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Case study

Supporting a multinational firm in establishing and managing an employee benefits captive

, 

09/08/2022

The Challenge

 A large, US-based multinational firm with more than 400,000 employees in over 220 territories was interested in using a captive to write employee benefit risks. Following a review of their financing methods for employee benefit risks — which included a mix of self-insurance, insurance, and pooling arrangements — the organization was interested in gaining more control over their costs and protection. The Marsh Captive Solutions’ team was engaged to review the current global employee benefit risks insurance program and assess the potential of using a captive to self-insure the program.

The Solution

 We assisted in supporting the employee benefit risks program review and feasibility study. The assessment and captive feasibility study demonstrated that it would be beneficial to set up a new captive, domiciled in Dublin, to self-insure employee benefit risks programs in selected countries. In addition, we prepared a detailed application to the Central Bank of Ireland in seeking a license for a new composite life and non-life reinsurance captive.

The Results

 Two networks were selected as the fronting insurers and to date policies from 43 countries have been transferred into the captive, with total annual premium of more than EUR€16 million. Our client gained control of their employee benefit risk program by centralizing risks and premium flows through the captive.

Marsh Captive Solutions provided a smooth transition in managing the policies through the captive, including access to our proprietary accounting software so the client could easily track the underwriting performance of each policy by class of business and location and produce a variety of reports. We have also held regular meetings with the fronting insurers to review bordereau reports and resolve any issues identified in the quality of information provided. Finally, we assisted the client with calculating their solvency capital requirements and running own risk and solvency assessment (ORSA) projections, including stress testing, to stay in compliance with Solvency II regulations.

A Modern Approach to Risk Management

Employee benefit risks can be a huge cost outlay for today’s organizations, often exceeding property and casualty insurance spend – but until now, little transparency has existed due to historical bottom-up control and purchasing patterns. By providing clients with a detailed look at their employee benefit risks, Marsh Captive Solutions enables clients to quantify and manage employee benefit risk programs through a combination of data and analytics.

Type of benefits that can be reinsured to a captive

Department of Labor approval required for any US ERISA benefits.

Life insurance

Group life, survivor pensions

Group medical insurance

Medical, dental, vision

Accident insurance

Accidental death and dismemberment, personal accident insurance

Disability insurance

Short– and long–term, permanent and total disability

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