Pooling and experience rating

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More info about Multinational Pooling

Pooling means combining risks in two or more countries. Local Employee Benefits schemes are brought together and treated as a single entity. This means that multinational pooling is in fact a layer above these local contracts, which allows a better spread of risk and results in economies of scale to the advantage of a multinational company.

Under this system, the company can benefit from favourable claims experience on a larger scale. This system is often referred to as “experience rating” and implies a cost-accounting mechanism with a number of income and outgo items that produce a balance.

If this balance is positive, it is returned to the multinational (in part or as a whole) as a dividend.

Examples of Money Flows when Contracts are Pooled

Pooling produced a Positive Result:

Pooling produced a Negative Result:

(source: ING_Global Network)