Captives and DEI strategies

Generali Employee Benefits Network brought together a panel of industry experts to ask: what does DEI mean? And what is the role of captives in this story?

The panel:

Steve Ireland, assistant vice president, major accounts, Sun Life Financial (Canada)

Sven Roelandt, global leader–employee benefits financing strategies, Aon

Annelieke van Mens, managing director–DEI&B strategy development, Aon

Fabian Vanhecke, sales & distribution director, Generali Employee Benefits Network

"From a benefits perspective, the question is how do you ensure benefit eligibility is available equally for all?" Annelieke van Mens, Aon

Fabian Vanhecke: Diversity, equity and inclusion (DEI) represents both a challenge and an opportunity for multinationals today. A challenge in terms of appropriate strategy and implementation, and an opportunity in terms of increased governance, better management and, ultimately, positive impact on the business. But first, what does DEI mean in a benefits context?

Annelieke van Mens: We see ‘belonging’ as an outcome of a strong and effective DEI strategy, so we use the acronym DEI&B. In our view, unlocking the potential of all individuals, and creating a sense of belonging in the company helps ensure employees come to work as their authentic selves.

This is about having psychological safety. If employees feel safe to come to work and to speak up, they will also feel safe to share their needs. That means you can be more effective in your benefits strategy.

We look at diversity from 12 different dimensions of personal identity. To highlight one dimension as an example: family structure. Nowadays we see acknowledgment of many different types of family relationships such as same-sex couples or people living apart together. From a benefits perspective the question is how do you ensure benefit eligibility is available equally for all?

When you look at coverage provided, fertility is an example. In the average medical plan in EMEA, fertility is included—if it’s due to medical reasons. As soon as you’re talking about fertility issues due to other reasons, as you may encounter if you would like to conceive a child without a partner, treatment is not typically provided through the medical plans.

So, look at your benefits across all 12 dimensions, to assess them from a DEIB perspective.

First and foremost, determine the key objective of your DEIB strategy. Then identify the gaps.

Questions to ask include: Do you want to be at market? Do you want to be leading? Are there dimensions that you feel as a company you should represent more strongly? How is your workforce composed now? And where do you want to be in a couple of years’ time?

From that, we can define a global framework that sets out where you want to go, your vision as a company. This can be either a generic guideline, such as: we want to bridge gaps, and these are the dimensions we want to focus on. Or it can be something more specific, such as: we want to accommodate neurodiversity in the company—please implement what is needed into our local businesses.

Focusing on a specific dimension can help a company be a trailblazer. But it also comes with inevitable complications. For example, there are companies that want to have gender dysphoria cover on a global basis. However, it’s not always available—it’s not even something you can even talk about—in every market.

Vanhecke: What’s the current, pragmatic experience of DEI integration in the local benefit design in a Canadian scheme?

"Employees in diverse communities want us to be speaking to them in more inclusive language." Steve Ireland, Sun Life Financial (Canada)

Steve Ireland: Sun Life is a very large Canada-based insurer and wealth management company, with a global footprint. We have very much embraced DEI, not just as an employer globally but also as a provider of products and services across the world.

In a Canadian group benefits context, we conducted a survey in 2022 of diverse Canadian communities. We wanted to understand whether their needs were being serviced by their benefit plans, or were there gaps.

Eight out of 10 people in diverse communities said it’s important that the benefit plan is inclusive. But less than 20 percent strongly agreed their plans were meeting their needs as members of diverse communities.

Clearly there’s a gap between what employees want and what benefit plans are delivering.

Three key themes came out of the survey:

1. Products and services and embedding DEI into benefit plans.

2. Employees in diverse communities want us to be speaking to them in more inclusive language. Communication came through as one of the key themes.

3. When people in diverse communities access healthcare, they want to be with a provider that understands them and their unique needs—whatever community they are part of, they want a provider they can identify with.

We’re responding to all of these aspects with regard to benefit design, plan sponsor support, communication and culturally relevant care.

In terms of products and services, one of the things that’s slowing us down, in terms of bringing products to market, is Canadian tax regulations. This is about trying to get the tax authorities thinking through a DEI lens.

Under Canadian tax law, benefits that are paid through a private health services plan are non-taxable. So, generally speaking, benefits paid through a group benefits plan are non-taxable.

Many new DEI-focused benefits are taxable, until the tax regulations are changed. This is coming, but getting the tax aspect aligned with what Canadians are asking for is impeding us in launching some of these benefits.

Vanhecke: The COVID-19 pandemic helped highlight that a captive can be the right answer to specific needs. That was a crisis situation, but here we’re talking about something much more positive. Is there the same opportunity for captives to help address the DEI situation?

"Captives will be recognised as the facilitators behind the translation of DEI into employee benefits." Sven Roelandt, Aon

Sven Roelandt: Over recent years, environmental, social and corporate governance issues—and DEI as an element of the social aspect—have appeared on the priority list of captives. That’s because the flexibility of reinsuring your own risk, when it comes to employee benefits, creates opportunities towards benefit enhancements.

This is a journey. And, to be clear, the journey doesn’t start with the captive. The captive is not there to take over the role of HR—it’s there to support HR in rolling out their people strategy in the most effective way.

The journey starts with an HR strategy around DEI, and an evaluation of the “what is”, “where do we want to go” and “how do we get there” questions.

It is at the stage of bridging the current situation with the desired outcome that the captive comes into play; it can do that at two levels.

First, it’s important to exhaust all local enhancement opportunities simply because from a compliance and administrative perspective, what can be facilitated locally is the most solid. By having a captive sitting as the ultimate risk carrier, conversations with the local insurers can be pushed beyond normal comfort zones.

Lately we have seen that for some companies, especially those with a young, diverse and highly skilled workforce, that is not going far enough. They want to take it a step further—for them, DEI is key in their employer branding. We see this mainly in industries where the war on talent is raging fiercely.

Here, again, the captive can excel in its typical role of enabler and an innovator.

What these companies are looking at, in partnership with
their consultants, is to provide a master policy which allows them to cover any remaining gaps after all local options have been exhausted.

The complexity of these setups depends on the type of cover(s) you want to include.

It’s fairly straightforward to deploy a global critical illness cover. It gets more complicated if one wants to include reimbursement of fertility treatment expenses, because that raises several questions. For example, what treatments are you going to cover as they may differ significantly, including differences across countries? And consequently, what will the cost be to the company?

The complexity is something we’re all still struggling with and we haven’t even touched upon gender dysphoria, a topic which several companies are starting to look at and which brings even more complexity.

Questions here include: what is it exactly that you are looking to cover? Is it the surgery? There is a significant pre and post psychological journey that comes with that—should that also be covered? If not, might you be creating further inequality? You may be offering a service only to people who have the resources to pay for the psychological journey themselves.

In conclusion, the master policy topic is very much on the agenda today. Have we figured it out? No. Are we going to figure it out? Absolutely.

Historically, captives have pushed the market into medical reporting, supported corporate health and wellbeing initiatives based on enriched data, and enabled pension de-risking. Tomorrow captives will be recognised as the facilitators behind the translation of DEI into employee benefits.

To find out more visit: www.geb.com/wherever-you-are