NEWS
Tuesday 27 August 2024
More and more multinationals are turning to captives to write their employee benefits (EB) risks. Given the growing demand, it’s always worth exploring some of the top trends driving this and leading to the success of these programmes.
Lauren Kelly, MAXIS Regional Manager, US central zone, shared her insights on this alongside Dany Mathieu, Aon Senior Vice President, North American Leader, Captive EB Services, in a new episode of the Global Captive Podcast.
Hosted by Richard Cutcher, the trio explored key trends for EB professionals leveraging their captive for EB – and what multinationals who have yet to explore this solution may not know.
To hear the full conversation, listen in the player below, on Spotify, Apple Podcasts or wherever you listen to podcasts.
1. Risk and Benefits teams are working together to drive captive solutions
Historically, it was risk managers that led the conversation to expand multinationals’ captives to include EB programmes, Lauren said.
“The initial main goal of creating EB captives was to diversify property and casualty (P&C) business and retain underwriting profits.
“While the same goals still exist on the risk side today, there’s been a big shift with risk and benefits managers working together to leverage the captive to support multinationals’ global benefits strategies – and the needs of their employees.
“The goal of many companies now is to achieve globally uniform EB plans, helping to meet both their diversity, equity and inclusion (DE&I) commitments and the individual needs of their people. Often there can be barriers in the local market as to what plan design is available and at what cost. Reinsurance and captives provide flexibility to implement these strategies.”
Dany agreed that risk and benefits managers working together to implement an EB captive is an effective strategy.
“Ultimately, our recommendation is to make sure that both parties are involved as soon as possible. [EB] cannot be implemented successfully [in a captive programme] unless there’s a good partnership between HR and risk management, and many other parties – finance, legal, captive managers.
“It really is a solution that requires many different teams to work together for it to be successful.”
2. Investment in wellness initiatives is a priority
As we mentioned, one of the key drivers to adopt the EB captive model is to take advantage of the potential costs savings and retain underwriting profits. So, how are multinationals reinvesting these costs savings?
While DE&I is a big focus of this spending, other areas clients are making enhancements include removing exclusions, increasing free cover limits and more, Lauren said.
“A trend we’re seeing is captives funding wellness programmes. The goal for most captives is a breakeven result.
“So, by funding these programmes which include preventative programmes, mental health, women’s health and more, they’re really reinvesting in not only the health and wellbeing of their employees but the health of the captive’s performance long-term.
“And ultimately, they see the value that these investments will keep their risk and benefits objectives aligned and really pay dividends to both sides in the future.”
3. Data is driving decision-making
It can be a challenge for multinationals to balance budget considerations with a desire to improve benefits and coverage.
Lauren explained how MAXIS’ suite of healthcare reports available to clients can help them identify top medical cost drivers in each country, and from that data we work with our clients to help them understand what possible local or global wellness solutions could be implemented.
“With rising inflation and pressure on corporate earnings, it's very challenging to balance improved benefits and cost management. It's important to use data and analytics to help drive the conversation and keep the alignment between risk and benefits departments, especially when budgeting for enhanced benefits.”