Why you should consider an insurance tender in 2021

Comprehensive background on insurance tenders.

The market outlook for the remainder of 2021:

  • The start of 2021 has seen a continuation of the distressed market conditions experienced over the preceding 12 – 24 months.
  • Insurers remain assertive in taking corrective actions to address profit downgrades emanating from escalating claim costs and low investment returns.
  • Reductions in insurer support and capacity, increases to minimum policy deductibles, and rising premiums costs are expected to continue for the remainder of the year.
  • Insurers continue to adopt heightened levels of scrutiny and demand a higher degree of information when looking at renewals and new business opportunities.
  • Claims against directors and officers are expected to continue as a result of the impact of COVID-19 on the economy, with many experts predicting that corporate insolvencies will be a major catalyst for claims.
  • Unprofitable accounts and/or organisations that operate in what are deemed to be high-risk professions may struggle to obtain insurer support or be forced to accept sizeable pricing increases together with restrictions in cover.
  • Many SME businesses that are struggling from the fall-out of COVID-19 may find it difficult to acquire essential insurances as premiums reach unaffordable levels.

Some questions to ask yourself:

  • Is our insurance program providing us with a broad scope of coverage that mirrors our individual risk profile? Does it effectively transfer all our insurable risks or are there unknown gaps that need to be closed and/or better managed?
  • How well do we know our insurers, and how well do they know us? When was the last time we were afforded the opportunity to have a face-to-face meeting with our insurers so that we could convey our company’s key messaging, and better educate them about our operational activities first-hand?
  • Are we doing anything to help counter the adverse conditions in the insurance market?
  • Do we have a low rate of claims occurrence, and if so should we consider self-insuring some of our risks? Has our broker performed, and are they able to perform the analytical work necessary to gauge whether self-insuring certain risks would be a more cost-effective solution?
  • Are our premiums being inflated unnecessarily through undisclosed or concealed commissions? Is our broker exploring the entire open market, or are they using mandated in-house online quoting systems that restrict their re-marketing efforts to a limited number of insurers that subscribe to their quoting facilities?
  • How is our account being sold to new and prospective insurers? Are we clearly articulating our risk mitigation controls to insurers, or are they having to make assumptions and fill any gaps in information with premium?
  • Do our current policies contain any ambiguous policy language that may cause confusion around the extent of cover provided in the event of a loss?
  • Are our policy wordings bespoke products tailored to meet our specific needs, or merely standard “off-the-shelf” insurer products that have been modified through a series of convoluted or unnecessary endorsements?

Insurance tender considerations:

  • Now is more important than ever to challenge the status quo and take a proactive approach in exploring alternative strategies to counter the hardening insurance market.
  • Organisations that remain idle are simply just riding the market cycle and leaving themselves susceptible to harsh market conditions.
  • Despite record losses, insurers are keen to write new business to achieve income targets.
  • Brokers are hungry for new accounts and are offering more services for their agreed fees.
  • No one broker has exclusivity on good ideas. Running a well thought out and suitably structured tender exercise can allow you to benefit from the knowledge, data and resources of multiple brokers in the market to better understand the adequacy and cost-effectiveness of your current program.

The main benefits of The Lion Partnerships insurance tender model:

  • It creates competitive tension in an open and transparent environment; thereby maximising your opportunities to secure the best possible financial outcomes, regardless of the market cycle.
  • You receive a full critique of your insurances from the brokers taking part in the process; thereby helping to pinpoint any deficiencies in cover and/or opportunities to secure improvements.
  • It delivers enhanced levels of broker performance, often at discounted fee/rates that are free of any hidden commissions or other forms or concealed fees that brokers regularly collect.
  • It’s an excellent corporate governance exercise that demonstrates that proper due diligence has been undertaken in managing the company's insurable risks.
  • It’s a tried and tested process that ensures you are making the best use of your insurance capital.
  • It ensures that you are partnered with the best, most suitably qualified broker and insurers to support your future aspirations and insurance/risk management needs.
  • There’s no requirement to change from your incumbent broker or insurer(s) to benefit from the process. The choice is yours.
  • It’s the perfect solution for any organisation that is looking to test, challenge, benchmark and/or critically analyse their current insurance arrangements.

The Lion Partnership is a privately owned, specialist consultancy group that supports businesses through the complex and often costly exercise of implementing efficient insurance programs through an insurance tender.

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Josh Tobin

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