Are you getting best value from your global insurance?
IN OUR EXPERIENCE
An international oil and gas company organised insurance through their regional offices. An employee moving from Canada to Angola discovered he would have less protection in Angola, when he felt he needed more. By switching from regionally arranged IPMI to a single global scheme, the company was able to access a higher level of homogenous benefits, and save US$60k per annum in premiums.
Global insurance is fiendishly complex and the devil really is in the detail. Here are seven ways that corporates of all sizes inadvertently overpay for global cover.
1. Regional cover for a global operator
It’s amazing how many companies who operate on a global footprint still organise their insurance cover on a regional or local basis.
There are lots of reasons why this might be the case: the way a company has grown; the perceived complications of local cover; different HR responsibilities. Whatever the reason it’s usually a costly decision. And it can cause problems with employees too. Global medical insurance with more lives covered and a risk spread across numerous territories can save significant sums on premiums. It will also ensure that all of your people enjoy the same level of protection, no matter where they are deployed.
2. Failing to regularly review
Given the complexity of global insurance cover, companies tend to stick with the same insurance provider for many years. This can be a costly strategy.
Just like your car insurance at home, the best rates are not always reserved for loyal customers. Global insurance providers change priorities, alter their desired risk strategies and frequently merge or acquire one another, all of which can affect the competiveness of your deal.
Renewals are also based on the details from the previous year, but small changes to people, assets or liabilities can make a big difference to overall premiums.
Perhaps you have withdrawn equipment from East Africa? You may no longer have people in costly territories like the US or Hong Kong. Reviewing these details at the same time you shop around can be a rewarding exercise.
3. Taking standard cover instead of bespoke
All of the big insurance companies reinsure their risk with underwriting markets, the most famous of which is Lloyd’s of London.
In certain cases, it can pay to take your insurance direct to a Lloyd’s Syndicate and create bespoke coverage to suit your exact needs. This can save money by making sure that you only pay for the precise level of cover you need. It can also ensure that global companies operating in high-risk markets or high-risk occupations can get the right level of cover without exclusions that compromise the quality of protection in those territories
4. Paying for US elective cover
A decade ago, there was a demand to include the option for elective treatment in the USA – particularly for senior US executives working abroad. The US had the best quality care and it showed that you were serious about looking after your expatriate workforce.
Today, whilst the quality of care in the US is still of the highest standard, you will find equally impressive facilities in Bangkok, Dubai, London and strategic centres around the world. Procedures can cost up to half what they might in a US medical facility, saving significant premiums and in many cases, providing more convenient treatment closer to the employees current home and family.
Procedures can cost up to half what they might in a US medical facility.
5. Cherry-picking maternity cover
It may sound counter-intuitive, but expanding maternity cover across numerous employees rather than focussing on your relevant female workers may actually reduce premiums. That’s because the likelihood of medical treatment across a wider population presents a much-reduced risk.
This is just one example of numerous ways that an inside knowledge of the actuarial process can help to reduce premiums for comparable cover.
6. Paying for cover that’s not needed
Are you paying for US medical cover, which is generally twice the cost of the rest of the world, when you only have a handful of people there? Are you paying for medical evacuation cover when most of your people are in offices in cities like Paris, Dubai or Singapore? Once again, the smallest details affect your bottom line.
7. Being mean about the excess
Who wouldn’t mind paying the first $50 on a claim? Agreeing to increase the excess on each claim by $50 can reduce overall premiums by 5%. That could be a saving of up to $25,000 a year for larger companies.