© International Group Program
Country Panel Presentation: Hungary
2016 IGP Regional EMEA Seminar Windsor, May 24-26, 2016
Karoly BALAZS, Sales manager
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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.
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Key Topics
Background Information
Country and Company Info &
Background
Social Security
Private Practice
Taxation Administration Legislation
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Background Information
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Country Info
Population: 9.8 million (decreasing and aging)
Capital: Budapest (1.7 million)
GDP per capita1: $25,069
GDP growth2: 3.2%
1: World Bank, 2014, on Purchasing Power Parity 2: Hungarian Central Statistical Agency, 2015
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Background Information Company Info
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Leading financial provider: - AuM: $ 2bn
- Premium income: $327m
3rd in life insurance:
- Premium income: $142m - Market share: 11.5%
Major pension provider:
- Membership: 180k - AuM: $521m
IGP member since 1992: - 60 multinationals
- 40% of premium income
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Key Topics
Background Information
Social Security
Summary of Social Security
Benefits
Private Practice
Taxation Administration Legislation
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Social Security Benefits Summary
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Retirement • Retirement age: 65 • Long term funding a problem (demographics) • Swiss indexation of benefits
Healthcare • Universal and free • Decreasing funding and service levels (lack of maintenance and
capacities) • Waiting lists for low capacity procedures
Disability • LTD as annuity • STD as daily benefit
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Key Topics
Background Information
Social Security
Private Practice
Customary Private Employee Benefits:
Type & Level of Benefits / Survey
Data / Plan Design / Benchmarking /
Trends
Taxation Administration Legislation
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Customary Private Employee Benefits Type of Benefits
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Life & Accident
Lump Sum Death Benefit
Minor accidents
Disability
Linked to Social
Security
Accidental disability
Medical
Sickness benefits
„Real” medical
Retirement
Voluntary pension funds
Pension insurance
Flexible benefit systems!
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Customary Private Employee Benefits Level of Benefits
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Critical events
• 1-2 x annual salary
• HUF 1-25 million
Minor events
• HUF 10k – 500k lump sums
• HUF 1-20k daily benefits
Medical • Services sold in packages
Retirement: - 3-5% of salary - HUF 3-15k / m
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Customary Private Employee Benefits Typical Plan Design / IT Service Provider
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• 1 x annual salary Life
• 2 x annual salary Accidental death
• 1 x annual salary Disability (accidental)
• HUF 30,000 Bone fracture
• HUF 6,000 Hospital care (acc. daily benefit)
• HUF 5,000 STD (acc. daily benefit)
• HUF 200,000 Surgeries
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Customary Private Employee Benefits Typical Plan Design / Telecommunications Company
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• 1 x annual salary Life
• HUF 11,000,000 Accidental death
• HUF 11,000,000 Disability (accidental)
• HUF 20,000 Bone fracture
• HUF 4,000 Hospital care (acc. daily benefit)
• HUF 20,000 Hospital care (acc. lump sum benefit)
• HUF 10,000,000 Death, traffic accident
• HUF 10,000,000 Disability, traffic accident
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Customary Private Employee Benefits Typical Plan Design / Business Services Provider
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• 2 x annual salary Life
• 1 x annual salary Accidental death
• 1 x annual salary Disability (accidental)
• 2 x annual salary Disability (social sec.)
• HUF 75,000 Bone fracture
• HUF 10,000 Hospital care (acc. daily benefit)
• HUF 10,000 STD (acc. daily benefit)
• HUF 75,000 STD (acc. lump sum benefit)
• HUF 110,000 – 1,100,000 Surgeries (accidental)
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Customary Private Employee Benefits Typical Plan Design / Consultant
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Benefit Executives Top management Middle management
Employees
Life HUF 30,000,000 HUF 20,000,000 HUF 15,000,000 HUF 12,000,000
Acc. disability HUF 30,000,000 HUF 20,000,000 HUF 15,000,000 HUF 12,000,000
Disability (SS) HUF 10,000,000 HUF 7,500,000 HUF 5,000,000 HUF 4,000,000
Fracture of bone HUF 250,000 HUF 150,000 HUF 120,000 HUF 100,000
Hospital care (daily benefit)
Sick: HUF 30,000 Acc: HUF 35,000
Sick: HUF 12,000 Acc: HUF 25,000
Sick: HUF 12,000 Acc: HUF 20,000
Sick: HUF 6,000 Acc: HUF 20,000
STD (acc. lump sum) HUF 250,000 HUF 150,000 HUF 120,000 HUF 100,000
STD (daily benefit) HUF 10,000 HUF 8,000 HUF 6,000 HUF 4,000
Surgeries Sick: HUF 350,000 Acc: HUF 950,000
Sick: HUF 280,000 Acc: HUF 780,000
Sick: HUF 245,000 Acc: HUF 645,000
Sick: HUF 175,000 Acc: HUF 575,000
Critical illness HUF 2,000,000 HUF 1,500,000 HUF 1,000,000 HUF 800,000
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Customary Private Employee Benefits Trends: Medical insurance
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2012: - Demand: early adopters - Supply: Medicover & „partners”
2013-2015: - Demand: multinationals & large local comps (growth slowed down by 2015) - Supply: insurance companies
2016 and beyond: - Demand: high prices, overload - Supply: capacities?, still no inpatient supply
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Customary Private Employee Benefits
• Disability 1990s: lot of „social” disabilities 2010s: Social security has become very strict Currently: normal level of disability claims
• Claims management Varying level of insurance awareness among employees Well-managed insurance is very rare
Trends: Disability & Claims management
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Key Topics
Background Information
Social Security
Private Practice
Taxation
Taxation of benefits (e.g. lump
sum versus pensions) /
Tax treatment of ER and EE
contributions
Administration Legislation
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Taxation
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Protection premium
Employer: tax free
Employee: tax free
Protection benefit
Employee: 15% tax on certain daily
benefits
Retirement contribution
Employer: 0-50% tax*
Employee: 0-33% tax*
*: depending on type of contribution
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Key Topics
Background Information
Social Security
Private Practice
Taxation Administration
Legal requirements re. administration of
benefit plans: actuarial valuations / communications / involvement of
unions/employees
Legislation
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Administration of Plans
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Pre-renewal Request of
employee data
Renewal Update of pre-
mium
New hires, leavers
Automatic cover Claims
Claim settlement
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Key Topics
Background Information
Social Security
Private Practice
Taxation Administration Legislation
Current legislative issues with
significant impact on the funding of the benefit plans / How are employer
and employees affected?
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Legislation
• New personal income tax rate: 15% (January 1, 2016) Effect: protection benefit payout for employee
• Flexible benefit systems: what’s the future?
Update
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Thank you for your attention! Key Topics We Discussed:
Background Information
Country and Company Info &
Background
Social Security
Summary of Social Security
Benefits
Private Practice
Customary Private Employee Benefits:
Type & Level of Benefits / Survey
Data / Plan Design / Benchmarking /
Trends
Taxation
Taxation of benefits (e.g. lump
sum versus pensions) /
Tax treatment of ER and EE
contributions
Administration
Legal requirements re. administration of
benefit plans: actuarial valuations / communications / involvement of
unions/employees
Legislation
Current legislative issues with
significant impact on the funding of the benefit plans / How are employer
and employees affected?
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www.aegon.hu
Contact Info
Karoly BALAZS Sales manager
+36 1 476 5353 / +36 30 999 8147 [email protected]
Aegon Hungary
