Most organisations engage the services of an insurance broker to design and manage their insurance programs. Unfortunately, the service delivery and expertise of insurance brokers can vary significantly from one insurance broker to the next.
Our insurance broker tender process will ensure participation from the leading insurance brokers to secure the best possible outcome to meet your current and future needs.
When to undertake a tender
Your organisation may need to conduct an insurance broker tender if:
- You are not sure what your insurance broker does.
- Your insurance broker’s service delivery is reactive not proactive.
- Your insurance costs have not significantly reduced over the past 4 years.
- You are not sure how your insurance costs compare to industry benchmarks.
- You don’t have an insurance broker service contract.
- You don’t know how much you are paying your insurance broker for their services.
- You have not had an insurance broking tender for 3 years or more.
Following the successful conclusion of the tender we will help you to draft an insurance broker service contact, including measurable financial key performance indicators (KPI’s).
We can also assist you to monitor the ongoing performance of your insurance broker to ensure they continue to deliver against their agreed broker service contract and KPI’s.
Case Study — ASX Top 100 Company
Situation
- The insurance broker had not completed a review of the clients risk tolerance and risk appetite or undertaken any analysis to evaluate the most cost effective retention structure.
- The client was in a distressed state less than 3 months prior to renewal following a series of significant insurable losses during the past 24 months.
- Many of these insurable losses remained open and unpaid for an excessive period of time with inflated reserves, causing the clients loss history to appear a lot worse than was actually the case.
- This had resulted in the client being advised by its insurance broker that its insurance premium was likely to increase by at least 4 times its existing premium.
- No service contract existed between the insurance broker and the client.
Process and findings
- RAS was engaged to undertake an independent insurance review. However, during this review we discovered the distressed nature of the clients’ insurance arrangements.
- The incumbent insurance broker was given an opportunity to present a solution to the Board, but was unable to provide a strategy to improve the clients’ current situation.
- Despite a short timeframe we recommended the client conduct an insurance broking tender for the distressed class of risk prior to renewal.
- RAS was engaged to facilitate the tender process and was able to influence the two most experienced insurance brokers and the incumbent insurance broker to participate in the tender process.
- Individual risk workshops were held with each participating broker to provide them with the best opportunity to understand the clients’ needs. This resulted in the competing insurance brokers being able to analyse and quantify key insurable risks and complete a risk tolerance exercise with senior executives.
Client outcome
- The client was presented with two viable alternatives to its existing insurance broker, with each providing a clear insurance program design and placement strategy and cost savings.
- The majority of reserves for open claims were reduced prior to renewal, following an extensive review by the new insurance broker.
- Premium and deductible increases were contained to less than half that quoted by the incumbent insurance broker.
- An insurance broker service contract was executed, which included the scope of services, the terms of the contract, the fees that will be paid and measurable financial key performance indicators (KPI’s).