Optimizing Global Benefits Delivery Through

Multinational Pooling

Lisa J. Morrow Global Benefits Program Manager

NetApp

Contents

• About NetApp

• NetApp Global Benefits Management Journey

• Governance models

• What is Pooling?

• Multinational Pooling advantages

• Insurope Pool history

• How to be successful in Pooling

1992

1995

2002

Network Appliance Founded

2005

#1 Best Place to

Work

2009

2015

2017

25th Anniversary

New NetApp

Story

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NASDAQ NTAP

Network Appliance Founded

New CEO Transformation

Begins

$1B Revenue

About NetApp

About NetApp

Values: Being a Model Company Is at the Heart of Our Culture

11,500 Employees in 51 countries

Mission: Help customers achieve what matters most to them.

30,000 Clients

Total Rewards Philosophy: Reinforce our values and mission to attract, motivate, and reward

employees. Benefits: High Tech Market Median

Principales valores de NetApp:

Confianza e Integridad

Liderazgo

Simplicidad

Trabajo en equipo y sinergia

Ir más allá

¡Lograr objetivos!

NetApp Global Benefits Management Journey

Global Broker Benefit Inventory Multinational Pooling

Thomsons Online

HRIS System Implementation

People Operations Implementation Governance

Benefits Manager Pooling Analysis

Total Rewards Value Proposition Global Programs & Policies Global governance review

Thomsons Online

2009 - 2012

2015

2016

2017 Challenges • Limited resources

• Not managing or optimizing pools; estimate 35% pooled

• Global Broker not mandated locally; estimate 30%

• Limited data

• Governance Adherence

Multinationals are concerned about Governance

Implications for Governance

1. Lack of adequate data on plan design, financial costs and risks, and policies

2. Strong governance in HQ country but no line of sight outside HQ

3. Strong management of certain benefit plans (e.g., DB plans) around the world but not others (e.g., DC plans or Medical)

4. Auditor increasing questions and scrutiny of benefit plans and liabilities

Challenges Multinationals are facing…

• Focus on bottom-line management

• Expansion in emerging markets

• Viability of social benefit programs uncertain

• Rising cost of health benefits

• Unsustainable costs of DB plans

• Significant salary inflation in emerging markets

• Increasing demand for retirement and medical

• Risks vary significantly around the world

• Legislative focus on transparency of risk factors

• Stricter funding requirements

• Consolidation, simplification and oversight

• Varied governance requirements and structures

Companies must decide on the degree of centralization/ decentralization required to address Governance concerns

Design

Financing

Providers

Administration

Spectrum of global benefit Governance models

Fully Decentralized Model

Some Corporate Oversight

Regional Model

Centralized Model

• Reviews & decisions made locally

• No global philosophy or guidelines

• Some design decisions are made by HQ

• Regionals may influence • Philosophy and Guidelines

provided but not enforced

• Philosophy and guidelines are enforced

• Decisions are made by region heads

• All benefits changed initiated and decided by HQ

• Fully insured contacts • No pools • No global funding or

investment guidelines • Risk is measured locally

• Pooling, but decision to pool may be made locally

• Global investment policy and funding guidelines

• Active pooling strategy

• Active pooling strategy • Captive • Global Pricing

• Choice of insurer, broker, etc., left to local management

• Multiple vendors

• Preferred provider network established

• HQ advisor

• Preferred-provider network mandatory

• Regional account management

• Global SLA • Global pricing • Multi year contract

• Employee communication is offered by local provider

• Admin. often in house

• Some global theme appearing in some communication materials (e.g. wellness)

• Regional web portals are appearing providing a common employee experience

• Central data feed

• Fully integrated web based employee portal

• Global data management system are essential

What is multinational Pooling?

• Multinational Pooling is not a new concept

– 1st pool started over 50 years ago! Today, most multinationals use multinational pooling to optimize the financing of insured benefits.

• Multinational pooling is effectively “global experience-rating.”

– Subsidiaries insure their benefits with a network like Insurope.

– In Stand Alones the company participates in its own global claims experience and independent of most local rating restrictions.

• Multinational pooling is beneficial for the subsidiaries, as they may not be large enough to be experience-rated on their own. By using pooling, subsidiaries benefit from better underwriting terms and global service level agreements.

How do we define multinational Pooling at NetApp?

• System for global risk financing of our worldwide employee benefit offering

– Brings together all of our benefits to take advantage of economies of scales and realizing cost savings

• Tool that allows us to benefit from favorable insured claims experience on a worldwide basis

Multinational Pooling advantages

Financial

Corporate

₋ Overall cost savings

₋ Improved financial reporting and governance of programs

₋ Pooled risks

₋ Improved overall efficiencies in benefit spends

Local

₋ Local cost savings

₋ Possible international dividends

Non-Financial

Corporate

₋ Central point of contact

₋ Consistent information

₋ Improved administration efficiency

₋ Improved employees mobility

Local

₋ Better terms and conditions

₋ Greater understanding of global principles

₋ Improved service from local provider

₋ Greater influence with local insurers

₋ FCL

Main objectives of Multinational Pooling

• Enhance the employee experience and offerings

• Reduce cost, minimize volatility, improve cash flow to NetApp of operating its insured employee benefit plans.

• Increase the data and information available to NetApp.

• Improve the management/administration of plans so that they operate efficiently and effectively.

• Enhance the quality of the risks insured by actively pursuing techniques to minimize the potential frequency or severity of claims.

Optimize the Efficiency and Delivery of Risk-Related Benefits

Operating model for Multinational Pooling

• Renewals – approval needed when change will result in change of pool, exiting a pool, or going with a non preferred vendor

• Recommendation/approval to pool a contract or not

• Review pool performance regularly

• Allocation pooling dividend

Global

• Renewals – Manage relationship with broker ̶ Work with brokers to manage local renewals ̶ Make recommendations and decisions on local placement ̶ Seek approval when necessary

Region

• Oversee remarketing and renewal process for local contracts

• Adhere to pooling strategy with Networks for all bids

• Work with procurement when necessary Brokers

Our Multinational Pooling strategy

Identification of Pooling Network

• Establish objectives Determine the appropriate number of networks

• Identify partner(s) • Negotiate terms and

rules of engagement

Phase 1

Monitoring of the Pooling Network performance

• Performance Review • Determine how to improve

pool performance • Return dividends

Implementation

• Communicate strategy • Determine implementation

timelines • Establish management

principles and internal rules of engagement

• Implement!

Phase 2

Phase 3

Phase 1: Identification of Pooling Network

Objectives

- Improve the financial performance of our sites

- Increase poolable population

- How many Pools should we have?

- Establish guidelines to drive consistency globally

- Ensure geographical coverage of NetApp’s footprint

- Allow for local competition

Factors for Identifying Partners

- Ensure geographical complement to NetApp’s footprint

- Flexibility, local and account service quality

- Identify partners with long-term relationship potential

Negotiate Terms and Rules of Engagement

- Agree to service level agreement

Establish objectives Determine the appropriate number of networks

Identify partner(s)

Negotiate terms and rules of engagement

Phase 2: Implementation

Communicate strategy

Determine implementation timelines

Establish management principles and internal rules of engagement

Implement!

Conduct inventory of benefit programs

- Significant opportunity for pooling

Grow the Pool

- Develop systematic target list

- Minimize disruption to the business

- Target large non-pooled contracts

- Identify non-pooled countries and determine viability and priority based on:

• Premium volume/lives associated with country

• Any restrictive notice periods hindering movement

• Historical claims experience

Define Governance structure – Roles & responsibilities in a Pooling environment

Activity Details Role

Plan Design Determining market competitiveness and offering

RFP Preparation Preparing request and contacting local vendors

Network Selection and Management

Negotiations with pooling partners on SLA, etc.

Vendor Selection Among network providers

Statutory Compliance Compliance of programs to local requirements

Claims Administration Claims resolution, etc.

Determining poolability Inclusion of benefit

Dividend Review/Allocation Review of annual pooling reports and allocation of dividends

Local HR Regional HR Corporate HR

L

L

L

L

R

R L

C

R

C

C

Phase 3: Monitoring of the Pooling Network performance

Periodic Review

- Understand business needs; employee needs/wants

- Pooling results reviewed annually

• Quarterly review of premiums and claims

Dividend Policy

- Dividends held centrally and used for global programs or offset costs

- Form of payment dependent on country

Performance Review

Determine how to improve pool performance

Return dividends

Insurope Pooling History (1)

Started pool in May 2009

– Countries: Australia, China, Hong Kong, South Korea, Taiwan as well as Indonesia,

Malaysia, Philippines and Thailand (insured from Singapore)

– Lives: 400

– Pooled Premium: 350,000 dollars

– Pooling System: Multipool

Insurope Pooling History (2)

• Mexico entered the pool in September 2012

– Benefits: • Life

• Medical (GMM)

– Pooled Premium: 30,000 dollars

– Lives: 24

• Our pool moved to standalone pool in 2013

– Pooling System: Limited Carried Forward with 3 Year Stop Loss

Insurope Pooling History (3)

• Currently:

– Countries: Australia, Austria, Brazil, Hong Kong, Mexico, Netherlands, Russia, Taiwan

and U.K.

– Lives: 1,450

– Pooled Premium: 1.5 million dollars

– Pooling System: Limited Carried Forward with 2 Year Stop Loss

Insurope Pooling History (4)

• Dividends 2009-2016:

– Approximately 500,000 dollars

– We distribute dividends with the subsidiaries

• Continued expansion efforts underway

– Insurope Network Members asked to quote alongside other pooling partners.

How to be successful in Pooling

Client

Insurer

Pooling Network

Broker

• Understand your Company culture and how decisions are made

• Define the rules of engagement and your non-negotiable items

• Establish strong partnership with your pooling partners, brokers, and insurers

• Set a realistic timetable

• Have the subsidiary support

Questions?