Local Government

Local Government group works with TLP's senior partners to optimise their collective insurance arrangements.

Background

The Lion Partnership’s senior partners in Australia were approached by a group of 8 Victorian Local Government Councils that required the services of an independent expert as part of an internal corporate governance review.

Given budgetary constraints and financial pressures resulting from reduced federal funding and rate-capping, the Councils were all eager to save money. However, they also wanted to explore the adequacy and effectiveness of their existing insurance arrangements and test their long-standing relationships with their incumbent intermediary.

The challenges faced by Councils are somewhat diverse and evolving. Their position within the government hierarchy and responsibilities to the general public mean they are susceptible to numerous high-frequency losses that can accumulate considerable costs over an extended period of time.

From an insurance perspective, one advantage of their position is their universal coverage requirements, given their exposures and subsequent risk transfer needs being virtually identical for the most part.

Approach

Accordingly, to assist the Council members to maximise their potential for cost savings, The Lion Partnership’s approach was to manage a 'Request for Proposal' (RFP) insurance tender exercise on behalf of the Council's on a group or collective basis. This meant that the Council tenders were advertised in the market simultaneously as a 'group' tender opportunity, which enabled the Councils involved to aggregate their insurance buying power from a marketing standpoint while still maintaining their programs.

This concept was reiterated to participating brokers who supported the approach as it also afforded them the opportunity, if appointed, to approach prospective insurers with a far larger potential premium pool.

Solution

As anticipated, this greatly enhanced the competitive tension among the respective brokers tendering for Councils' business, which helped to generate better financial outcomes and deliver enhanced policy conditions and coverage together with improved levels of service from their respective brokers and insurers.

Moreover, The Lion Partnership could also work with the Local Government Councils and their appointed brokers to ensure a more open, transparent working relationship between the two parties, thereby eliminating any potential or perceived issues regarding broker advocacy or support.

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Josh Tobin

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