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© International Group Program

Country Panel Presentation: France

2016 IGP Regional EMEA Seminar Windsor, May 24-26, 2016

Philippe Mahé, Quatrem Assurances Collectives

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This presentation was exclusively prepared for the attendees of the 2016 IGP Regional EMEA Seminar. None of the contents of this presentation may be copied or disclosed to any other party or used for any other purpose than the one mentioned above without IGP's prior written permission.


Key Topics

Background Information

Country and Company Info &

Background

2

French Social Security & EB Market

Trends


Life, Disability, & Medical

Administration Claims

Prevention & Claims

Management

Disability & Medical


Key Topics



Background

3


Trends




Prevention & Claims

Management



Country Information: 2014 Key Figures

• 66.3 M inhabitants in 2014 (+0.45%)

• 95.8% has a private social insurance (indiv. or group) (+1.91%)

• GDP € 2,132 Bn (+0.8%)

• € 13.2 Billion : Global deficit of the Social Security (-14.3%)

• Health expenses € 2,893 a year per person (+3.08%)

(Percentage “+” or “–” compared to 2013 data) Source: Insee, OECD.Stat, Cour des Comptes, FFSA


Company Information

A Private Insurance Company & wholly-owned subsidiary of Malakoff Médéric

Dedicated to supplying employee benefits through brokers and consultants

Member of the IGP Network since 2010

2015 vs. 2014

Premiums € 1.4 Bn + 13 %

Assets (technical reserves) € 7.1 Bn + 6 %

Regulatory solvency margin 148% % - 11 %

Client Portfolio 62.000 + 3 %

Policyholders 2.4 millions + 4 %

Employees 585 + 2 %

Source: Quatrem

Medical 47,2% Life &

Disability 40,0%

Retirement 12,8%

Quatrem's turn over by activity


Company Information - continued

Malakoff Médéric – Quatrem merged in April 2016 This new structure shall be a key actor in Corporate Group Medical and Life & Disability (Group contracts). Based on 2015 results this new group is in the top 3 of collective insurance providers.

Latest News:

Source: l’Argus de l’Assurance


Key Topics



Background

7


Trends




Prevention & Claims

Management



Social spending (Health & Disability) cost 10.10% of GDP in 2011 Above the OECD members average: +1.4

8.00%

8.10%

8.40%

8.60%

8.70%

8.70%

9.20%

9.40%

9.70%

10.10%

10.30%

10.80%

11.20%

11.40%

11.60%

11.80%

0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00%

Canada

Ireland

Australia

Portugal

Japan

OECD

Italy

Spain

United …

France

UK

Belgium

Germany

Sweden

Denmark

Netherlands

% of GPD

Social spendings (Health & Disability), OECD countries 2011

(% of GDP)

Canada

Ireland

Australia

Portugal

Japan

OECD

Italy Spain

USA

France

UK

Belgium

Germany

Sweden Denmark

$2,000.00

$3,000.00

$4,000.00

$5,000.00

$20,000.00 $30,000.00 $40,000.00 $50,000.00 $60,000.00

Social spendings

per inhabitant USD

GDP per inhabitant USD

Social spendings (Health & Disability) per inhabitant and GPD per inhabitants,

OECD countries 2011

Social spending $ 3,683 year/person Close to the trend line

Social Security Benefits – International Source: OECD.Stat 2011


Individual / Collective protection

Legal protection

IGP market

2 pillars / 3 ways to cover employees

2nd Pillar: Private social insurance - All benefits come on top of Social Security - Employee Benefits Market - Corporate agreements to manage Group Protection

3 ° Additional cover

2 ° Group Schemes

1° Social Security

1st Pillar: General Scheme (State) - 3 principles: Equality, Quality and Solidarity - Since 1945

Social Security Benefits - France


Summary of Social Security Benefits

• Since 1945, French Social Protection system relies on legal basic cover provided by Social Security

• 3 fundamental principles : equality for healthcare access, healthcare quality and solidarity

• Compulsory enrolment for all employers & employees with a funded plan

• Social Security is managed by various schemes but the General Scheme accounts for 75% of all schemes’ medical expenses


€ 213.6 Bn Health and Life & Disability spending in 2014 € 175 Bn Health € 38.6 Bn Life & Disability The level of expenses provided by private players is rather small. But Life & Disability expenses are more equally shared between the State and market providers

85%

62%

15%

38%

0

50

100

150

200

Heath Life & Disability

(€ Bn)

Health and Life & Disability spending 2014 (1st and 2nd pillar)

Private social insurance: indiv. & group (2nd Pillar)

General scheme (1st Pillar)

€ 175 Bn

€ 38.62Bn

1st & 2nd Pillar distribution

Social benefits in France

Source: FFSA “Les assurances de personnes données clés 2014”


2nd Pillar market: 3 types of providers •Insurance Companies (ruled by the Insurance Code) •Life Insurance Institutions (non-profit & joint administration co., ruled by the Social Security Code) •Mutual Insurance Companies ( non-profit co. ruled by the Mutuality Code)

40%

29% 62%

38%

53%

9%

22%

18%

29%

0

10

20

30

40

Global Health Life & Disability

Spending (€ Bn)

2nd Pillar providers market share 2014

Life Ins. Institutions

Mutual Ins. Companies

Insurance Companies

€ 40.5 Bn

€ 14.5 Bn

€ 26 Bn

Note: Information related to pensions has not been included in this presentation as it is not allowed to pool such benefits in France. Market shares differ if pensions are included: Insurance Companies (59%) Life Insurance Institutions (27%) Mutual Insurance Companies (14%)

Social benefits in France



Individual versus Collective Market:

Source: FFSA

Health:

Premiums: € 10.8 Bn, +12.3% since 2010 Individual protection is predominant 57% of Premiums A poor Loss Ratio for Groups 87% compared to Individuals 78%. In 2015 & 2016 thanks to ANI reform Groups market share should increase (cf Hot Topics – Opportunities).

Life & Disability:

Premiums: € 9.3 Bn, + 20.6% since 2010 The level of premiums is equally shared between Groups (52%) and Individuals (48%). The Loss Ratio for Individuals 56% is better than Groups 72%. Groups insurers use Health to sell Life & Disability .

Group Insurance

3.0

3.5

4.0

4.5

5.0

5.5

6.0

6.5

2010 2011 2012 2013 2014

€ Bn Health insurance Market

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

2010 2011 2012 2013 2014

€ Bn Life & Disability insurrance Market


Social security and Group Employee Benefits: Life & Disability

Social Security Benefits Groups Employee Benefits (on top of Social

Security)

White Collar Blue Collar

Death

Death lump sum established by the Rules as a fixed amount: € 3,400 (raised each year)

Death lump sum 100% to 400% of GAS* according to family status (x2 in case of accident)

Death lump sum 50% to 200% of GAS* according to family status (x1.5 or 2 in case of accident)

Survivor’s Pension 40% of annual wages, up to €15,216 (additional +20 % after 55years old)

Whole life pension: 1% of GAS (A+B) x(65 – Y) Y: age of deceased Insured

Whole life pension: None

Orphans’ Pension 25% of annual wages, up to €9,510, per child (€ 7,608 as form the 3rd child)

Temporary pension: 5% to 20% of GAS according age of children, until 26 years old

Temporary pension: 2% to 10% of GAS according age of children, until 26 years old

Short Term Disability

Temporary indemnities: 50% (<31 days) or 66.6% of daily gross salary (max. benefits per day € 57.13). Maximum duration 3 years.

Temporary indemnities: 100% of net annual salary (max. retirement age) after a 60 days waiting period.

Temporary indemnities: 100% of net annual salary (max. retirement age)

Long Term Disability 50% of average GAS (10 years) limited to € 19,020 a year. Paid until retirement

* GAS : Gross Annual Salary Source: AMELI, French Social Security

Group Insurance


Social security and Group Employee Benefits: Health

Social Security Benefits Groups Employee Benefits (on top of Social Security)

Example of Employee Benefits common plans

General practitioner & specialist, Biology &

Radiology Acts

General practitioner € 15.10 : 70% of SS price Specialist € 16.50 : 70% of SS price Psychiatrist € 26.79 : 70% of SS price 60% - 70% Biology & Radiology Acts

General practitioner 98 % Specialist € 16.50 : 98 % Psychiatrist € 26.79 : 98 % 96% Biology & Radiology Acts

Hospital treatments 80 % of hospitalization fees It doesn’t include accommodations fees

99 % of hospitalization fees Accommodation fees: € 18 per day

Drugs

Depends on drugs. 5 category depending on their Medicinal uses : 100% / 65% / 30% / 15% / 0%

99 % in general, depends on drugs

Dental 70 % of Social Security conventional prices. But this price is often exceeded by dentist. Poorly reimbursed

89 % Dental cares and Prosthesis

Optics

60 % of Social Security conventional prices. 60% spectacle frame (max price € 30.49) 60% glasses ( max. price depends on correction ) Poorly reimbursed

82 % Glasses and spectacle frame

Source: AMELI, French Social Security

Group Insurance


Key Topics



Background

16


Trends




Prevention & Claims

Management



Hot Topics

Social Security Policy: the government wants to reduce the deficit

-9.4

-23.5

-28.1

-20.8

-17.5 -15.4

-13.2 -13.1

-30

-25

-20

-15

-10

-5

0 2008 2009 2010 2011 2012 2013 2014

2015 (forecast)

€ Bn

French Social Security Deficit

Source: French Social Security 2014 report

Social security expenses involve:

-Health benefits : 49% of 2014 deficit -Pensions : 9% of 2014 deficit -Family benefits: 20% of 2014 deficit -Disability: - 5% of 2014 deficit -“FSV” (solidarity for elder): 27% of 2014 deficit

Reforms:

-Pension reforms

2010: min retirement age : 60 to 62

2013 :raises of employer's and employee’s contributions

-Health : Social Security « disengagement »

A balance welfare system: “reduce 1st pillar & transfer to 2nd pillar”

ANI reform January 1st 2016

“Responsible Contract” April 1st 2016


59%

41%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Group contracts

Individual contracts

ANI TRANSFE

R

Medical Premiums Individual versus Group in 2013

Hot Topics – ANI

ANI (National interprofessional agreement) Reform: generalization of Medical Collective Protection

From January 1st 2016 all firms have a Medical Collective Protection for their employees The aim of this reform is to reduce inequalities between large and small firms, between executives and non-executives. More than 600 000 firms to cover with medical group insurance. It represents a huge transfer from individual to group : 4 to 6 millions insureds concerned. Consequences: A very competitive market -In order to reduce their losses providers specialized in individual contracts will sell group contracts: Banks / insurance companies , Mutual Insurance Companies…

-To conquer market share some providers have an aggressive strategy on price, they sell medical cover for € 18 per month although equilibrium price for ANI contracts is € 35 per month. They hope to make it profitable later.



Hot Topics – ANI continued

Individual contract segment : According to a March 2015 IFOP survey 48% of employees (8 millions people – Insee) are considering an additional individual cover on top of the collective one: That’s why providers focus on this essential segment. They offer a minimum collective basis with individual options. The increase of alliances between multi-type providers will boost contract diversity, distribution network size, and pooling.


Hot Topics – Opportunities

Responsible Contracts :

By way of these “responsible contracts” the French government wants to normalize the insurance market. The aim of this decree is to reduce medical spending as the “responsible contracts” restrict the amount of guaranties given by using both a regulated ceiling and minimum. Consequences: According to private providers this reform will:

Bring more discipline

Help negotiations between employers, employee representative and insurers

Foster cost containment in companies by reducing spending.

Increase renunciation of cares by increasing the amount left to the insured.

It could increase inequalities and reduce Medical cover

Source : Colombus Consulting livre blanc « Quelle sera la protection sociale des Français en 2025 ? »


ANI Summary

• “ANI” : As of 1 January 2016, compulsory collective protection for all employees on top of the SS coverage including “SMEs”

• About 6 Million of potential new insured !

• Better and longer coverage for laid-off Employees (free) as of 2014 on medical benefits and on death/disability as of 2016.

• Any laid-off employee can ask for a year-long free coverage on medical benefits technical impact on insured plans is mutualised in order to spread this new cost

• A similar technical effect will impact death/disability plans in 2016 !


Key Topics



Background

22


Trends




Prevention & Claims

Management



Administration of Plans

• We are legally compelled to provide the Employer with accurate summaries of Benefits so that he can fulfill his obligation to inform his Employees about their Benefits / Rights.

• Transparency of costs is a compulsory principle for Insurance Companies, Brokers and Claim Administrators as well.

• We must also grant the Insurance Taker (and our insured as well according to a new trend) with a public version of our income statement.

• In case of modifications in the insurance policy, we face three different processes :

• Employer Unilateral Decision

• Corporate Agreement (Employer and Unions involved)

• “Referendum” (Everyone’s involved)


Key Topics



Background

24


Trends




Prevention & Claims

Management



Claims Prevention & Claims Management

4 SIMPLE FIGURES

• In the past years we have observed a significant inflation on disability and medical claims in France (around 5%/Year). The current trend seems to indicate a slow-down in this inflation with a 2.3% increase since January 2015.

• Increase of medical expenses and long-term effect on disability : 20% of the employees suffer from a chronical disease.

• On average, in a 1000-employee company, sick leaves represent the equivalent of 40 full-time jobs.

• An ageing population : 16% of the employees take care of a dependent relative.


Claims Prevention & Claims Management

• Malakoff Médéric - Quatrem have developed (or created partnerships) claims prevention & management tools to improve their clients satisfaction, such as :

• KALIVIA (network for high quality optical care and cost containment)

• VIAMEDIS (third-party payment)

• QUALIOPEE SANTE ( ANI Contract flexible to employer, global and customizable to employee , easy to subscribe and to manage)

• MMS (survey of psycho-social risks within the company)

• MALAKOFF – MEDERIC medical diagnostic tools (audit to reduce health hazards at work)

• JLO (survey analysis and consulting for solution in order to improve employees working conditions and performance, treatment of disability e.g. personalized “back-to-work” programs for disabled )

• Dedicated tools e.g. Prevention, Check-up (tailor-made solution with a medical check-up, and a long-term training program – time-planning/nutrition/fitness)

• https://entreprise-territoire-de-sante.malakoffmederic.com/


Questions & Answers

27


www.quatrem.fr

Contact Info

Philippe Mahé Quatrem

+33 1 53 32 68 96 [email protected]

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