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Multinational Pooling

Multinational pooling is an important financial vehicle used by employee benefits managers and risk managers worldwide to reduce the escalating costs of insurance and to coordinate employee benefits plans within their organizations. The International Group Program (IGP) is the leader in multinational pooling with over 830 clients.

IGP offers a broad range of products to ensure that each multinational corporation's pooling package accommodates its specific needs and achieves maximum savings.

The savings a corporation has earned through pooling are determined on an annual basis by netting out claims, changes in reserves, commissions, taxes and other expenses from the worldwide premiums paid plus interest credits. The remainder, if positive, is paid to the multinational corporation in the form of an international dividend. Many of IGP's clients have had a significant portion of premium returned to them as international dividends at year-end through the pooling of their international employee benefits plans.

The IGP accounting system preserves all of the benefits of dealing with a prominent national insurance company whose expertise focuses on the local market. In addition, IGP provides advantages at the international level.

Multinational pooling works as follows:

A First Stage Accounting reflects the experience of a participating insurance policy in a given country.

By Second Stage Accounting and "pooling" policies that a company provides in several countries, savings are generated through economies of scale and efficiencies in administration and reporting.

The Local Perspective: First Stage Accounting

First Stage Accounting reflects what occurs under a group employee benefits policy in the absence of a pooling network. First Stage Accounting is the calculation of the net cost of insurance to the subsidiary, which is the premium less the local dividend (profit sharing), if applicable.

Local Costs

All coverage is provided through local policies issued by Network Partners to participating subsidiaries. From the employees' point of view, these are standard policies issued by prominent, locally admitted, national insurance companies. Each policy's plan design reflects local market practice.

From local management's point of view, the arrangement is as good as, and often better than, what can be obtained locally, even before considering the additional advantages of pooling.





The Global Perspective: Second Stage Accounting

IGP combines the experience of each participating local insurance policy (First Stage Accounting) to create the client's International Account. An annual Second Stage Accounting is then prepared for each of these policies, which generates additional savings by taking into account the expenses, risk, and claims of the company's entire pooled employee group worldwide.

In this accounting:

  • Charges for expenses and risk (the amounts needed to cover potential volatility) are based on competitive standards and reflect the economies of scale that result from buying coverage in several countries from a single source. They also reflect the reduced risk of pooling losses resulting from combining the experience of the policies worldwide.
  • Claims are the actual claims and/or pooled claim charges. Pooled claim charges limit the amount of individual claims that can be charged to the International Account. This protects the account from deficits caused by the death or disability of a highly compensated individual.

The annual Second Stage Accounting determines, for each policy, a Contribution to the International Account (CIA), as follows:

Premium Paid


  • Investment Income Earned on any Reserves Established Under the Policy
  • Investment Income Credited (Debited) on Premium Float (Where Applicable)


  • Claims and Changes in Reserves (if any)
  • The Expense and Risk/Profit Charges Determined in Accordance With IGP Standards
  • Commissions
  • Taxes
  • The Local Dividend Paid (if any)

Equals: Contribution to the International Account

The Contribution to the International Account (CIA) is positive if the experience has been average or better than average in a given year, or negative if the experience has been poor.

How Second Stage Accounting Works