Are captives the key to creating an equitable employee benefits offering?
This Pride month, we look in-depth at how captives can enable a fairer workplace.
June is Pride month. Multinationals everywhere are putting rainbow flags on their social media profiles and highlighting their commitment to the LGBTQ+ community. While it’s encouraging to see so many businesses showing their support for LGBTQ+ equality in June, some face criticism that this is only a marketing effort and does not go any deeper.
“Rainbow-washing” is a term used to describe how doing just this has become popular in recent years. For those that might not be aware, “rainbow-washing is when a company splashes rainbows, glitter, and LGBTQ+ imagery all over their social media and marketing without substantiating that support with meaningful advocacy or allyship.”1
Multinationals need to ensure that they are true advocates for their LGBTQ+ employees and the wider community, demonstrating their support through concrete actions all year-round – not just in June.
So, how can multinationals avoid rainbow-washing?
Of course, the answer isn’t to stop showing support for Pride month each June – this is crucial. But it needs more. Creating policies, fostering an inclusive culture and providing resources and support can ensure that LGBTQ+ people feel comfortable in the workplace. This will show that your support of, and commitment to, Pride isn’t just rainbow-washing. Multinationals could consider:
- creating LGBTQ+ employee groups to find out what support is most needed and how it can best be delivered
- ensuring policies cater for all people and are not unconsciously biased
- offering inclusive employee benefits (EB) that support the LGBTQ+ community.
While the first two points are important, we (of course) wanted to explore the role of employee benefits in more detail. In particular, we wanted to look at how multinationals can use captives to offer their LGBTQ+ employees more and better benefits.
Captives, EB and LGBTQ+
Multinationals have been using captives to manage EB risks for a long time now, but in the last decade they have proven to be an even more enticing proposition. There’s been a wave of activity as the most centralised multinationals have realised that adding EB to a captive can help retain the underwriting profits, gain control over pricing and diversify their existing business.
And, of course, using a captive for EB risks can help employers be more flexible with the coverages they offer. As the ultimate risk bearer, captives allow employers to remove exclusions, set pricing and cover limits, and provide a minimum standard of benefits.
All of this is particularly helpful for a multinational looking to offer benefits that really help their LGBTQ+ people. This coverage could be anything from recognising same-sex partners as dependents on life, accident and medical coverage, to pricing gender dysphoria treatments that might not be possible locally due to local pricing or policy exclusions.
Aaron Brown, Regional Manager, UK & Ireland, at MAXIS GBN believes that a captive is the best way for multinationals to overcome some of the challenges that can arise when trying to underwrite these benefits locally. He said, “When it comes to employee benefits, it can be difficult to align a global strategy as every country and local insurer will have different pricing models, local exclusions and regulations. This means that, despite how progressive an employer wants to be, it might not be possible to offer the benefits that you want in every market.
“Using a captive is a real enabler to help drive a people-first strategy for multinationals. Being able to remove exclusions, add cover for same-sex partners, or price something that might not be possible through local underwriting makes a captive really powerful.
“We have a number of clients that are using their captive to make these changes and it’s helping them meet their diversity, equity and inclusion goals and look after their people appropriately.”
DE&I is more than LGBTQ+
As we all know, diversity, equity and inclusion (DE&I) is about more than just supporting LGBTQ+ employees. DE&I is about ensuring that all your people, no matter their ethnicity, sexuality, gender, religion, age, etc., are able to thrive.
Being able to offer comprehensive support to all groups in an organisation can be challenging. Just as in the LGBTQ+ space, local market practices and regulation can present obstacles when financing a wide-ranging benefits programme. This is a particular problem in the face of rising general inflation, medical inflation and changing employee expectations when it comes to benefits.
DE&I is about ensuring that all your people...are able to thrive.
But again, this is where a captive can come into play. We asked Aaron about one of his clients who has used their captive to offer a wide range of benefits that wouldn’t have been possible with other global programmes (such as a pool) or with local insurance plans alone.
A captive DE&I case study
Aaron Brown (AB): “We have a global captive client in the financial services industry that has been very forward thinking when it comes to its employee benefits plans. In the LGBTQ+ space, the multinational has worked to ensure that same-sex partners are covered by their policies around the world, where legal, even where this might not have been possible before. It has removed lots of exclusions – not just those related to DE&I – from policies, including HIV/AIDS, alcohol and drugs, natural disaster, war exclusions and more.
“In its medical plans, it has also worked to ensure equality in terms of what treatments are covered. The team realised that, outside of some of the most mature insurance markets, menopause treatments were not covered and many women were left without access to related healthcare. By writing the plans via their captive, the team were able to amend the local policy terms and conditions and ensure that the right treatments were available.
“Another interesting way this multinational has used their captive is to reinvest underwriting profits into wellness initiatives. The captive writes business as ‘not for profit’, which allows local entities to invest more in wellness initiatives that are most relevant to their people. Any profits are also added to a pool that local entities can apply to use.”
Thanks Aaron, is this something that lots of companies are doing? Or is it mainly the largest multinationals that have been using their captive for EB for a long time?
AB: “From what we are seeing at MAXIS, this is something, in one form or another, almost all captives writing EB are doing. When I started working in the industry over ten years ago, captives writing EB was much less common and a lot of the driving force for establishing a programme was around the financial advantages. But now, the biggest driver is delivering a people-focused strategy and getting the best coverage.
“We’re also seeing a commitment from a number of multinationals looking to offer a minimum standard of benefits globally, and using their captive to do this.
“This focus on people, DE&I and improving benefits has helped build real momentum in the industry towards the EB captive model. Ultimately, captives are helping multinationals deliver their people strategy, secure better pricing and, win the war for talent as well.”
Achieving equity
The aim of offering minimum standards of benefits, even when something isn’t standard within a particular market, shows that a captive can almost make benefits location-proof. This is something Janaize Markland, Director, Business Risk and Insurance at Meta, told us when we asked about the goal for its captive programme in 2021.
“It’s about trying to standardise our benefits as best we can. There are some regulatory and compliance challenges in some areas, but we are working on level-setting our benefits across our international locations to the extent we are able.”2
Healthcare equity is another DE&I challenge captives can help to resolve. Rose O’Donovan from Further Group, a specialist in cross-border insurance solutions for serious illness, says
“Employers can eliminate health inequity by ensuring that every employee has access to inclusive products and services that provide the same high-quality healthcare regardless of race, ethnicity, gender or geography.”3
To do this, employers could review their table of benefits, identify any gaps and use the captive to add this additional coverage. Alternatively, employers could reinvest savings from the captive into a cross-border insurance solution that helps to ensure people have access to the best care, no matter where in the world they live.
Keys to success for multinationals
What steps do you need to take to successfully use a captive programme to deliver your DE&I strategy?
As DE&I maintains its place at the top of the corporate agenda and more multinationals look to offer benefits that cater to and protect an increasingly diverse workforce, it seems only natural that the most centralised will look at how their captive can help them achieve their goals. With lots of avenues to explore, the opportunities that a captive can provide might be too good to ignore.
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[1] Michelle R. Wheeler, PSM Marketing https://www.psm-marketing.com/how-avoid-rainbow-washing-pride-month/ (Sourced May 2023)
[2] Anon, MAXIS GBN https://maxis-gbn.com/news-events/latest-news/eb-only-captives/ (Sourced September 2021)
[3] Anon, MAXIS GBN https://maxis-gbn.com/news-events/latest-news/diversity,-equity-and-inclusion-in-the-workplace/ (Sourced September 2022)
This document has been prepared by MAXIS GBN and is for informational purposes only – it does not constitute advice. MAXIS GBN has made every effort to ensure that the information contained in this document has been obtained from reliable sources but cannot guarantee accuracy or completeness. The information contained in this document may be subject to change at any time without notice. Any reliance you place on this information is therefore strictly at your own risk.
The MAXIS Global Benefits Network (“Network”) is a network of locally licensed MAXIS member insurance companies (“Members”) founded by AXA France Vie, Paris, France (“AXA”) and Metropolitan Life Insurance Company, New York, NY (“MLIC”). MAXIS GBN, a Private Limited Company with a share capital of €4,650,000, registered with ORIAS under number 16000513, and with its registered office at 313, Terrasses de l’Arche – 92727 Nanterre Cedex, France, is an insurance and reinsurance intermediary that promotes the Network. MAXIS GBN is jointly owned by affiliates of AXA and MLIC and does not issue policies or provide insurance; such activities are carried out by the Members. MAXIS GBN operates in the UK through its UK establishment with its registered address at 1st Floor, The Monument Building, 11 Monument Street, London EC3R 8AF, Establishment Number BR018216 and in other European countries on a services basis. MAXIS GBN operates in the U.S. through MAXIS Insurance Brokerage Services, Inc., with its registered office located at c/o Katten Muchin Rosenman LLP, 50 Rockefeller Plaza, New York, NY, 10020-1605, a NY licensed insurance broker. MLIC is the only Member licensed to transact insurance business in NY. The other Members are not licensed or authorised to do business in NY and the policies and contracts they issue have not been approved by the NY Superintendent of Financial Services, are not protected by the NY state guaranty fund, and are not subject to all of the laws of NY. MAR01237/0623
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