Insurance Procurement

While the need for purchasing insurance remains integral for any business, there myriad of due diligences required in an insurance review require substantial commitment of a company’s time and resources. Because of this many organisations are reviewing how they procure insurance.

The result of this is that the insurance procurement process is often outsourced to an insurance company or broker, who in turn is relied upon to suggest a course of action. While this can sometimes yield the required result, many variables are left to chance including:

Performing cost analysis and assessing buyer side risk;
Analysing differences in policy wordings and endorsements;
Checking adequacy of limits of liability and declared values;
Monitoring major dependencies with customers and suppliers;
Reviewing contractual liabilities and their effect on insurance policy coverage;
Analysing uninsured risk exposure and sensitivity / GAP analysis;
Monitoring changes in business risks and their effect on your level of coverage provided, such labour hire and contractor risks;
Premium benchmarking and understanding available pricing and coverage options available;
Negotiating insurance contracts, structuring service level agreements and fee levels;
Investigating consolidation of insurance programs and risk financing alternatives.

Managing the Insurance Procurement Process

When conducted professionally, the insurance procurement exercise can actually enhance the organisations' market profile, improve return on investment, provide a real evaluation of the alternatives available, and/or affirm the strengths and benefits of the current relationship.

Some of the important issues to be addressed in the procurement process include:

Timing;
Frequency;
Deciding which Procurement Method to use;
Developing a comprehensive Insurance Tender Document;
Finalising an evaluation methodology;
Gauging interest from brokers/ insurers;
Assisting with evaluation of Tender Responses and performing Due Diligence;
Dealing with broker / insurer questions and issues;
Post tender service monitoring;
Finalising broker appointments such as fee structure and Service Level Agreements (SLAs).

It is essential companies explore alternate ways to secure the right relationships that add strategic value to their operations. When considering your next insurance procurement exercise, it may be worth considering independent insurance procurement specialists who is experienced in insurance tenders and can work in partnership with you to manage the process.

The process usually starts with an insurance procurement specialist working with you to informally discuss your requirements. It is essential that a full understanding of your requirements is gathered at inception so an effective procurement strategy can be presented to your business. This model can then be presented to generate further discussion and start the review process.

Our Service Offering

Epago Group, with our extensive procurement experience, has partnered with Boutique Risk to provide clients with a leading independent insurance procurement consultancy that understands the importance of nurturing an effective insurance procurement process. The insurance offering can be structured to include one-off projects or long term projects and ongoing retainers focussing on continued support.

Some benefits of using our services include: