United Kingdom

Ten steps to get tender ready

Whether you’re considering a full OJEU tender or you’re looking for a new insurer for just one element of your cover, your approach can influence the outcome. Heidi Dennis, director – public sector at Aon Risk Solutions, outlines how to get the best results from your tender.

Insurance tenders have become more complex and time-consuming in the current market conditions. To achieve the best results from a tender, preparation is key. At Aon, we have the following tips to help you get the best results from your tender:


1. Start early

Our experience over the last 18 months has shown us that the more you can do prior to the ITT going live the less work there is in clarifications and the simpler the evaluation.

When carrying out a multi lot insurance tender, we recommend starting at least eight months before and assigning adequate resources to obtain the information from colleagues and departments.

Insurers have been requesting up to six weeks to prepare their submissions as the amount of work they have to do to support the underwriters and rating has increased. This includes reviewing claims information actuarial reports and in some cases surveys. This, together with time to respond to clarifications, lengthens the whole process.


2. Use a broker

Working with a broker gives wide market engagement. Taking professional advice can also reduce your risk and save you time as you will benefit from their market knowledge, helping you target insurers with the most appropriate risk appetite. A broker can add value to the tender. In the current market, the additional cost of engaging a broker should be outweighed by the work they’ll do for you.


3. Choose the best route to market

Consider whether a framework (YPO or CCS) or a full market tender (formerly known as OJEU) offers the most suitable route to market. Framework call-offs avoid the pre-qualification stage, which can streamline the tender process and some of the processes are simpler, with pre-agreed documentation. A full market tender may mean more work for you and your procurement team, but may offer access to a wider pool of more specialist insurers not available via the frameworks.

You may also want to consider a market test exercise for low value premium business which falls below tender thresholds. This isn’t a full tender exercise but it can still demonstrate value and provide governance support to your insurance purchasing decisions.

Some policies, such as high value buildings or niche covers are best marketed outside a tender exercise as a specialist approach is required. Where this is recommended, a procurement waiver may need to be obtained.

Your broker will provide advice on the route likely to deliver the best result for you and your specific circumstances.


4. Review programme design

New and alternative methods of service delivery will inevitably result in a changing risk profile so a total cost of risk remodelling exercise can be prudent. A broker can help with this, providing access to actuarial analysis to ensure your programme matches your requirements and your overall insurance spend, including below deductible funding, is minimised.

With limits of indemnity under pressure, this exercise can deliver real value. You may also have other considerations when looking at your overall programme design and these should be review ahead of putting the tender specification/ITT together.


5. Engage with the market early

A pre-tender market engagement presentation event, including one-to-one sessions with insurers so they can ask questions in confidence, can help. This signals to insurers that you are serious about the tender and gives you a great opportunity to outline why they should quote for your business. These are now mostly held virtually with the advantage of attracting insurers not based in your area as well as enabling more of your staff to attend, wherever they are working.


6. Provide a comprehensive and detailed tender pack

Your tender pack is your opportunity to outline the detail of your risk exposure in order to obtain the best terms from bidders. It should include as much detailed technical risk information as possible, as this will help the underwriters to offer their most competitive premium. This should include general information such as a profile of your organisation and your procurement portal details but also more specific data for each line of business.

Insurers often require detailed underwriting presentations including:

  • Property – construction, cladding types, number of storeys, risk management, occupation and surveys of major locations with high values, modern methods of construction, green issues and social value.
  • Liability – employee health and safety, risk management and modern slavery.
  • Motor – fleet list and breakdown of type and size of vehicles, usage, carriage of goods, storage and accumulation.
  • Professional indemnity – details of all services and proposal forms.

This may look daunting at the outset but it’s far better to provide this level of detail in advance than to receive hundreds of clarification questions.

Your insurance broker will issue with a questionnaire designed to capture all of the information required. Once your questionnaire has been completed, you can agree with your insurance broker who will prepare the ITT. It is vital this is checked by all parties prior to publication to ensure nothing is missed. Detail is key and add-ons like preparation of insurance certificates for property portfolios, provision of rates, employers’ liability certificates for schools, individual motor certificates and premium adjustments need to be included at this stage to avoid disappointment after award.


7. Claims data

In addition to providing ABI claims experience data from your insurers, we would recommend including detailed claims listings. This needs to be in Excel format for all classes of business. As a minimum you should supply five years' data but ideally this should be 10 years, especially for casualty and motor classes.

Also include information about any large losses, especially where you have subsequently implemented risk management measures to prevent repeat claims. Work with your current insurers to provide this information as early as possible. Without it you risk a reduced level of insurer engagement and you could also be criticised for giving your holding insurer an advantage.


8. Consider lot design

Choose your lots to appeal to the widest possible market. If you only accept packaged quotations, you will limit the responses you receive, which may not deliver value for money or the best available cover. Normally lots are broken down into separate lines of business but each lot will be awarded in it’s entirety to one insurer. Terrorism quotes can be from insurers into Pool Re or open market but remember Pool Re still requires you to insure all your property with them, while open market allows selection.


9. Be ready for clarification questions

You must be ready to answer clarification questions within the timelines to allow insurers to prepare their submissions. This may require cooperation from other departments and colleagues. Please remember that insurers need clarification responses to be provided to them in good time to take them into account in their underwriting submissions so ensure that responses are issued promptly.


10. Determine your evaluation criteria

The evaluation process needs to be clear and you should set your evaluation criteria to reflect what’s important to you. This will take into consideration factors such as price, quality of service and innovation.

Also think about the other services an insurer can provide. As an example, having an excellent claims handling service can make a big difference on a day-to-day basis but can also support you in the event of a large loss. Consider asking bidding insurers to demonstrate how they would work with you to reduce your total cost of risk.

You will need to provide a breakdown of the evaluation methodology and points allocation and your broker can assist you with this.

Social value is often a mandatory part of the evaluation criteria. Where you need to include this, be clear about what you expect insurers to offer to help them to respond in a way which meets your needs.


More information

At Aon, we have considerable experience of helping public sector organisations with their insurance tenders. Speak to your account manager or contact Heidi Dennis at [email protected] for more information.