6 December 2022

Zurich outlines role of captives in social issues

Zurich sees companies placing greater emphasis on the ‘social’ part of ESG and expect it to become even more important in the future. In an article, Zurich’s head of captive services Paul Woehrmann and employee benefits captive specialist Reto Heini discuss how a captive can be deployed to improve a parent’s performance on social issues.

These issues include: wage and benefits equality, wellbeing of employees (physical, mental, financial and social), human rights, employee engagement, training and workforce development, health and safety conditions, privacy and data security, supply chain labor standards, access to healthcare and of course Diversity, Equity & Inclusion (DE&I).

Captives working together with HR professionals can help global companies agree and implement minimum benefit levels into their local schemes, Woehrmann and Heini wrote, and insurer networks already have experience in implementing such structures and can provide a vital link between the local and global customer and consultant stakeholders.

Captives can also be key to helping a customer implement improvements on equality and DE&I matters, in many cases facilitating employee benefits cover which would not ordinarily be available locally.

“Even though there is a lack of standardised metrics to assess a company’s social behaviour, many organisations have already started to incorporate social factors into their processes and decision taking,” Woehrmann and Heini said. “The corona pandemic helped advance the agenda by making stakeholders worldwide have a closer look at how companies manage human capital and related factors.”

DE&I is currently of particular interest since it can directly impact the profitability of a business. Another important subject is equality; be it through addressing high profile remuneration inequalities like the gender wage gap, or aspects related to ethnicity, age or hierarchical benefit structures within a company, which may be accentuated within certain organisational units or divisions and the countries of presence.

On benefit gaps, they noted that many companies are decentralised and head offices often may not know what levels and breadth of cover are provided locally. This just increases the risk that depending on the country of residence, employees are not treated equally.

On minimum disability coverage, they noted countries with annuity style benefits (typically within Europe) where the cover is often integrated with the local social security system and possibly occupational pension scheme. A solution, they said, might be to apply a more general philosophy in order to ensure that all the employees have an income from all sources of no less than 65% of their pre-disability salary in the event that accident or illness renders them unable to work, payable up to normal retirement age; or where not, for a minimum period of perhaps 5 years. This then allows the local subsidiaries and their consultants/insurers to translate the head office instructions into adequate local disability benefits.

The article is here.