More captive-backed international employee benefits programmes are underwriting medical covers although it often remains a later addition, according to Nicola Fordham, chief underwriting officer at MAXIS Global Benefits Network.
Speaking on a GCP Short where she was joined by Nekisha Tyrrell, head of underwriting at HSBC Insurance (Bermuda) Limited, HSBC’s captive, Fordham said around two thirds of MAXIS’ captive portfolio is now including medical cover.
The captive reinsuring medical cover means it is participating in the corporate’s medical insurance plan, which can include items such as non-urgent care, specialist treatment, operations, physio treatment and dental.
Captive employee benefits programmes have traditionally begun with long-term illness, life and disability covers.
“Perhaps the original points of putting employee benefits into a programme, particularly a captive programme, was around leveraging the underwriting margins that were there,” Fordham said.
“And for medical, you don’t tend to have such wide margins. The reason being because there are so many more claims that come under your medical treatment.”
The HSBC captive and employee benefits programme is operated on a ‘not for profit’ basis, meaning they target breaking even.
“We cover our margins and then where we do experience any profits, we have a pool that eventually goes back to local companies for wellness initiatives,” Tyrell said.
She added that including medical in the captive had been a positive experience to date.
“Because we work so closely with HR teams, we’ve been able to provide comfort locally that we’ll be flexible enough because there are things that are not necessarily covered locally, but because it’s 100% reinsured into our captive, we can take those claims on,” Tyrrell explained.
“We’ve been able to provide benefits that may have been a bit more generous than they’ll get in the market because again, we write it 100%.”
Fordham said that because medical is typically lower margin business, and often written on a breakeven basis such as in HSBC’s case, the motivation for companies going down this route is more about delivering better care to staff, and attracting and retaining talent.
“You’re talking about covering your people,” she added.
“You want your people to be at work, being productive, being able to do the job that you are paying them for. So being able to ensure that if they need medical treatment or their family needs medical treatment, that they can access that because you can provide the appropriate insurance.”
Listen to the full discussion between Nicola Fordham, chief underwriting officer at MAXIS Global Benefits Network, and Nekisha Tyrrell, head of underwriting at HSBC Insurance (Bermuda) Limited, here or on any podcast platform by searching for ‘Global Captive Podcast’.