Multinational companies face an ever-changing set of challenges and opportunities in an increasingly globalized world. One of the key areas that has seen significant evolution over the last three years is the practice of Multinational Pooling for employee benefits. While many organizations have heard of captive arrangements or local profit-sharing agreements, Multinational Pooling is often overlooked.

What is Multinational Pooling?

Multinational Pooling is a mechanism that links employee benefits plans worldwide. This solution has been instrumental in streamlining benefits administration across borders and delivering substantial advantages to both companies and their globally dispersed workforce.

This approach offers advanced risk management and governance, enhanced service and administration, centralized reporting and can offset the cost of employee benefits through the potential generation of multinational pool dividends. In addition, it can offer higher Free Cover Limits – extending the scope of coverage without medical evidence – for life and disability covers. Eligible benefits include life, medical, accident, disability, and retirement with risk across different regions or countries.

In this article, we explore the market drivers, and why multinational companies are considering this solution.

The Growth Trajectory of Multinational Pooling for Employee Benefits

The latest industry statistics show that since the COVID pandemic, Multinational Pooling increased by about 20%. The interest in pooling is recognition of the many benefits, such as global facilitation and coordination, enhanced service and reporting, better terms and conditions, and the potential for receiving an international dividend.

According to a recent market survey by Insurope, the most important factors for companies when setting up a pool are (1) strong local insurance companies that belong to the network, (2) the potential for international dividends, (3) track record, and (4) products and services offered by the multinational network.

The strong growth is also driven by:

• Risk Awareness: Due to the pandemic, there is higher risk awareness among people and demand for risk protection, insurance and wellbeing solutions among individuals and companies.
• Cost Optimization: Global companies are looking to offset cost pressures. In times when inflation and medical costs are skyrocketing, Insurope’s multinational pooling solutions can contribute to mitigate the overall costs for multinational companies.
• Globalization Trends: As businesses expand their operations to tap into new markets and customer bases, the need for consistent and efficient employee benefits programs across borders is critical. Multinational Pooling addresses this need by providing a unified solution.
• Technological Advancements: The advent of advanced software and data analytics has greatly enhanced the feasibility and effectiveness of Multinational Pooling. Companies can now seamlessly manage benefits programs through collaborative platforms.
• Regulatory Changes: Demographic trends, pressures weighing on public finance (as a result of the pandemic, war in Ukraine and need to finance the green and digital transition) is resulting in a growing role for private insurance solution in plugging certain protection gaps. Against this background, the access and distribution of employee benefits in the workplace is now critical in most jurisdictions and multinational pooling has proven an effective way for multinational companies to gain access to market leading insurers across the globe.

Benefits for Multinational Companies

Once a company has decided to implement a multinational pool, most are very pleased with the results. According to Insurope’s market survey, almost all companies plan on continue with the solutions in the future. In fact, Insurope’s survey demonstrates 84% of the multinational companies consider pooling to be very important when selecting a local provider for their subsidiaries. This speaks to the wide range of benefits Multinational Pooling offers companies with international operations. Here are the top reasons why companies choose multinational pooling and stay with it over the long term:

• International dividends: By netting claims and other expenses from the global premiums, positive pools (with good claims experience) can generate value in the form of international pool dividends.
• Better Terms and Conditions: With options like high free cover limits for Life and Disability, Multinational Pooling makes it more convenient for organizations to protect their employees without having to take additional actions. Access to Worldwide Reporting and Information: Global reporting on their benefits plans allows HR teams to  have access to an overview of performance and results of the subsidiaries that are included in the pool. .
• Better Coordination with Local Network Members that Enhance Employee Satisfaction and Retention: Facilitating coordination with local insurers is critical. At the same time, offering competitive and locally tailored benefits packages through local licensed Network Members demonstrates a commitment to employee wellbeing. This can result in higher employee satisfaction, improved morale, and ultimately, higher retention rates.
• Governance: Navigating the regulatory frameworks of different countries can be a complex and time-consuming process. Multinational Pooling programs allows multinational companies to gain access to a Network of market leading local insurers, coordinated by Insurope. Therefore, to benefit from the expertise of local insurers in each country who understand and can navigate various legal and regulatory requirements.

Future Multinational Pooling Trends

Multinational Pooling is by far the most used and preferred global employee benefits risk solution for most multinationals. We expect this momentum to continue. Looking ahead, the Multinational Pooling market is positioned for continued growth. Due to the pandemic, there is greater risk awareness and demand for risk protection and insurance among individuals and companies. At the same time, a modest percentage of multinational companies worldwide have implemented a global strategy or use a global solution offered by Multinational Pooling Networks.

And, with the ongoing evolution of technology, including the integration of artificial intelligence and advanced analytics, the capabilities of Multinational Pooling are set to expand even further, providing companies with even more sophisticated tools to manage their global employee benefit plans.

Wrapping it up

Multinational Pooling represents a powerful solution for companies looking to navigate the complexities of providing employee benefits across international borders. Its growth over the last three years is a testament to its effectiveness in streamlining operations and  ensuring a consistent and competitive offering for employees worldwide. As the global marketplace continues to evolve, Multinational Pooling will likely play an increasingly pivotal role in shaping the future of employee benefits administration for multinational corporations.