Swiss Life Network Conference 2007: Employee Benefits trends

Trends in Latin America
Marcelo Assunção, Sales Director for Corporate Business, Icatu Hartford Seguros SA, Brazil

- With a population of almost 600 million and growing, and with insurance penetration and density that are still very low, there is a high level of business opportunity in the Latin American market.
- The stable economic situation in most of Latin America, with declining unemployment and inflation rates, has brought a steady increase in long-term investments by national and international companies.
- There have been high growth rates for life insurance over the last ten years, especially for pension solutions. There are excellent market opportunities in this area, as in most Latin American countries less than 50% of companies have pension plans.
- Another positive result of economic stability over the past few years is that people are starting to think about the future. This is a further factor strengthening market opportunities for the insurance industry in the region.

Trends in North America
David Henry, Managing Director, Great-West Life Assurance Company, Canada

- The aging population in North America is putting pressure on the social security system. The health care system in particular will face increasing expenditures in future. So the quality and cost of health care is a big issue, which is also being driven by longer life expectancy.
- Society is having to deal with a sharp rise in long-term disability caused by diseases like cancer, cardiovascular disease and mental illness.
- The mental health aspect is becoming an increasingly important topic for employers, although further steps are needed to raise the awareness and recognition of mental illness. Companies that promote the mental health and well-being of their workforce are gaining a strong competitive advantage.
- The identification and treatment of mental illness is very important, as in Canada over 30% of disability claims relate to this. Insurance companies which specialise in insurance solutions for disability hold a key positive differentiator.

Trends in the UK
Cheryl Brewer, Customer Solutions Director, Unum UK

- On the one hand we are seeing a trend towards occupational pension schemes. Defined benefit schemes are being replaced by defined contribution schemes. A further ongoing trend is that insurers are acting increasingly as service providers, and self-insured clients are moving to insured benefits. These changes offer great opportunities, especially in the group risk markets.
- On the other hand, the market is becoming increasingly competitive and the retention of existing customers is thus essential to business success.

Trends in the Asia Pacific region
Cedric Luah, Head Sales Region Asia Pacific, Swiss Life Network

- The Asia Pacific region accounts for around 60% of the world’s population, with the two most rapidly growing countries being China and India. However, there is also strong population growth in other parts of the region.
- Insurance companies and politicians need to take steps to prevent a pension time bomb. One of the major challenges will be the retirement of the baby-boom generation, for example in Japan, Korea and Singapore.
- For cultural reasons, risk products are still unpopular for individuals. As a result, insurance products are largely marketed as savings and investment instruments. It is also commonly offered as part of employee benefits program by corporate entities.
- The trend towards high savings rates and massive investment needs continues, which means a high demand for financial products and more investment options / vehicles.
- Rapid talent growth is attracting global resources, and this is increasing the urgent need to offer more advanced employee benefit programmes.

Trends in South Africa
Nico van der Walt, Head Momentum Collective Benefits, South Africa

- A new National Security Saving System (NSSS) is expected to be introduced in 2010. This will be compulsory for all employed citizens, and it is proposed that it will provide risk benefits. This could potentially halve the size of the risk market in South Africa, as these private benefits may be provided in future by the state fund.
- The retirement industry had to deal with a poor public image over the last few years and a very competitive market. Price is the main determinant of where business is placed.
- The impact of AIDS continues, but this can be priced for in group schemes and we have seen mortality rates for some companies lower than previously estimated. Due to educational and treatment programmes, it is easier for people to remain productive, which is positive for employees, employers and insurance companies.
- Opportunities for new business will come from a stronger focus on specific products such as disability income benefits, and from expansion into other African markets over time.

Employment benefits trends, and requirements of Network Partners/SLN from customers’ and brokers’ points of view

Nadine Weber, Group Benefits & Stock Option Manager, Richemont International S.A., Switzerland; Urs Wuethrich, Head Global Benefits, Syngenta International AG, Switzerland; and Kathrin Schiffer, responsible for Group HR Global Benefits, UBS AG, Switzerland, provided us with the latest trends and developments from the customer’s point of view.

The broker’s viewpoint was given by Paul Kelly, Senior Consultant, Towers Perrin, Foster & Crosby Inc., UK, and Denis Stainier, Worldwide Partner & Director Client Development, Mercer Human Resource Consulting, France

- Due to ongoing globalisation, multinational companies are increasingly having to use employee benefit solutions to help retain their employees.
- This development means that flexible benefits and pension solutions are becoming more important.
- Locally-sourced information is vital to getting an overview of the different social security systems and benefit solutions worldwide. Multinational companies need an overview of the employee benefit situations in countries where they operate, and it is important to find reliable providers in these countries.
- A further significant step many multinational companies are working on is to gather all the information from their subsidiaries regarding existing employee benefit solutions, claims experience and market situation and benchmarks into a central database to optimize their worldwide employee benefit activities.
- Multinational companies set a high value on pool transparency, especially regarding claims. Cost transparency also plays a key role for customers, as risk and cost management are becoming more and more important.
- International dividends remain an attractive argument for pooling, although other insurance solutions and general consultancy are gaining in significance.