Group Insurance Guiding Principles: The Importance of Building and Implementing Them

Two main elements are at the heart of every company’s culture: values to guide the vision and strategic orientations to guide decisions and actions. It is from this corporate culture that the employer brand and the employee experience are derived.

In addition to the culture that influences the company’s entire business model, integrated total rewards is another key element that has a significant impact on the employer brand and employee experience duo.

At Solertia, integrated total rewards is at the heart of our strategy; as we present in our article on our HR center of expertise and its advantages, it intrinsically permeates our approach to consulting with our clients.

For us, integrated total rewards is broken down into four key components:

• Direct compensation (e.g., salary, bonuses);
• Employee benefits (e.g., group insurance, pension and savings plans, vacation and other paid leave);
• Professional development (e.g., training opportunities, career progression, performance management);
• The work environment (e.g., work climate, office layout, remote work policy, work-life balance measures).

While most of the concepts in this article apply equally well to each key component, we will focus primarily on employee benefits and more specifically, group insurance.

At the heart of an integrated total rewards strategy, benefits programs are part of an offer that is consistent with the other key components. In-depth reflection is therefore necessary to properly identify the strategic orientations that will enable the benefits offering to the enhancement of the employer brand and the employee experience. In this context, it is the guiding principles that will guide the actions needed to achieve this.

These are the guidelines the company sets for itself to facilitate its decision-making process. In the management of its employee benefits programs, these principles are reflected in the financial, design, administration, risk management and governance aspects.

This ensures that the organization’s decisions are consistent, that its integrated total rewards strategy is aligned, that there is a common thread between its programs, and that the message to employees is consistent.

The active participation of stakeholders in decisions makes it possible to identify the guiding principles that are important to the company and that will have a tangible impact on the management of employee benefits programs. It is for this reason that the involvement of all the stakeholders concerned is essential, i.e. HR, finance and accounting, as well as senior management, just as strategic support helps to properly frame the reflection.

Here are some examples of principles that come up more frequently:

• Financial management;
• Risk management;
• Administration;
• Competitiveness of the plan;
• Cost-sharing;
• Employee financial security;
• Flexibility;
• Equity, Diversity and Inclusion (EDI).

The purpose of the exercise is to position the company’s preferences along an axis for each of these guiding principles. Then, they must be ranked in order of priority, even if it means eliminating those that are not important to all teams.

Once determined, the guiding principles are finally ready to be used and applied in the reflections and management of employee benefits programs.

Here are examples of common situations related to the management of a group insurance plan, to illustrate how the application of the guiding principles can facilitate decision-making.

A situation often seen in the market is when a group faces a renewal where the increase in premiums is particularly high. Rather than to bear the increase, the advisor suggests two alternatives.

The first option would be to proceed with a request for proposals to switch to an insurer that will offer a premium reduction. Thus, an organization that prioritizes the competitiveness and low costs of its group insurance would favour maintaining current benefits and proceed with a request for proposals to take advantage of short-term savings.

The second option would involve reducing the plan’s benefit levels to make it more streamlined and cost-effective. On the other hand, an organization that prioritizes administrative simplicity over the cumbersome tasks associated with changing insurers would ask its current insurer to reduce coverage as a cost-control measure.

Another common situation for many organizations is when a group wants to offer more flexibility to its employees by converting its traditional group insurance plan into a modular plan. Plan members can choose different levels of coverage depending on the options available and the rates applicable to each of them. The employer must then consider the necessary adjustment to its contribution to the insurance premium within its cost-sharing formula.

The decision to review the cost-sharing formula between the employer and employees should be made based on the organization’s priorities.

A company that advocates equality would pay exactly the same amount for everyone. In this case, the employer would assume half of the total cost of the employee’s and their dependents’ coverage, regardless of the selected module

On the other hand, a company where equity is more emphasized would pay an equal percentage for everyone. In this other case, the employer would assume half of the total cost of the coverage of the employee and his or her dependents, regardless of the module selected.

The guiding principles can also be used as tools for good governance. By aligning with certain standards, they help meet regulatory compliance requirements. This example shows how the application of the guiding principles contributes to the sound management of a pension and group savings plan.

When an employer offers a group retirement and savings plan to its employees with the objective of promoting their financial well-being, it is important that the plan is able to meet their needs. The employer must provide them with clear and comprehensive information so that employees are able to determine their risk tolerance, identify their investment horizon, and choose their investment vehicle accordingly. It is good to have access to information, but it must be interpreted appropriately. Communication with employees is therefore essential to ensure that they understand the choices that need to be made.

There are several ways to achieve this objective and the orientations taken by the employer will vary according to its guiding principles. A company that wants to properly support its employees would immediately provide all the relevant information on the plan’s rules, a risk tolerance questionnaire, the investment options available to them and the risks associated with them. This communication is even more important if the organization offers a variety of investment choices. An employer that puts the financial well-being of its employees first and wants to go the extra mile, would give them access to the services of an independent financial planner. This personalized support would allow each employee to obtain an in-depth assessment of his or her financial situation, based on his or her objectives, risk tolerance and specific needs. Thus, rather than following a one-size-fits-all approach, each individual would benefit from recommendations tailored to their reality, allowing them to choose the vehicles and investment options that are best aligned with their financial journey and aspirations.

The process of identifying and prioritizing the guiding principles can be done separately for group insurance plans, and pension and savings plans, but it is much more efficient and consistent to prepare them jointly.

This exercise ensures the relevance of the employer’s comprehensive benefits offering and makes it part of the integrated total rewards strategy. It is the common thread that connects all the elements of employer branding and employee experience and helps align talent management strategies with business strategy.

This consistency will not only increase employees’ trust in their employer but will facilitate communication and their understanding of the decisions made.

Thus, effectively implementing the recommendations presented in this article enables the integration of guiding principles, strengthens governance, and optimizes the strategic planning of group insurance plans as well as pension and savings plans.

Do you have any questions or need advice? Our group insurance, and pension and savings plan teams will be happy to assist you. Do not hesitate to contact us.