How we can help complex clients budget internally

Many companies will have their own internal cost centres and need to account for spending in each centre, including what goes on benefits.

A consistent request from clients is to have accounts split; internal cost centres have their own budget pressures and they do not want to cross subsidise other budgets in the group.

The issue - Internal cost pressures and premiums that don’t reflect the accurate cost:

A typical scenario could be where different divisions of a company need an accurate cost at the end of a financial year to pay for their share of a centrally purchased benefit.  A good example of this is our own company, Ellipse.

Ellipse is part of the Munich Re group and as such we are part of the benefits package centrally purchased by Munich Re UK.

At the end of the year, we are sent an invoice for our share of certain benefits based on the unit rate of the overarching scheme and our share of the sum assured.

However, we’re a growing company with a young workforce and doing it this way doesn’t accurately reflect the cost of our cover.  We’d much prefer to have a breakdown showing our split.

Here is a typical example of how Ellipse can help:

A client we recently quoted for bought and sold a lot of different subsidiaries.  The client needed to be able to charge the exact cost for each subsidiary to the internal cost centre, which meant knowing how much of the premium was attributable to each member’s cover. Although the client company itself was very large, the firms they bought and sold depended on contracts won or lost, and could just result in three or four people joining or leaving.

Averaging out a unit rate based from a much larger scheme would have been inappropriate and failed completely to reflect the true costs per member.  As we price at a member level and because we use members’ actual joining and leaving dates, the supporting reports we could provide gave the breakdown they needed to support internal cross charging.

How does Ellipse actually provide this accurate cost breakdown?

Every time we issue a statement of account for a scheme we can, where requested, provide an automated breakdown of the member costs. This is provided on a category to category level.  So, when establishing schemes, if the categories are aligned to the cost centres, the cost for each category will show the cost for each cost centre.

Many companies are in a similar position of needing accurate costs for different parts of their business so next time you have a client asking for a breakdown of accurate costs so they can budget internally please remember that Ellipse will be able to help. 

Ed Bryan, Head of Distribution