An insurance broker can save you and your organisation time and money. But, as Andrew Millard, public sector practice leader – North at Aon, explains, it’s worth considering what you need before making your selection.
Working with a broker can help a public sector organisation manage risk and insurance spend more effectively. But, as the services and expertise they offer can vary enormously, it’s important to find the right one for you and your organisation.
Understanding what you need is key to selecting the right broker. Spending some time considering where your organisation is on its risk management journey and the sort of relationship and support you would want from a broker, will make the selection process much more powerful.
First, consider what you want from a broker. Some are happy to provide a simple, transactional service, reviewing your insurance every year and recommending the most appropriate options: others can offer a more holistic service, advising on risk management and how legislative changes and emerging trends could affect your organisation.
What’s most appropriate will come down to the needs of the organisation and the availability of internal resource, including experience with handling claims, risk management and providing insurance advice. A broker can complement this resource.
For some the transactional approach is exactly what’s required, while others will regard insurance placement as secondary to a comprehensive risk management approach that seeks to protect assets, people and the financial position of the organisation.
Aon recently conducted a survey of a selection of public sector organisations. Expertise was the overwhelming response of what organisations value most from their broker. Innovation has become increasingly important as risks develop and the insurance market hardens.
Depending on your needs, you may also want to decide whether you want to engage a broker who specialises in the public sector or use a generalist broker. The public sector insurance market is very specialist, served by a much more limited number of insurers and brokers.
A specialist broker will be able to provide support and expertise relevant to your sector. They will also be able to recommend and deliver alternative solutions such as captives or reinsurance where the main insurance market can’t provide appropriate cover. This can be important, especially in difficult insurance markets.
If you are carrying out an insurance tender, a specialist broker is vital as they will guide you through the routes to market and documents required to be compliant.
Even if you have a procurement team to assist, a tender is a tricky and complex task. Engaging a more generalist broker can work but it could be a false economy. Where we have won business from non-specialist brokers, we have seen instances where it was possible to save up to 30% on the cost of the insurance programme while enhancing cover.
Once you have identified the level of service you require, you can put together your tender document. This is an important tool in finding the right broker so it’s worth getting it right.
Keep the questions you include in a tender focused and try to limit them to no more than a handful. We see many broker tenders with pages of questions, often covering exactly the same ground in a variety of different ways.
A lengthy tender document with dozens of questions can backfire on an organisation. As well as deterring some brokers from responding, sifting through the answers creates a lot more work for you. It can also be an indication that insufficient thought has gone into what the organisation wants from a broker.
Building a relationship
It is often said that insurance is a people business. Because of this, it is sensible to meet the brokers you would like to work with before you send out your tender document. This could potentially be a long-term relationship and, if you don’t get on with them, it may not work.
Talking to brokers at this stage can also inform your thinking about the type of service you want. They might have ideas about certain risks, data and tools that can help support change or a service that would benefit the organisation.
Events such as the ALARM conference or meetings of insurance officer groups are great places to network with brokers. Or speak to your peers in other public sector organisations to see whether they can recommend someone.
Price and remuneration
Fees are often a small proportion of the overall insurance and risk spend and consideration should be given as to how to evaluate the total cost to an organisation. Being able to be specific and prescriptive about the services you will need, including estimated hours, will help the broker to be as accurate and up front as possible in their fee.
If you would like to find out how Aon’s public sector team can support your organisation and it’s insurance and risk management needs, speak to your account manager or contact Andrew Millard at [email protected].