Nobody can deny the global employee benefits market is changing. Trends that were already underway before the Covid-19 pandemic, such as remote and flexible working and digital healthcare are now largely the norm.
We’ve been talking about the end of “one-size-fits-all” benefits for years. Workers now demand flexible, tailored benefits that are more appropriate for their short and longer term needs, and the pandemic has served to make this demand more real. Benefits also need to cater to different lifestyles and be relevant for the five generations we now see in the workforce – from Millennials and Generation Z to Baby Boomers.
The most innovative multinationals are using new technologies and data analytics to meet these demands and offer benefits that truly help care for, attract and retain their people.
Flexible and tailored benefits programmes for all sounds fabulous – but we know it’s never quite as easy as that. Multinational employers will always be faced with the significant challenge of funding these benefits in a cost-effective way.
One of the most common ways to manage this is by working with an employee benefits network and setting up a global EB programme – such as a pool, global underwriting or captive solution. These programmes offer an effective way to help manage risks at a global level and achieve true economies of scale.
Surprisingly, less than 30 per cent of international companies actively work with a global employee benefits network at the moment. And while there are around 7,000 captives worldwide – mainly managing property and casualty (P&C) risks for multinational companies – less than 150 are currently writing employee benefits business.
This means there is a real opportunity for multinational employers, with help from advisers and EB consultants, to start using their existing captive programme to help control the costs of EB and the associated risks.
For example, one of the most challenging areas for multinationals is medical inflation. Health and wellness benefits can be very important in attracting and retaining staff, but medical costs are rising faster than general inflation and giving employers concern about the sustainability of costs. But medical insurance can be included in a global programme to become more cost-effective. In 2019, the net loss ratio of medical policies included in our global programmes was 99 per cent, showing that medical can be priced accurately. This figure has been consistently stable over recent years.
Global programmes can also help deliver the flexibility employees increasingly want, as cost-savings can be reinvested to provide better benefits. In July 2020 We commissioned global research and found that 46 per cent of employees were reappraising the benefits their employer offered.
Plus, around a third said they wanted their employer to focus on health benefits such as private medical insurance and access to digital healthcare platforms, ahead of lifestyle benefits such as salary sacrifice schemes or benefits allowances.
To meet employee demands, benefits networks and employers have needed to act quickly during Covid-19. Many multinationals implemented telemedicine, employee assistance programmes (EAPs), digital mental health and musculoskeletal programmes to provide access to treatment from home.
These digital solutions are ensuring that all employees, wherever they are in the world, have the same access to these valued healthcare tools. This was crucial during the pandemic, but now employees have become used to the ease and convenience and are unlikely to want to give them up. Global benefits networks need to be on hand to help multinationals roll out these digital solutions globally.
One of the other most-talked about trends in the global EB space is how multinationals can provide benefits for their non-traditional workers – anyone who sits outside of traditional full-time employment, including contractors, freelancers, gig and self-employed workers.
This growing group is key for many businesses’ success, and it’s going to be crucial for multinationals to find innovative and cost-effective ways to attract, retain and protect these workers. Enabling employers to do this effectively, efficiently and in a compliant manner is a service insurers and global benefits networks are increasingly being asked to provide. Technology platforms and data-focused approaches are going to be vital in offering benefits to these non-traditional workers and closing the protection gap.
The world of work is changing rapidly in the wake of Covid-19 and multinational employers, EB consultants, insurers and global benefits networks must keep innovating to offer the most valued benefits.