Advantages of Multinational Pooling and the Network Arrangement
For multinational employers considering multinational pooling to cover their local nationals worldwide the number 1 question we are asked is what are the advantages and specifically how do these advantages translate to “our specific organization internationally.”
We hope you will speak to us about the latter which we will do without consulting fees, but as for the advantages, we have put together a comprehensive list below:
A multinational pooling program where a local insurance company in the pool is used to cover local nationals keeps the employer in compliance. In many countries it is simply illegal to use a non-admitted insurer to cover local nationals.
Ease of implementation. Do you have local nationals in 10 countries? Using a multinational pooling network vs. “doing it ourselves” can save about a year of time and effort. This is very simplistic but a major advantage.
The local pooling network insurer satisfies the local tax and legal regulations and maintains the plan design and premium payments seamlessly. Local law changes on plan design are immediately reflected by the local insurer in the multinational pool.
A pooling arrangement facilitates vastly improved reporting so, at a glance the home office can see what is going on in each country.
By bundling insurance risk through multinational pooling, total insurance expense can be reduced and additional savings are possible through international dividends if their claims experience is positive. After the final accounting, a dividend (refund) check can be returned to the parent company.
Multinational pooling enables the multinational employer to get closer to experience rating on a global basis, while still ensuring appropriate risk protection. This is especially true if the group size in some countries is small.
The underwriting terms locally may be more favorable because a company participates in a multinational pool. For example, guaranteed issue limits for life insurance amounts without medical evidence may be increased just for being in the multinational pool.
There is a degree of leverage the multinational pooling network has over the local insurance companies that the company would not be able to achieve on their own (unless perhaps you are GE or Boeing or a company with 50,000 or more local nationals!)
Global financial accounting provides a simpler perspective of insurance policies across borders and within countries. This improves the flow of information and transparency in the details including premiums paid, commissions and claims paid, allowing for more control. A better understanding facilitates improved risk management.
In summary, multinational pooling makes things much easier, ensures legal compliance, and saves money. There are very few down sides.
