January 31, 2025

Creating a Globally Consistent Benefits Strategy

This guide’s goal is to inform employers on a variety of different elements to consider when creating their strategy. It also explores the business case and core tenets to focus on in establishing a thorough approach while providing guidance on how to produce a more equitable ecosystem.

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Employers have access to a variety of financing mechanisms to help control costs and improve governance, ensuring a consistent approach to managing benefits globally. Choosing the right financing mechanism depends on the size, structure and risk tolerance of the organization.

Global Financing Mechanisms Landscape

The use of global financing mechanisms both drives savings and offers better transparency and reporting for governance. Employers increasingly rely on these mechanisms not only to streamline their benefits but also to help fund innovative benefits, such as fertility coverage or the removal of exclusions or caps on services like mental health or gender affirmation treatment.

While these mechanisms bring many advantages, they also come with challenges. Transitioning from multiple local plans to a global solution can be complex, and reporting from insurers, particularly in smaller or remote markets, may be delayed or inconsistent. Despite these challenges, companies are utilizing data dashboards to improve visibility and align global benefit strategies with their long-term goals.

With some creativity and a strategic framework, financing mechanisms can be used to help implement a global consistency strategy. Captives, for example, are becoming an increasingly popular tool for global employers. While traditionally used for property and casualty insurance, captives are expanding to cover global risk benefits such as life and disability insurance, as well as medical benefits.

Types of Financing Mechanisms

There are six main financing mechanisms that global employers use. Most employers deploy a combination of approaches around the world:

• Local fully insured plan: The employer partners with a local insurer who owns the risk.
• Regional plan: A pool of smaller markets is combined under one regional vendor, with a single policy across the region.
• Multinational pooling: This mechanism aggregates insured employee benefits from multiple countries. Surpluses from favorable claims performance are shared with the employer.¹
• Global underwriting: Combines risk benefits (life insurance, disability, accidental death and dismemberment, travel accident) under one global insurance vendor. Local insurance policies are issued by the vendor.²
• Captive: Employer-owned insurance company that bears the financial risk and works with global fronting carriers to provide insurance benefits around the world.^3-5
• Local self-insured plan: The employer retains the risk and partners with local insurers or third-party administrators (TPAs) to manage benefits.

Table 3-1 simplifies the key components of financing mechanisms. It’s best to work with a broker and/or captive manager to fully understand specifics of the items highlighted in the chart.

Table 3-1: Comparing Financing Mechanisms

Vendor Consolidation Considerations

Vendor consolidation can be an essential aspect of implementing a global consistency strategy. Employers may choose to consolidate vendors across regions or business units to increase purchasing power and reduce costs. While full consolidation may not always be feasible due to regulatory or cost constraints, streamlining key functions, such as administration or actuarial services, can still lead to significant process efficiencies and cost savings. To determine the best approach, employers should conduct thorough feasibility studies to assess compliance and ensure that any consolidation efforts are genuinely cost-effective.

The path to global consistency requires careful consideration of financing mechanisms as part of a long-term strategy. Each step—from assessing the right mechanism and vendor partners to aligning it with your global strategy—will help set the foundation for successful implementation.

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Resource Global Consistency & Governance Governance