultants and insurers,
the other panelists affirmed that the path to
a successful captive in essence comprises two
journeys, the initial one to get the project
going, followed by a journey within the captive
to reach the set risk and HR management
objectives. The consensus from the panel was
that at the end of the captive journey, the view
will be worth the climb.∞
26 Global Benefits Vision - December 2016
CirCumstanCes at ProjeCt LaunCh (earLy 2015)
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ProjeCt objeCtives
Group
q Premium reduction out of mutualization with three insurance partners
q Shift from “opportunistic pools” to “managed pools”
HR
q Avoid time spent by 250 entities issuing annual RFPs for five EBs
q Visibility on contracts and claims data within three months (as opposed to 18)
q Ultimately O Groupwide EB purchase procedures O Harmonization of HR policies O Financing well-being initiatives and exceptional cases (ex-gratia payments)
Captive
q Diversification and hence, lower capital requirements under Solvency II regime
q Increased premium flow
q Break-even results, which requires adequate pricing for adequate protections; the captive will only accept contracts in the profit / break-even / small loss, but not in Large Loss categories
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year one initiatives
Captive q Governance
O Creation of a dedicated underwriting committee including one HR colleague
O Governance Manual updated; information of Luxembourg regulatory authorities
q Solvency II O Training of the Board; definition of captive risk
appetite and protection levels O EB underwriting reflected in the five-year
Business Plan and in ORSA1
Networks
q Choice of three preferred partners
q Start of contractualization O Negotiation of central / local fees, collateral,
captive protections O Definition of documents formats (quotations,
reporting, invoicing)
q Quick wins O Specific in-depth studies on some complex
countries (Belgium, U.K., Italy, U.S.), whether poolable or not
Group Entities
q Communication
O Memo by Head of Group HR to all HR correspondents preparing for 1/1/16 RFPs
O Memo by Risk Management to all insurance correspondents
q Process O Nothing formally imposed: local entities
are only requested to include the three partners in their local EB tenders
O Local entities must provide rationale (cover, price, servicing) should they decide not to retain one of the three group preferred partners: “comply or explain”
q Joint visits of some core countries by HR and RM: education, conference calls, explanations
Brokers
q A memo explaining BNP Paribas’s project, the respective roles of various stakeholders, and interaction with the global consultant is sent to local and global brokers
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Proposal for EB Captive implementation project drafted by outside consultant
Preliminary analyses, including
q Full mapping of group benefits worldwide
q Actuarial analyses of all EB contracts and classification under four categories based on their expected outcome:
O Profit / Break-even / Small loss / Large loss
q Recommendation of compatible pooling networks based on geographic footprints and on potential for poolable contracts
Agreement by HQ to finance this project as part of a wider corporate initiative aiming at optimizing processes and reducing costs
Two co-sponsors: Head of Group HR and Head of Group Central Functions
Board of SB Ré (group reinsurance captive) agrees to the project
Project focus on Life, Disability, Accident, and Health only (no pensions)
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year two—GoinG DeePer
Process q Prices are quoted by the local insurers, then reviewed by their network, and sent to the Underwriting Committee of the captive
q The global consultant analyses each quotation, and assesses its expected outcome (profit, loss, break-even)
q The captive indicates to the network O Whether it refuses to reinsure the
contract (e.g., large loss expected)
O Or if it accepts O When there is enough margin, captive can
suggest premium reduction to network
q Captive is not seen by the local entity, nor by the local insurance partner or broker
Group HR set the example: group-wide contracts (such as health coverage for expatriates) are moved to the captive arrangement
Reinsurance agreements and protections signed September 2016 (retroactive at 1/1/16)
Group HR hires an actuary dedicated to the matter
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next stePs
Too much health risk; need more accident, life, and disability
Health insurance is more financing than insurance; it exhibits low volatility and one cannot expect positive results to build reserves
Build a consolidated vision of our book of risks
Access reinsurance markets to buy adequate protections, rather than getting built-in reinsurance from each partner for their books
Assess the actual cost reduction achieved
Reduce local broker fees and commissions
In an ideal world
q Select one global broker for coordination purposes q Get rid of no claim bonuses q Enforce group selected partner(s) locally q Harmonize group HR policies in terms of benefits
Set up enough reserves to finance well-being initiatives and exceptional cases (ex-gratia payments)
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touGh Points
Hard to precisely quantify actual benefits from EB captive scheme
q Strong buying culture in the group; most EB contracts were already purchased at a competitive price
q Many countries experience 8%-10% medical inflation, making it hard to compare year on year
Group culture makes it difficult to enforce global HR decisions locally. Local entities love
q No claim bonuses
q Local brokers organizing local tenders
q Local insurers rather than group selected networks
In many countries, local insurers are already distribution partners or even shareholders of our local entities
Existence of dedicated mutual insurance companies in some core countries
Lack of process and reporting tool (RMIS) to monitor and collect contract data on the go
Reinsurance agreements took very long to negotiate and agree
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1ORSA Own Risk and Solvency Assessment, a regulatory report prepared by insurers and reinsurers under Solvency II rules
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orGanIzed by event beGInS locatIon
WCF World Captive Forum 2017, Boca Raton, 29-31 January 2017
29/01/2017 Boca Raton, fl
IEBA IEBA Annual Conference 2017, Brussels, 1-2 March 2017
01/03/2017 Brussels, belGIum
LOCKTON 2017 Lockton Global Benefits ForumWashington DC, 10-11 April 2017
10/04/2017 Washington, D.C.
IBIS 47th IBIS AcademyCannes, 1-5 May 2017
01/05/2017 Cannes, france
IGP IGP International E.B. Seminar,Boston, MA, 9-10 May 2017
09/05/2017 Boston, MA
LOCKTON 2017 Lockton Global Benefits ForumManila, 15-16 May 2017
15/05/2017 Manila, Philippines
LOCKTON 2017 Lockton Global Benefits ForumLondon, 7-8 June 2017
07/06/2017 London, UK
Conferences 2016-2017
NA
AGD
EConference and webinar organizers, please send information about your events by email to eric.muller-borle@global-benefits-vision.com. Publication is free for now and remains at the discretion of the publisher.