Switching from “Single-Compartment” to “Multi-Compartment” approach in life insurance - Vermeg
Switching from “Single-Compartment” to “Multi-Compartment” approach in life insurance

Switching from “Single-Compartment” to “Multi-Compartment” approach in life insurance


The Single Compartment approach can be summarized as defining multiple, different and independent products to address very specific customer needs. A more efficient alternative, the Multi-Compartment approach, is to build a more flexible overall product to better meet customer needs.

Needs on the “Customer” side

Taking out several life insurance plans has become a common and cumbersome reality for many policyholders for various reasons, including:

  • Changing needs & decision parameters over time: As customers go through various stages of life; marriage, purchase of a primary or secondary residence, anticipation of future financial assistance to children (e.g. higher education), divorce, preparation for retirement, establishment of a ‘rainy day’ savings plan etc., their life insurance needs will evolve. An individual’s investment profile and risk aversion can also change over time.
  • Evolution of available products: The range of life insurance products has expanded and evolved as a result of innovation (investment strategy, financial arrangements, financial instruments etc.) and changes to the regulatory framework.

Needs and Responses on the “Insurers” side

Dictated by customer needs, (changing goals for the same policyholder requiring disparate investment strategies), most insurers have, so far, resorted to designing independent products (the Single-Compartment approach), each responding to a specific need or a very limited subset of needs. However, this approach presents insurers with major limitations that can be summarized in the following points:

  • Excessive volume of policies managed at the portfolio level given multiple number of policies registered on the same holder;
  • Mobilization of significant operating resources (Human and material) in order to manage in most cases, redundant transaction processes related to their business system.
  • Products that lack transparency and flexibility for their owners


The Multi-Compartmentsmanagement mode (also called Multi-Wallets or Multi-projects) – combines “Customer” and “Insurer” interests.

  • General Principle

The “Multi-Compartments” approach includes independent management of several investment modes / strategies (customer driven strategy, autopiloted strategy, company driven strategy or mandate strategy) within the same policy / product allowing:

  • Several investment strategies at the policy level (One strategy per investment coverage or per compartment or per project);
  • Specific risk coverages for each Compartment.

The different Compartments defined on a contract are autonomous in terms of coverage services (Regular addition or Regular withdrawal), investment services (automatic rebalancing, securing capital gains, progressive investment, etc.) and charges. The latter are manageable on a single policy in intra-Compartment or inter-Compartments or both.

Target representations of a product in “Multi-Compartments” management mode

  • Strengths

In addition to meeting the expectations of the customer and the insurer’s interests, the Multi-Compartment management mode:

  • Allows Insurers to extend their offerings to their customers and reduce their operating costs.
  • Avoids the “All or nothing” option for the customer: The management method “Multi-Compartment” has the advantage of avoiding the “all or nothing” option for the saver who wants, for example, to ensure a minimum amount of his savings invested in euro funds, while wanting to take advantage of the company driven strategy or mandate strategy, which allows many insured to take the step of investing in units of account. Facing this dilemma, many savers can resign themselves to choosing a 100% allocation in euros;
  • Allows a different investment portfolio, composed of appropriate assets for each Compartment: This enables each customer to define their own current and future investments (to address different investment goals);
  • Allows each customer to take advantage of a single tax priority for all policies;

VERMEG/SOLIFE – driving innovation in line with market expectations.

As part of our commitment to continuous improvement, VERMEG will, during 2021, integrate the “Multi-Compartment” management mode at the level of our SOLIFE solution. This integration will impact all product management parameters and extend to all operations in the life cycle of a product/policy such as configuration of Multi-compartment products (creation and addition of compartments without limitation of number and according to the needs of the Insurer), investment processes (Subscription, Single Premium top-up, Switch in…), divestment processes (Withdrawal, Switch out, transfer, Surrender, claim) and all technical or administrative endorsement (change of investment strategy, change of coverage or investment services, add a new compartment on policy…etc).

For our SOLIFE customers, this change will provide additional flexibility in product definition, enable them to better serve their customers, and, by simplifying the overall process, from product definition to management, reduce administrative overhead and cost.


For more information, please contact us https://www.vermeg.com/contact-us/



Majdi BEN MOALLEM – Project Manager at VERMEG