Theatre 2. Global Reward. Sponsored By. Zurich Insurance Company Ltd

Theatre 2 Global Reward Sponsored By

Using centralised structures to deliver global benefit plans Tony Dowd, Principal, Aon Hewitt Global Benefits Practice Dale Fleet, Senior Corporate Relationship Manager, Zurich Employee Benefits Network David Munro, Head of Operational Risk EMEA, DLA Piper TAKING YOUR EMPLOYEE BENEFITS TO NEW HEIGHTS

Agenda Introduction Issues surrounding the implementation of global programmes DLA Piper Role of the consultant Implementation Other structures that can help support global plans The future and challenges ahead 3

Property and casualty vs life and disability In the employee benefits world, Umbrella / Master contracts or worldwide programmes as well as Difference in Conditions / Difference in Limits are not common Property/casualty is top down Employee benefits is bottom up 5

Overarching considerations Regulation Employee Benefits are regulated in many markets Can be mandatory Financial Impact Cost of Employee Benefit programmes can be high GBP 500 1,000 per employee for risk covers (ex medical) Potential cost of liabilities can be higher than property and casualty risk Reputational Risk A good Employee Benefits programme can act as an attraction/retention tool for employees Can impact on reputation of organisation if things go wrong Risk Strategy Programmes are often structured and placed without reference to organisational risk strategy or approach 6

Background and objectives DLA Piper is the largest law firm in the world with 750 partners outside USA Wished to consolidate provision and implement a global Life insurance programme centrally for all Partners Wished to ensure consistent cover and satisfy moral obligations to survivors Additional challenge of a globally mobile workforce moving between countries Compliance and governance both important factors 8

Approach Investigated Zurich s ability and appetite for the programme Reviewed Partner provision across the countries in scope Given the diverse countries and the scattered populations, a fully compliant programme was not possible The plan was to place as many of the schemes in locally compliant solutions and sweep up smaller groups into regional plans Designed a simple banding structure in terms of benefit levels, pinned to Partner earnings 9

Scheme design In conjunction with Zurich, a global programme was designed which met all of DLA s requirements, using both local and Zurich International plans The global benefit structure agreed is: Earnings (GBP) Up to 250k Between 250k and 500k Over 500k Cover 500k 1m 1.5 m Also allows for grandfathering of benefit levels in certain countries Global rate per mille and premium level agreed, combining local premiums and rates and partner transfers on no worse terms 10

Reinsurance structure and process Parent company Multinational Customer Multinational dividend Carries full risk Network Reinsurer Bundling of pooled risk into one single portfolio Zurich Administration, Pooling Reinsurance agreement Technical result to ZEBN Full Compensation to NWP Network Partner 1 Network Partner 2 Network Partner 3 Network Partner 4 Network Partner 5 Customer subsidiary 1 Customer subsidiary 2 Customer subsidiary 3 Customer subsidiary 4 Local subsidiaries have a direct contract with the local network partner Customer subsidiary 5 11

Global partnership Programme Level Coordination Central Account Management, pricing and terms United Kingdom EMEA Region Asia Region Country 1 Country 2 Countries UK Belgium Germany France Netherlands Countries UAE Oman Saudi Arabia Czech Republic Georgia Hungary Romania Slovakia Turkey Ukraine Russia Poland Countries Hong Kong Singapore China Japan Thailand Locally agreed terms and conditions Country 3 Locally agreed terms and conditions Locally agreed terms and conditions Country 4 Locally agreed terms and conditions Provides greater scope of cover in terms of geography Centrally coordinated, with programme level terms and pricing Policies not fully admitted but provide compliant cover Some benefits may remain outside programme due to capabilities of local affiliates 12

Multi-dimensional aspects Alignment with procurement Compliant benefits Vehicle Design Leveraged relationships Programme Design Market competitive Benefit Design Financially efficient Alignment with strategies 14

Conditions for successful implementation Commitment Willingness to manage the pool Communication to subsidiaries Buy-in of local responsibles Close cooperation between ALL parties Patience and long-term perspective Clarity of targets 16

Stakeholders for risk manager interface HR Finance Benefit design Link with Workforce strategies Benchmarking against market Overall cost of EB provision Compliance with accounting policies Legal Compliance with contracting requirements Application of standard terms and conditions Procurement Selection of suppliers and ensuring best deal Management of placement and marketing activities Benefit Advisors Advice on programme structure Advocacy services 17

Competing interests Benefit design Financial efficiency Programme Design Vendor selection Contractual terms 18

Hierarchy of solutions Captives Consolidated programmes Coordinated programmes (including pooling) Local/regional policies (transfer of risk) Self insurance (usually with SL/Cat Cover) 20

Consolidated programmes Recently, there has been a shift in insurer-thinking towards a more globally coordinated approach, building on existing insurance solutions in country The innovative elements are around: Single insurer Centralised account management across all countries Combination of EU and non-eu countries via local country plans and international plans (small headcounts) Programme-level discounts/free Cover Limits Risk-based fee structure based on tariff rates and experiential rates 21

The future Governance and compliance remain at the forefront of all development Pan European legislation has not helped stimulate the market, however certain structural / process frameworks are created which may help in the future Work on true top-down structures (as on the non life side) continue to be developed which require close HR / Finance cooperation Barriers to development include: Combined policies with multiple covers (life; medical; disability; accident; pensions) Local social and labour law requirements Integration with non risk products (like pensions) 23

Thank you 24