Expatriate Benefits Issues, Trends and Experience Simon Ball & Linda Beavis Risk. Reinsurance. Human Resources.
Why are we discussing expatriate benefits? Expatriates are by nature influential to the business success Often accompanied by families High expectation of duty of care from employer Treatment costs can be very high dependent upon condition but difficult to predict High emotive/sensitive issue Wide range of expectations often centered on home country provision Moral liabilities Comply with local legislation Staff retention tool Proprietary & Confidential 1
Why are providing benefits to expatriates different? Effective treatment procurement required to reduce future costs Multi-lingual capabilities essential 24/7/365 availability required Understanding of home country cover essential to manage expectations Possibility of subrogation from certain EU based social systems, depending upon employing entity Highly service led, very little margin or volatility of risk Highly emotive claim process Proprietary & Confidential 2
Rising Costs Put Pressure On Company Budgets 12.00% 10.00% Global Medical trend rate in recent years 8.00% 6.00% 4.00% Drivers to medical inflation Soaring drugs R&D costs New treatment paths Litigation and insurance High cost health issues Obesity Diabetes Life extending 2.00% 0.00% 2013 2014 2015 Growing costs of private medical insurance European long-term healthcare black hole Utilization (and cost) hard to predict Single-year cost optimization or longterm control mechanism Proprietary & Confidential 3
Treatment Procurement: The Details What is treatment procurement? Do insurers deliver it? How will it look in the future? Domestic versus international Long-term cost control versus short-term savings? Proprietary & Confidential 4
Market Trends Trend Regional plans Multi benefit schedules Employee cost participation US exclusions Pre-deployment screening Description Global expatriate plan being split into several regional plans Setting up more than one benefit scale within single policy Introducing copayments and cost sharing with employees Remove US coverage from policy Health checks ahead of assignment Rationale Recognizing expatriates in different regions have different needs Allowing for various categories of expatriates and overall growth in covered populations Cost savings Cost savings Change employee behaviour Including coverage within the US increases costs substantially Additional cost and regulatory burden of PPACCA Ensure no hidden costs ahead of assignment costs Understand total costs of the assignment and educate employee Impact/action Ensure global plan fits needs of Asia population. Ensure Asian voice is heard when design is reviewed Review existing policy to ensure it meets needs Look to add schedules if appropriate Carry out feasibility analysis to see if this is possible and worthwhile Analyze claim patterns Review policy to see if US is included or excluded Look into feasibility of removing this Look to implement predeployment screening ahead of assignments Proprietary & Confidential 5
Alternatives to formal expatriate benefit policies With the rising costs of international PMI, some are looking at alternatives such as Travel Insurance, we have detailed below the pros and cons of each approach based on expatriates needs Travel insurance International PMI Suited to short term travel Suited to long term travel/secondments Pre-existing conditions excluded Pre-existing can be included, depending on type of plan Often based on employee cover but can be extended to spouse/dependants Open to employee and spouse/dependents No preventative cover Health screens, vaccinations, preventative tests can be covered Pre-planned, i.e. maternity not covered Maternity can be included Routine monitoring of chronic conditions not covered Chronic can be covered No direct settlement for outpatient or small claims Direct settlement in many countries for in an out patient claims Lower cost Higher cost Policy schedule and card with assistance numbers Full membership pack and literature with online claims submission, card, assistance numbers and additional member information Proprietary & Confidential 6
Client Example: Large French Based Multi-National Background Had not taken their scheme to market for a number of years Concern raised over rising costs Treatment procurement led tender Compliance a major issue, OFAC and local compliance Results Moved provider 1 January 2015 Auditable justification of move based on reduced compliance cost and treatment discounts Savings circa 12% achieved over long-term Administration costs reduced Higher utilization of technology Proprietary & Confidential 7
What Is A Pan European Plan? Pan European plans allow you to have one single policy to apply across borders They a provided by the insurer under the European Union Freedom of Services act These plans apply to all Risk policies Life, Disability, Accident Death and Disability, Critical Illness They can cover all EU countries and some EEA countries. They can be set up with as little as 2 countries and 5 employees They enable you to obtain cover for very small populations in multiple countries. By combining multiple country populations you can enjoy the benefits of a larger scheme for your smaller headcounts Proprietary & Confidential 8
Things to consider about Pan-Euro plans Advantages Purchasing scale of regional population Considerations Cross-subsidies of underwriting experience across the region Reduced policy administration and management - Simple Accounting with breakdown of cost per jurisdiction Single policy for the region and so different from pooling (in particular no dividends) Greater governance and control over all aspects of plan management If local policies have been set up this could mean loss of control for local management over policy providers (design can still be owned locally though) Consistency of benefit policy for mobile employees Limited to EU Countries (and some EEA) for now Allows for group terms where not possible on a country by country basis Limited to risk benefits for the foreseeable future Competitive approach to Free Cover Limits Claims are paid to the Policyholder for them to distribute locally. Allows differences in plan design by country, allowing the employer to provide market standard benefits Policyholder responsibility to ensure correct taxation of local benefits Proprietary & Confidential 9
Risk. Reinsurance. Human Resources. Appendices
Current Issues: Ebola Virus Ebola is not new the virus was discovered nearly 40 years ago Fruit bats, a delicacy for some West Africans, are thought to be the natural host, but various types of monkey can carry the virus too There is currently no proven vaccine or cure but drug trials are being fast tracked. As long as it proves to be safe and effective, we hope a vaccine will be available in 2015 Proprietary & Confidential 11
Ebola: Infection People are infected when they have direct contact through broken skin, mouth, nose with the blood, vomit, faeces or bodily fluids of someone with symptoms The virus can be present in urine and semen too Infection may also occur through direct contact with contaminated bedding, clothing and surfaces - but only through broken skin It is still unclear how long the virus exists on surfaces, however, it is thought that the virus only survives for a short time outside of the body; particularly when it is dried onto hard surfaces such as metal or glass. Bleach and detergent can kill Ebola The disease is not transmitted through the air, like flu. Very close direct contact with an infected person is required for the virus to be passed to another person It can take between two and 21 days for humans with the virus to show symptoms People are not infectious until the symptoms develop Proprietary & Confidential 12
] Ebola: Key Points Ebola is a rare, very serious viral illness There is a current outbreak in West Africa The chances of acquiring Ebola are very low There is no specific treatment Precautions to avoid infection can be taken Carefully assess the need to travel to affected countries and ensure adequate arrangements for onward travel are in place Proprietary & Confidential 13
Ebola: Key Points For Clients Evacuating every potentially contaminated person is financially restrictive Costs of evacuation are extremely high Medical evacuation air ambulances taking Ebola patients few and far between Contamination of non-infected countries a potential corporate risk, isolation of returning assignees essential Life and disability policy wording needs checking for Ebola cover No private facilities taking Ebola patients Most developed countries exclude entry for infected non-local nationals Life and disability policies may not cover the risk Travel insurances are of little value in the region Proprietary & Confidential 14