We asked leading brokers and consultants to share their thoughts and measurements for international employee benefits in 2015. Looking ahead into a constantly changing environment, the impact of disruptive business models on Employee benefits and how to address the challenges which they pose, stand in the centre of our attention. These are their replies:
What main factors do you see influencing the Employee Benefits industry in a world of radical change, with political instability, uncertainty, and economic fluctuations?
AON
The ageing of the work force, people’s inability to retire financially, healthcare costs rising at double the rate of regular inflation, social security cutbacks, expectations from millennials for everything on demand, the do-it-yourself economy, continuous education, flexible careers, big data: all these factors point toward mass customization, flexibility, and more choices for Employee Benefits.
KESSLER
We’re facing many challenges from a local and also from an international point of view. Local issues are changes in legislation, longevity, low interest rates, and how benefits are financed. Internationally we have subjects such as managing international benefits, keeping information up to date, costs, compliance, mobile employees, and handling M&As
MERCER
The need for employers to find innovative, cost-effective, and relevant benefit programmes that can be offered to employees. Employers need to offer attractive programmes that meet the needs of both ageing and next-generation employees. The one-size-fits-all model is long gone for certain industries.
TOWERS WATSON
It’s certainly an interesting world, but I doubt we’ll ever live in a period without political instabilities and other uncertainties. I think the most critical issue impacting Employee Benefits today, and likely to continue dominating the focus of multinational leaders, is governance. Companies require clear delineations of roles and responsibilities for employee benefit programmes, for both larger and smaller cost plans. It’s why we’re seeing such an increase in demand for global brokerage and global pension investment and advisory appointments: multinational leaders need the assurance that everything is being covered and that benefit programmes are aligned with global reward strategies, properly leveraged to ensure costs consistent with their multinational competitors, and that the long-term impacts on benefit programmes are being considered and planned for appropriately in all markets.
Will disruptive business models (such as Amazon, Uber or Youtube) affect the Employee Benefits industry? How?
AON
The biggest challenge for us at Aon is the emergence of mid-size (some would even say small) multinationals. How do you help clients who go from zero to 2,000 employees in 50 countries in two years (still with “just” 20 employees per country). Employee Benefits need to cross borders and scale more easily. Multi-employer platforms must emerge.
Demands from clients to obtain timely and relevant health-related claims data will impact health intervention programmes and shape the delivery of healthcare in emerging markets.
KESSLER
New business models will certainly have an impact on the employee benefits industry. Employees are able to access more information and will have more knowledge about Employee Benefits. Depending also on the age group, these new models will be used differently. Due to complexity and the diverse personal situations of each employee, we believe that focusing on personal consulting will remain crucial.
MERCER
Yes, to some extent. The younger workforce will be looking for new ways to access and be informed about all aspects of a compensation package. The term ‘benefit’ will perhaps be re-defined in the near future.
TOWERS WATSON
Towers Watson is fortunate to work with some of the most innovative companies around, who are constantly challenging the status quo of their own business models to generate new and profitable products and services. These companies are likewise demanding innovation from their consultants and benefit providers. While traditional global solutions such as pooling and brokerage continue to remain relevant, we must continually look for cutting edge solutions that deliver results for our clients. Towers Watson has been pioneering several new and evolving global benefit solutions, such as:
- Benefit captives: the number of captives used to fund Employee Benefits has nearly doubled over the last seven to eight years, and Towers Watson has supported most of these companies newly entering the captive space.
- Global risk marketing: taking global books of business for life and disability coverages out to bid simultaneously gains immediate leveraging on cost savings through reduced premiums and increased corporate governance.
- Towers Watson’s Global Access: offering pre-packaged benefit solutions eliminates the need for brokers and greatly reduces the role of local HR in managing benefit programmes.
It’s certainly an interesting world, but I doubt we’ll ever live in a period without political instabilities and other uncertainties. I think the most critical issue impacting Employee Benefits today, and likely to continue dominating the focus of multinational leaders, is governance. Companies require clear delineations of roles and responsibilities for employee benefit programmes, for both larger and smaller cost plans. It’s why we’re seeing such an increase in demand for global brokerage and global pension investment and advisory appointments: multinational leaders need the assurance that everything is being covered and that benefit programmes are aligned with global reward strategies, properly leveraged to ensure costs consistent with their multinational competitors, and that the long-term impacts on benefit programmes are being considered and planned for appropriately in all markets.
Will your business model be impacted by disruptive business models? If you think this could be the case, what measures are you taking?
AON
Yes. We’re building a global technology platform that can be used to help clients locally and globally for broking (e-auction), inventory, governance, data analytics and employee experience. We’re creating global common processes to serve clients more efficiently, including an inbound dedicated team for multinational clients, and cross-border and offshore admin and consulting teams.
KESSLER
We are offering our clients up-to-date information software to help them manage international benefits. At the same time, we’re extending our personal consulting capabilities, for instance by organizing special events for international employees coming to Switzerland. Our clients see these events as very valuable, as it is a challenge to communicate Employee Benefits.
MERCER
Yes, it already has. We’re constantly developing tools and processes to meet increasing demands for quicker, more accessible, and updated information. Apps and direct access product solutions are already starting to become standard for distributing data and knowledge.
TOWERS WATSON
We consider it our role as a consultant to constantly challenge the status quo. We expect even greater leveraging of non-traditional global benefit solutions (described above) over the next two to three years, while we continue to develop the next “new” solutions to meet the unique needs of our clients.
What will be the biggest challenges and changes for you and your clients in 2015?
AON
For Aon, the biggest challenge will be to implement consistent processes and products while meeting our clients’ needs for customized solutions.
For our clients, the biggest challenge will be to delegate some of their decision-making and control to us (or another third party).
KESSLER
We see our challenge as keeping up to date with all the changes going on, and filtering the essential information to our clients along with our advice on possible actions to take. We also see that Swiss companies are beginning to manage Employee Benefits across borders, and here it’s our challenge to give advice so they can benefit from our experience and also from our worldwide network.
MERCER
For us it is to be able to develop and deliver cost-effective, innovative solutions to our clients at an acceptable profit margin. We see that margins are getting slimmer.
Our clients face different challenges depending on their industry. The energy sector, for example, will be especially challenged to achieve cost savings, while many other industries will put greater focus on attracting and retaining the right talent. Selecting and developing the right leadership team in a changing world will also be important this year and in future.
TOWERS WATSON
Towers Watson continues to expand its Global Benefits Management business, which involves a variety of potential solutions to match our clients’ individual needs. It’s incumbent on us to challenge our clients who are comfortable with traditional approaches to governance and benefits financing to explore all their alternatives and actively consider whether the status quo fully addresses their corporate objectives.
Broker and consultant profiles
AON
Francois Choquette
Executive Vice President, Global Benefits.
He leads the Global Benefits consulting business for Aon. He has 25 years of experience assisting multinationals with a broad range of international benefits issues such as M&A, global benefit design and financing, global governance policies, and employee mobility. He has lived in Montreal, Toronto, New York, and San Francisco, and worked and travelled in more than 40 countries.
KESSLER
Markus Leutenegger
International Employee Benefits Specialist.
Born in the UK, he has lived most of his life in Switzerland, and has worked for Kessler since 2012. Before that he worked with international life insurers and with another insurance broker consulting multinational companies in Switzerland. His main focus is on consultancy for pension schemes and managing multinational pooling programmes.
MERCER
Jimmy Johansen
Partner with Mercer's International Consulting Group.
He has worked with Mercer or Mercer-related companies in Europe and Asia since 2000. He is responsible for client management for some of Mercer’s largest clients in the Nordic region, and has a European role leading Mercer’s Insurance Work Group, covering multinational pooling and global benefit management solutions..
TOWERS WATSON
Gerry Winters
Senior international consultant with Towers Watson.
Now a senior adviser to multinational organisations on benefit and reward programmes, he spent several years as a benefits leader at a leading global company. He is pleased to once again be part of the largest, most experienced team of dedicated international consultants in our industry.