Many companies with employees located in many countries globally provide supplemental benefits in addition to those that are government mandated. Many of these supplemental plans are insured: life, accidental death and dismemberment (AD&D), disability, retirement, etc. Typically, the office in each country location manages their own process of selecting insurance companies, types of coverage, comparing premiums and settling on the final contract language. Sometimes the number of employees is very small and, therefore, the premium is high because the risk is spread over a small number of people.
Many large companies have adopted multinational pooling as a way to finance supplemental plans. There are nine multinational poolers in the world and they each cover benefits in many countries.
Think of a multinational pooler as a holding company. Under each pooler is a network of insurance companies – usually one insurer per country. A large company would select a pooler and purchase insurance plans for each country through the pooler’s network of insurance companies. By pooling all of their employees together, the risk is smaller due to the large number of employees covered. The intent is that a company can provide the same benefits and yet reduce the total premiums and administrative costs.
When selecting a pooler there are some issues that need to be considered. Some of them involve underwriting provisions, termination provisions and level of retention. I want to focus on one that I believe is extremely important: due diligence on the pooler’s local medical insurer in each country.
Medical insurance is used very frequently by employees and their families and therefore can be a very sensitive issue if you are considering changing insurers. Here are a few things to investigate:
- Local insurance company financial stability — is their past and current financial status secure?
- The cost of the premium that is quoted compared to other local insurers — is the premium higher/lower than the country’s existing insurer?
- Willingness to accept pre-existing conditions
- Local reputation of the insurer — customer service issues
- Any problems local management/employees might have in switching insurers
- Pre-existing conditions – Although medical coverage/plan design remains the same, if the new insurer refuses to cover pre-existing conditions there are likely to be some very unhappy employees. I know one case where the wife of an employee in theUK had cancer. The new insurer refused to cover her. The damage caused by this one incident required a lot of time and effort to resolve. The multinational pooler finally had to tell the local insurer that pre-existing conditions must be waived. That being said, bad feelings remained with the employee, his co-workers and local management.
Poor customer service is another problem that is very visible to employees. Delay of claims processing, denial of claims and lack of responsiveness to employee questions and complaints all create unnecessary tension and frustration.
After your investigation, you may find that local medical insurers in some countries seem to have a good reputation and meet your requirements. In other countries, however, you may have some concerns whether employee issues will be taken care of properly. In these countries it might be best to engage the services of a local broker that can act as the intermediary between your employees and the insurance company. In other countries where customer service does not appear to be an issue, an administrative person on staff may be able to handle claims issues with the insurance company directly.
Selecting a multinational pooler can be a tedious process; however, it is well worth the time to conduct due diligence — especially with medical insurers. Due diligence may not catch all the potential problems, but it is worth the effort to attempt to reduce the likelihood of problems down the road. Medical insurance is a very sensitive issue, and effort must be taken to ensure adequate care for your employees.
If anyone has experience in selecting a multinational pooler — especially with investigating medical providers in each country — please provide your comments below. We all benefit from each other’s experiences.
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