Fringe benefits that cross borders: An international pooling system aims to cut the costs. Roger Trapp reports

COMPANIES of all sizes all over the world offer their employees some kind of benefits. Where they differ is in the type offered.

This is chiefly because of varying national requirements and rules. As a result, it is difficult for multinationals to achieve economies of scale.

Providing a solution to this problem is the intention of the co-operative agreement announced last week by Cigna, the US-based international employee benefits company, and Gerling Group, the Germany-based international insurance and reinsurance company. Under the alliance, they will be offering a multinational pooling system for the benefits plans of international businesses.

Cigna director John Hamblet accepts that other companies have established similar links.

But he says this arrangement is different, because businesses are offered complete flexibility in which companies they use for insurance, rather than being forced to deal with particular organisations in different countries.

Since this centralised method of doing business did not seem consistent with the way UK companies in particular made decisions, Cigna decided personnel managers in individual national operations should be able to make decisions about cover - at the same time as making the service cost-effective for the whole group.

It had considered going it alone, but decided to link up with Gerling - which is strong in areas, particularly mainland Europe, where Cigna is not.

Essentially, the system is like a profit and loss account, with premiums being paid in as income, and expenses and claims being registered as outgoings. At the end of each financial year, the account is assessed and, in most cases, a dividend paid back to the client.

Local differences are accommodated by linking local contracts to whatever is standard for the area. This also ensures that employees deal with insurers in their own countries, rather than negotiating with a single international organisation.