Marsh Nexus, the employee benefits cell solution launched earlier this year, is lowering the barrier to entry for multinational employers looking to finance EB through a captive structure.
Marsh Health and Benefits partnered with Redion Employee Benefits and Zurich Global Employee Benefits Solutions (ZGEBS) as its exclusive fronting networks for the cell solution, which utilises Marsh’s Mangrove Protected Cell Company domiciled in Washington DC.
Speaking on the latest episode of the Global Captive Podcast Paul Lewis, multinational advisory growth leader at Marsh Health and Benefits, said the product is set up to help multinational employers with non-US benefits spend in areas such as private medical, life coverage, and accident and disability benefits provided to employees in their local markets.
“We launched the Marsh Nexus captive solution to address a very practical gap that we see in the market where we believe many multinationals do want a long-term self-insured approach for their non-US employee benefits to help drive sustainable savings, gain more control of their global benefits, putting them in the driver’s seat,” Lewis said.
“Marsh delivers the core control advantages of a captive, so control over pricing, control over operations, control over plan design as well, but at the same time also lowering central operating costs, speeding up implementation, and reducing the employer time, effort and commitment that’s commonly associated with an international employee benefits captive strategy.”
Madeleine Olszewski, global client leader at Redion EB, and Gary Piper, global network partnerships manager at ZGEBS, joined Lewis on the podcast to discuss the partnership and why they are excited about supporting Marsh Nexus.
Piper and Olszewski agreed that for the networks, working with a cell is not hugely different to servicing a pure, single parent captive.
“Local policies that still need to be issued, risks still need to be underwritten as they would be and the client still needs the transparency around data and reporting that allows them to make those informed decisions around whether or not to include something in a captive or continue to reinsure into their captive,” Piper explained.
“So at the end of the day, I think we are still operating in a reinsurance framework, we’re still ceding risks to another insurance company, irrespective of the format. I see a lot of similarities between the single parent and the cell captive.”
Olszewski added: “What’s interesting is the fundamentals of a cell captive don’t really change. So whether you’re talking about a traditional captive or a cell captive, the client’s needs are essentially the same as far as strong governance, good data, disciplined underwriting, effective local execution.
“Those building blocks are the same, so the difference is really the vehicle itself. A cell structure can make captive participation more accessible by removing the complexity and operational burden associated with setting up rather than running a standalone captive.
“But from Redion Employee Benefits’ perspective, our philosophy remains unchanged. We believe the client should remain in control of all the important decisions. The local insurers are going to contribute their expertise, and the network’s going to provide the coordination and governance that the captive needs to determine direction and make decisions.”
Lewis said a certain volume of premium spend is still required to make the captive financing structure work, but it also comes down to what the employer is trying to achieve and their priorities.
“From a scale perspective, premium is probably the best proxy to use,” Lewis added.
“A common client profile would be at least roughly $5 million or more in non-US employee benefit spend. There is a minimum portfolio of $3 million, but we do make sure that we’re only bringing in appropriate policies as well so that $5 million number is probably a safe number to use.
“But beyond the numbers the typical Marsh Nexus client is a multinational employer that is looking for better control or wants to get in the driver’s seat of their EB. So better data and reporting, a simpler vendor landscape working through the two fronting networks and more sustainable benefit costs, but again just don’t have the easy access to this wholly owned captive today or facing the barriers that we mentioned.”
Listen to the full Global Captive Podcast episode here, or on any podcast platform. Just search for ‘Global Captive Podcast’.