TLP’s senior partners in Australia were approached by a group of 8 Victorian 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 were also wanting to explore the adequacy and effectiveness of their existing insurance arrangements and to 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 means they are susceptible to numerous high-frequency losses that can accumulate considerable costs over an extended period of time.
That being said, one advantage of their position from an insurance perspective is their universal coverage requirements given their exposures and subsequent risk transfer needs being for the most part virtually identical.
Accordingly, in order to assist the Council members maximise their potential for cost savings, TLP’s approach was 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 tender’s were advertised in the market at the same time as a ‘group’ tender opportunity, which in turn enabled the Councils involved to aggregate their insurance buying power from a marketing standpoint while still maintaining their own individual 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.
As anticipated, this greatly enhanced the competitive tension among the respective brokers tendering for Councils’ business, which in turn helped to not only generate better financial outcomes, but also deliver enhanced policy conditions and coverage together with improved levels of service from their respective brokers and insurers.
Moreover, TLP were also able to work with the Councils and their appointed brokers to ensure a more open, transparent working relationship between the two parties; thereby eliminating any potential or perceived issues in terms of broker advocacy or support.