Interview with Hanno Mijer – Global Head Corporate Life & Pensions, Zurich Insurance Group
Global Benefits Vision: Could you please tell GBV a little about yourself, how you chose your career path and your journey to Zurich?
Hanno Mijer: I am a trained actuary, but I have never actually worked in an actuarial position. For the first fourteen years of my career I worked with AEGON Insurance, where I held a number of marketing, sales and executive roles in the Netherlands, Eastern Europe and Asia. They were primarily greenfield or start-ups; for example, I was the founding CEO of AEGON’s Pension fund management company in Hungary following the regime change and the commercialisation of the markets there just after the Berlin Wall fell. This was a very exciting time as we introduced pension and other products into a completely new market, where I could leverage my skills in start-ups and employee benefits.
Many of my roles with AEGON were on the employee benefits side and included Senior Vice President for Sales and Marketing for AEGON group’s life unit in the Netherlands and Head of Product Research & Development.
In 2000 I joined Watson Wyatt – now Willis Towers Watson – and I headed up their sales team for international corporates for seven years. I joined Zurich in 2007. In fact, I was appointed by our CEO Mario Greco, who had then just joined the company as CEO of Global Life. He asked me to develop Zurich’s employee benefits unit, CLP (Corporate Life and Pensions), which has grown to be more than one third of Zurich’s Life business.
While CLP was only launched in 2008, it has grown to be an important part of Zurich. I’m very proud to have had the opportunity to start this with Zurich, especially since we now have 60 of the FTSE 100 as our clients, one-third of the S&P 500, and many household names such as Royal Mail in the UK, Nestlé, and so on. This growth from a greenfield to the current size has been driven by, and is still dependent upon, our commitment to putting the needs of our multinational customers first.
GBV: While ZEBN (Zurich Employee benefits Network) is an older entity than Zurich’s CLP, could you tell us more about the history of expat coverage, group life, group EB and pooling?
HM: In 2008, Zurich had a number of smallish employee benefit operations across the globe. This included ZEBN, but at that point in time it was not part of Zurich’s strategic growth plans.
So, while we had employee benefits programs, they were not yet a part of an overall strategy. In 2008 we asked ourselves: “We have small employee benefits companies, a large P&C corporate business, a strong brand name in Zurich. Shouldn’t we build a strategic, really global, managed employee benefits business?”
So the decision was made to start pushing this global strategy, which is still very much at the heart of what we do in CLP today. We focus on multinationals and large domestic companies, making sure our propositions match the client’s needs, i.e. research and understand clients’ requirements, and then address them through appropriate products, and recognizing that the large majority of these clients are advised by employee benefits consultants. That’s why we are working very closely with global and international consultants such as Mercer, Willis Towers Watson, Aon and local specialized distributors. We also focus heavily on working together with our P&C colleagues to leverage their existing corporate client basis and infrastructure. We have a common customer segmentation, shared relationship leaders and joint training programs to make sure our people can really serve clients seamlessly across P&C and Life.
In terms of solutions, we provide group risk (e.g. life, income protection, accidental death and disability etc.) in all the territories; we offer pensions in a smaller number of markets, where we do DC pensions only; and group medical in a very limited number of markets when heavily linked to group risk solutions. This strong focus has enabled us to really address the specific needs of our customers.
GBV: Could you describe the structure of your organization?
HM: We have a global executive team based in Zurich. This is a hands-on, experienced team with an average tenure of 23.6 years of employee benefits experience – a team of people like me who have worked in employee benefits for the majority of their careers.
Many of them not only have experience as an insurance executive but also have an employee benefits consulting background, in many cases with one of the Big Three employee benefits consultants. Moreover, while being a Swiss company the management team is very diverse and includes Italian, English, American, Chilean, Portuguese, Dutch and Scottish nationals. This not only illustrates the global character of the team, but also the breadth of experience we all have and our ability to really understand our global client base.
Key to our success is the strong collaboration between global and local teams. Combining global best practices and tools with deep local knowledge clearly delivers superior service to our clients. These tools for example include one global client base across Life and P&C and global training programs for client facing employees.
Regarding our international units: we have the pooling operation led by Wendy Liu which offers multi-domestic solutions and whose core operation is in Switzerland, and we serve expat and mobile employees by offering International Group Risk and International Pension Plans. Simon Foster heads up the latter, which we call Zurich International Corporate Solutions. Part of the operations of this unit are now in Luxembourg because Luxembourg provides us with a strong multi-language employee base, a supportive regulatory and legislative environment and a talent pool. We see a continuous growth in demand for these expat international solutions.
GBV: Swiss Life Network recently relocated to Luxembourg as well – what were your reasons?
HM: We tried other things with our expat and mobile employees unit before establishing ourselves in Luxembourg two months ago. For example, we offered a group risk solution selling from Luxembourg into Germany. It’s an award winning product in Germany. Its success prompted us to question why we couldn’t repeat this selling in other territories, hence the move to Luxembourg.
We held the kick-off event only about two months ago, and now have a team of 20-25 people on the ground there – plus sales people in a number of countries.
We have done things in the past that people said couldn’t be done. Six years ago, people said to us, “Oh, you can’t really start from scratch in the UK selling group life. You can’t do it; it’s very competitive.” Today we are a leading player in the UK group risk market.
We are looking to grow our business in the US by sticking to our strategy: focusing on the clients we understand; working closely with employee benefits consultants and leveraging our P&C corporate client base.
GBV: How could you recap, in a nutshell, your approach in Global EB and the market opportunity?
HM: CLP started as a truly global business in 2008-2009. It then gained importance and by close of last year already represented over one third of Zurich’s life insurance premiums (APE).
At CLP we work closely together with our sister unit Global Corporate, to serve common clients and distributors, including joint training, marketing and infrastructure, for example for International Programs.
And I would expect that this segment remains one of Zurich’s fastest-growing areas.
Take a look at multinational companies. They are changing the way they buy employee benefits. They are becoming ever more centralized, ever more standardized, and at increasing speed. What helps us is that we are one of the very few international insurers that can really serve multinationals and respond to these changes. The employee benefits pie is growing, so it makes a lot of sense for a global insurer like us to get a growing slice of what is already a growing pie.
GBV: That ties in very nicely to the next item, which is really cross selling with the property casualty portfolio. Zurich recently introduced ZIPE, the international program for employee benefits, which is benefits-only and has nothing to do with cross selling per se, at least in theory.
HM: Cross-sell is a very important component of our strategy and the launch of the programs is an example of that strategy being put into action. Zurich International Programs for Employees is driven by what the market is doing and right now companies are increasingly centralizing and standardizing how they buy employee benefits. For example, take a global company with 30 subsidiaries – it wasn’t that long ago that they would allow all their subsidiaries across the globe a high degree of autonomy in the way they would buy employee benefits programs, which often was contrary to the way they would allow them to buy any other risk program. In recent years, companies have realized that some of their employee benefits risks are as big, if not bigger, than some of the more traditional risks they are managing.
Companies are also realizing that in this world of growing compliance and regulatory constraints, the last thing you want as a big employer is to get into the press for the wrong reasons: by not being compliant with how you treat employees or by not being compliant in places where you are not so sure about regulations.
Companies have also become more cost-conscious and are now looking to leverage their global buying power, which is easier to achieve through a centralized purchasing process. There are also significant benefits of a global program given it is a tailor made solution with centralized coordinated implementation, single point of contact, harmonized terms and with easy access to data and information.
Maybe you don’t want to standardize benefits but at least you as a customer would like to achieve some kind of worldwide minimum standard and be compliant with local and global regulations. All that basically fits into the international program concept, which, of course has existed for a long time on the P&C side, and in which Zurich is one of the leading companies. We have over 6,000 programs on the P&C side. So we thought it would make sense to check with clients to see if we should also add an international program in employee benefits – Zurich International Program for Employees – and we found there was strong support for the idea.
As you are aware, we have only been in the market for a few months now, and we have been overwhelmed by the response. We knew we were on track because we developed the program in close collaboration with major multinationals and Employee Benefits Consultants. But I’ve never been on a platform during a conference with a room full of risk officers, – we asked for volunteers for our client program and we hoped we would get three. But actually we had more than 20 companies volunteer – It’s amazing! This fits with a) the trends we have seen in the market on the demand side; b) the strength of Zurich, and c) how employee benefits consultants are advising the companies.
GBV: In respect to pooling, if we look at the market, which is 50 years old, the market penetration is below 5 percent, which is not a great success. Employee benefit captives have not had much traction until now. Do you see any change today?
HM: It goes back to what I said earlier: it is really due to the changing way clients buy and appreciate employee benefits risk. So pooling – and I agree with you that it has been surprising that pooling has not become more widespread – is a good arrangement, but it’s more suitable for decentralized multinationals. Because the implementation process requires negotiations with each domestic market and any profit would often have to be redistributed again to the countries.
It all has to do with the fact that in the past, buying employee benefits was decentralized, and it really did not get a lot of attention at the highest levels. Ten years ago you would go to a CCO, CEO, CFO, and they would not be very close to employee benefits decisions. That has changed because of shifts in compliance, regulation, costs and needs.
As a result, newer forms of pooling – and Zurich International Program for Employees is definitely in some sense a new generation of pooling – and also captives are getting much more attention, and we are seeing a huge change in how companies want to use captives. That’s great for us because Zurich is a large captive provider on the P&C side. We can leverage P&C relationships – the P&C infrastructure – which is invaluable as you need quite a lot of infrastructure to manage captives.
If one looks at the numbers in the US, for example, I believe that the number of companies filing applications to use captives for employee benefits with the Department of Labor for the past two years alone is double of what it had been for the previous 20 years.
We are actually in the process of putting employee benefits into captives for multi-nationals as well as speaking to existing clients, who have P&C captives to expand their solution to employee benefits as well.
GBV: How do you see the future of social security vs. employee benefits?
HM: It can be observed that there is an overall decline in the ability of states to provide safety nets for their citizens. In particular, in developed countries, with the compounding effect of an ageing population, governments are finding it difficult to maintain pension benefits and tackle rising healthcare costs. In the corporate sector, we see a trend towards de-risking of balance sheets with corporations trying to offload their employee liabilities. And savings is just part of the equation. At Zurich, we partnered with Oxford University to understand the awareness level of income protection gaps and found that half of respondents believed the risk of losing their ability to work for a period was lower than 10% – the actual risk is closer to 25%. Income protection gaps can have severe consequences for families and households. One-third of households drop into a lower income quintile after an unexpected adult death in the UK, and 20 percent fall into poverty. However, the message is not getting through to individuals themselves.
People increasingly need to take personal responsibility for protecting themselves. Employers have their part to play in tackling this challenge. By offering benefits packages that include income and life protection, employers can attract and retain talent in today’s competitive skills market and also help to close income protection gaps. We know from our surveys in 11 countries, that six in ten respondents would prefer an IPG package to higher pay. Insurance companies also need to step up to the plate. For instance, innovative solutions such as longevity hedges where insurers take on the longevity risk of a section of a pension scheme can be very interesting for corporations and we at Zurich have worked together with Mercer to deliver such solutions in the market.
GBV: What value does your organization add to the Global Employee Benefits process?
HM: As a global composite insurer, Zurich has advantages that domestic insurers can’t copy – our global footprint, the strength of our balance sheets, which allow us to take greater risks, our partnering abilities, etc. But Zurich is also differentiating itself from other global players.
- We established global relationships with Employee Benefits Consultants which we will continue to develop;
- We have a very strong focus on cross-border regulations and have developed an award winning tool (MIA – Multinational Insurance Application) that supports us wherever we do business or cross-border business.
- We have invested in technology and are looking for ways to work with Employee Benefits Consultants to deliver more value to our customers with an example being our work on the B2B2C area.
- We can handle complexity – designing innovative solutions with Employee Benefits Consultants and customers is a big part of our job and keeps us fresh.
- We have the ability to operate across life and non-life corporate segments and have a proven track record of doing so very successfully.
GBV: What do you regard as the main challenges in the global employee benefits industry?
HM: There are many. Maybe the most important, in the end, is that notwithstanding all the efforts of the industry, employees don’t sufficiently understand that if they don’t put more money into employee benefits, be it on pension or risk, they will have a huge issue.
A further challenge is that many employers don’t make it easy for their employees to participate in these programs. They either offer propositions that are limited, do not fit real needs, or they just fail in their communications to their internal clients. A corollary to that is that as an industry, and I’m talking about providers as well as employee benefits consultants, we could do more to accept and respond to the changes in the market that we have been talking about.
I believe when I talk to my counterparts, or competitors, or employee benefits counsellors, they would see the challenges ahead. But to make the change in the organizations respond to these issues is a big thing. It’s a difficult thing. If you talk about Zurich, or any of our big competitors, we are all like big oil tankers – ships as it were – and changing course is difficult.
What we did a few years ago was to ensure that Zurich took CLP employee benefits operations and gave them a proper place in the organization to have the space to profitably grow. We are succeeding and I see our competitors moving in the same direction, but getting there – playing in this market and doing so profitably – is not easy.
Right now, the insurance industry does not seem to lead in how we use technology and big data. This is changing and insurers are now investing heavily in making information more easily available to our clients so it serves them better. I think one of our key challenges is to do that in a timely way, as well as economically and efficiently.
Finally, Employee Benefits professionals are a very limited group of people across all providers and across all clients – benefits managers, HR managers, employee benefits consultants. There’s just a lack of talent. So one of our challenges is to explain to all stakeholders that employee benefits is a very interesting, dynamic and growing industry. We have to make sure that we get a sufficient influx of young people. We have to train them, we have to invest in them, and that takes a lot of my personal time and attention.
GBV: That leads nicely into our next question: How do you attract, train, and retain talent for your operations?
HM: It takes a strong vision. When we started CLP in 2008, it was difficult to attract good people. It wasn’t viewed as a very sexy segment of the insurance industry; but people began to see that CLP had a very compelling vision and focused execution that was leading to results. This in turn enabled us to recruit more senior people both internally and externally and create this positive momentum.
We have training programs varying from a program for young talents where people across P&C, global corporate, and CLP go through a year-long training program with exposure to senior management, to programs for client-facing people. For example, in the last couple of years we trained two and a half thousand market-facing people across CLP and P&C, to ensure that they buy into our vision of cross selling, that they buy into our vision of showing OneZurich to clients, and they loved it! Because our people get attention, get the opportunity to look at the business holistically (across CLP and P&C) and they can really expound it to clients and distributors.
The challenge for me is to be able to do it consistently. Zurich is going through changes and I have to make sure that people understand that CLP is an important component of Zurich’s profitable growth – and to give them the tools in terms of training, challenges, and client exposure.
GBV: What are the biggest challenges you think you will be facing at your organization and in the industry in general?
HM: The biggest challenge is getting individual employees to understand their role and responsibility in shaping their employee benefits. Providers and Employee Benefits Consultants have a role to play in creating this awareness but as an industry we must do much more to convince individuals of the need to protect themselves. The research we conducted with Oxford University shows people tend to underestimate their income protection needs. Income protection gaps have devastating consequences for households and far-reaching social and economic impacts for governments and employers. They are linked to other pressing issues of our time including aging populations and the global retirement savings gap. The situation is not much brighter on the savings side. The research we conducted in six European countries revealed that the average savings buffer – savings plus investments plus pensions – was only sufficient to cover 4.6 years of living expenses on average. EU savers eligible for retirement between 2011 and 2015 already had an absolute pension gap of EUR 1.9 trillion.
Addressing these gaps requires a collaborative approach between households, the public and private sectors at both a national and regional level. Using tax and welfare systems to incentivize income protection, encouraging greater flexibility in the workforce and promoting prevention and wellbeing programs must all be considered. As a global insurer, we at Zurich have a responsibility and an important role to play to increase awareness and help society mitigate these risks.
GBV: What are your priorities in your role?
HM: I have four key priorities. My first is to understand, in depth, the changing needs of corporations and Employee Benefits Consultants. That means being in the market and talking with them on a regular basis to develop a shared understanding. The second is finding ways to deliver against those needs in a profitable manner. The third is to ensure that we leverage new technologies to provide a better experience to customers and Employee Benefits Consultants. Finally, the basis of it all – people. Having the right team in the right markets doing the right things is an everyday task. There’s nothing better than growing a business with a team that works really hard and has fun doing so!