Expatriate Benefits - Aon · Aon Global Benefits Proprietary & Confidential 2 Expatriate Benefits –Issues, Trends and Experience Why are providing benefits to expatriates different?

Risk. Reinsurance. Human Resources.

Expatriate Benefits

Issues, Trends and Experience

Simon Ball & Linda Beavis

Aon Global Benefits

Proprietary & Confidential 1

Expatriate Benefits – Issues, Trends and Experience

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

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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

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Rising Costs Put Pressure On Company Budgets

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

2013 2014 2015

Global Medical trend rate in

recent years

Drivers to medical inflation

– Soaring drugs R&D costs

– New treatment paths

– Litigation and insurance

High cost health issues

– Obesity

– Diabetes

– Life extending

Growing costs of private medical insurance

– European long-term healthcare black hole

– Utilization (and cost) hard to predict

– Single-year cost optimization or long-term control mechanism

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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?

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Market Trends

Trend Regional

plans

Multi benefit

schedules

Employee cost

participationUS 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 co-

payments 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 pre-

deployment screening

ahead of assignments

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Alternatives to formal expatriate benefit policies

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

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

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Client Example: Large French Based Multi-National

Background

Results

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

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

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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


What Is A Pan European Plan?

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Advantages Considerations

Purchasing scale of regional population 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


Things to consider about Pan-Euro plans

Risk. Reinsurance. Human Resources.

Appendices

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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

Ebola is not new – the virus was discovered nearly 40 years ago


Current Issues: Ebola Virus

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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

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


Ebola: Infection

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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

Ebola is a rare, very serious viral illness

Expatriate Benefits – Issues, Trends and Experience]

Ebola: Key Points

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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

Evacuating every potentially contaminated person is financially

restrictive


Ebola: Key Points For Clients

Documents

Expatriate Benefits - Aon · Aon Global Benefits Proprietary & Confidential 2 Expatriate Benefits –Issues, Trends and Experience Why are providing benefits to expatriates different?