A few guidelines on GBM agreements

Recursos Humanos y la continuidad

Autor: Álvaro Obregón

The world of complementary social welfare must coexist with the unstoppable phenomenon of worldwide globalization.

Until fairly recently, insured benefits within multinationals were fragmented realities wherein insurance schemes across existing subsidiaries were taken out with local insurers who were often not in partnerships with international networks. Tendered price and administrative management skills appeared as determinant factors when implementing benefits. This often resulted in a wide scattering of plans and insurers, beyond the control of decision-making centers whose approach did not guarantee optimal economical and technical conditions.

A quick glimpse into the past would enable us to understand how these agreements contributed to ending this situation and how, through them, companies could effectively streamline the way employee benefits were implemented. It was first and foremost a question of placing risks – particularly life-related – with local insurers incorporated into international networks in such a way that insurance policies with the local ‘pooling partner’ could benefit from mass hiring advantages as a result of the existence of many other contracts, in the same multinational, concluded with the same insurer elsewhere. But as cost synergies remain a highly relevant factor, transparency of benefits in place across multinationals around the world should be underlined as a unique operating feature. Through sophisticated tools that Mercer makes available to its clients, individuals in charge of decision-making centers have immediate access to relevant technical details on benefits anywhere in the world —renewal dates, number of employees covered, nature of the plan and its covers as well as overall costs— all this information can be accessed on one side of the globe to thus accurately comprehend the main features of plans on the other.  

Cost assessment and visibility of existing programs and their governance are the key competitive advantages resulting from global agreements of this nature which, in addition, are tremendous strategic levers of growth and creation of value. 

Our Company is a pioneer in setting up and designing agreements of this nature. Our Spanish offices have wide-ranging experience in the management and enforcement of these type of global agreements. Although some agreements of local multinationals with a strong presence abroad have been made available to our colleagues elsewhere in Mercer, the ‘incoming’ agreements – with around 70 accounts already — make up the bulk of our efforts.

The particular terms and conditions under which a GBM Agreement has been concluded are thoroughly analyzed by our team specializing in global benefits. Once contact with the local subsidiary is made, data on existing employee benefits plans is requested and a comprehensive evaluation is carried out, resulting in the proposal of a full range of measures for the renewal of plans. The often misidentified ‘preventive cancellation’, a sine qua non requirement for the release of requests for quotation, is a customary recommendation made to clients when the enhancement of existing plans have proven feasible. As previously stated, GBM Agreements represent a major tool for the improvement of employee benefits schemes.

Once the Global Agreement is set in motion, some of our IT tools such us MercerGold + and GBMA, ensure clients access to all their plans in place, regardless of where they are set up, as well as the proper control and governance of them.   

We believe that current situation is conducive for these aforementioned solutions and hope to witness the significant development of them in the near future. 

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