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Multinational Pooling

Nordben is a Member of two of the world’s leading networks, IGP and Insurope.

Nordben’s products can be included in an IGP or Insurope account. For further details about IGP or Insurope please visit their web sites:

What is Multinational Pooling?

The concept of Multinational Pooling has been around for over 50 years. It is the linking together of group insurance contracts (with a “network” of insurers), effected in two or more countries by subsidiaries of a multinational corporation, for the purpose of combining claims experience under these contracts. The Pooling operates on two levels.

 

-         Local contracts between the subsidiaries and the local network Insurer

 

-         Global contract between the parent company and a Multinational Pooling Network.

 

So, for example,



The overlaying global contract does not effect the local contracts. The local contracts will meet all local legal and tax requirements. Most insured group and employer paid employee benefits can be pooled:

                                        Death
                                        Disability
                                        Retirement (but no defined contribution)
                                        Medical
                                        Accident

In a simplified example a “Pooling Account” could look something like this:

 

Total 

Premiums 

 60

100 

20 

180 

Investment income

 8

10 

21 

Total income

 68

110

23 

201 

         
Claims 

 30

60 

30 

120 

Insurers' margins

10

16

4

30

Total outgo

40

76

34

150

Experience rating balance
or multinational dividend

28

34

(11)

51


Research has shown that a well balance Pool can expect to yield on average 5% to 10% of total worldwide insurance premiums in the form of an annual dividend.

So, where do savings come from?

Tariff countries  Those countries where governments regulate conservative pricing structures that all local insurers have to follow - this is very rate but was a significant source in the early years of Multinational Pooling. 
Favourable claims  experience               The multinational benefits from including insurance contracts that yield a good claims experience. 
Reduced insurer margin  The insurer accepts lower margins in return for enhance contract presistency. 
Global purchasing power  The parent company is able to pressure the network into delivering "best premiums". 

What other benefits can "Multinational Pooling" bring?

Improved underwriting conditions  The networks typically offer guaranteed issue or free cover greater than local norms, i.e. the need for medical examinations are reduced. 
Global service Standard  The networks aim to deliver global standards in terms of claim settelment, renewal, contract issue etc. 
Global governance The networks report to the parent company on the multinational's global benefit plans. The parent company has increased oversight/control. 
Information The networks supply benefit information so that the multinational knowns what is best practice, new market developments etc. 


22 August 2008
Paul Cutter
August 2008