Latest Trends in International Benefits Mercer's Benefits Survey for Internationally Mobility Employees is underway now. Take part in this unique survey and receive a free executive summary and exclusive discounts on reports. Healthcare, Life Cover, and Disability Benefits: Addressing Compliance and Other Cross-border Solutions Alana Rae and Paul Andrews, The MMB Centre of Excellence for International Benefits Benefits are a key component of any international assignment package, but consistently rising costs in both mature and emerging key markets mean that employers’ internal budgets are under greater pressure than ever before. Furthermore, in some countries locally administered plans are mandatory if organizations are to comply with local legislation. Ensuring that benefits are affordable on a sustainable basis and fit for purpose is therefore very high on the agenda for most multinational corporations. This article offers a concise overview of the latest trends in international healthcare, life cover, and disability benefits, and suggests potential solutions that are both cost-effective and compliant. “Essential” International Benefits International assignees require insurance cover for a range of scenarios, and typically receive: Life cover. This can include lump sum life insurance, also known as “death in service”. Accident cover. This can include a lump sum for accidental death or dismemberment. Disability cover. This can include income protection, also known as “income replacement”; lump sum total; and permanent disability. Medical cover. This can include assistance with international medical and dental expenses; global assistance and security; wellness and pre-assignment screenings. Latest Trends In the international medical benefits space, there is a growing emphasis on gauging and encouraging employee wellness. Pre-assignment evaluation of the health of employees and their dependants is now more common, as well as identifying pre-existing ailments prior to assignment is important on a number of fronts, not least cost. Combating rising premiums is essential for all businesses, particularly those active in the Middle East and some parts of Latin America, where medical inflation costs are rampant (20% p.a. in the UAE and an astonishing 40% p.a. in Brazil, compared with an average of 10% p.a. in other parts of the world). Improved claims management, fraud detection and network management all have a part to play in cost management. As does the leveraging of provider links, harmonizing plans across regions and localizing assignees where possible . International risk is also an area of increasing focus, for a variety of reasons: It’s a less developed market. Fewer companies tend to have international life and/or disability cover in place compared to those who have a medical plan. Product development and general awareness in this market historically has been slower, however, opportunities for growth lie increasingly in emerging economies and in some instances, the more dangerous locations. Risk management. International plans will continue to play a part in protecting a company from the cost of absence or accidents to employees. Employee demand. Benefit packages need to be comprehensive and offset potential risks to the individual / dependents. Employees are increasingly educated about their benefits and the expectation is that life and disability cover should be in place, whilst they are on assignment. A changing approach to compliance. Local domestic insurers are increasingly reluctant to offer overseas cover. International Risk Compliance Considerations This latter point is just one example of the general shift in the way in which international risk compliance is measured and managed. Previously, non-admitted global plans (“one size fits all”) were written under one contract and administered offshore. Claims were paid across borders and the entire system was lightly regulated. Today, international assignments are changing – while the traditional full expatriate assignment is still very much part of the picture, alternatives are gaining traction – and the regulatory environment is becoming more complex. As noted above, cost reduction continues to be a priority. Looking ahead, there is likely to be: An increased focus on the location of the policyholder, the employment contract and attendant benefit promises. Closer scrutiny of cross-border claims payment. Navigating Today’s Legislative Environment As both employers and insurers become more mindful of compliance concerns, a variety of solutions have developed in the market. Life, accident and disability plans can be managed by a Cross-Border plan for multinationals facing the following challenges: Small employee populations by country which affects premiums, underwriting and ability to offer these types of benefits. Limited in-country HR/benefit resources, regional and global HR/benefit resource capacity. Fragmented global or regional benefits strategies. This approach includes a reduced number of plans and thus less administration, which improves overall process efficiency. Additional benefits include: Consolidated underwriting, a centralized approach to underwriting requirements and cost. A greater concentration of numbers, which facilitates the leveraging of premiums. Enhanced governance of plans and benefits in place. A continued ability to vary benefit levels per location. Another alternative is a Pan-European approach, which again reduces the number of plans, features centralized administration, underwriting and invoicing. This applies only to EU-based plans and is compliant within thanks to Freedom of Services legislation. The Future? Many countries in the world are currently experiencing unprecedented change, and it is more difficult than ever to predict long-term challenges and potential scenarios. It is important to think through developments in the benefits space, however, so that your organization can be as future-ready as possible. Key topics for discussion should include: Cross-border plans. Whilst these are still in their infancy, making use of insurer links and centralizing where possible with one provider can assist in developing a coherent strategy. Flexible benefits. These are very popular across multi-generational workforces in domestic markets, where different employee segments have differing needs. Is your benefit offering as flexible as it could be internationally and is there scope for this? Varying provision levels. Is offering home and host cover only an option for your organization? Cost-reduction avenues. With continued increases in cost of benefits, can partnering with the right providers help reduce claims costs without effecting employee experience? Exploring online and other tech solutions. Employee portals and online doctors are just two ways in which innovation can improve or overhaul benefits provision. Keep an open mind about these and trial them if appropriate, gauging employee feedback in the process.