Industrial Alliance has signed a partnership agreement with Allianz Global Benefits, a multinational employee benefits consulting firm headquartered in Stuttgart, Germany. The insurer says it intends to rely on Allianz's expertise on stand-alone and captive fronting, a method by which the benefit plans of companies' subsidiaries and divisions in various countries are pooled together in order to reduce risk charges.
“Multinational employers can reduce the overall cost of their local benefit plans without reducing benefit levels," explains Industrial Alliance in a news release announcing the partnership. "By combining local employee benefit plans into a single pool, a multinational employer profits from the experience rating of the combined employee benefit plans. This reduces the multinational's risk charges, as the employer is able to spread the risk of adverse experience over a larger group."
Multinational employers will be able to take advantage of favorable claims experience globally, and receive the surplus generated by the pooled plans. Industrial Alliance says that employers will also receive detailed financial reports that describe the pool's performance in detail and which will allow them to identify problem areas, such as escalation or claims incidence in a local benefit plan.