“Starting early and deciding your key objectives are fundamental when tendering your insurance” says Aon’s Health and Social Care Development Manager Laura Jennings. Laura shares her insight for achieving optimum results for your risk and insurance procurement.
A common approach for larger health and social care organisations to tender their risk advisory and insurance via a structured ‘Request for Proposal’ process. The need to review can be driven by desire to ensure the business is buying best value, making sure the current programme is fit for purpose, it could be a genuine need for change or simply because it may have been with the same provider for several years and internal governance dictates a formal tender.
Insurance tenders have become more complex and time-consuming in the current market conditions. For many the overriding objective is to lower insurance costs. But it’s worth highlighting that the lowest fee isn’t always the best value to an organisation.
Engage early
It’s vital to treat the timelines of the tender like a marathon not a sprint. A good advisor will begin the renewal journey six months ahead of the renewal date. The timelines of most tenders rarely take this into consideration often placing increased pressure on the winning broker to deliver the optimum insurance programme within a shortened window. Most brokers will secure a reasonable placement within the timescales. The question is ‘by providing more time – does this allow for a better outcome? – the short answer is yes. We recommend engagement with suppliers at least eight months ahead of the renewal date and completing the tender process as close to the six-month window as far as possible.
Use a specialist health and social care broker
The health and social care sector is a complex array of risk and bound by regulatory pressures. Equally the insurance market brings a multitude of underwriting appetite which only a broker with a strong presence in this sector will understand. Insurers have varying approaches to the way they provide communicable disease and abuse for example, which again emphasises the value of a broker who understands the different appetite for each insurer and the cover they provide.
Set your objectives
Establish the key drivers for a review, consider the number of brokers to invite and how they will be managed. What are the overall objectives for the review and is there motivation to change or at least open mindedness to change? How comfortable is the organisation with accepting more risk? Are there any third-party relationships already in place that work well, and can you keep them? In our experience, long standing relationships can be maintained and continue to work alongside a new insurer and new broker. What does value for money look like? How can a broker help in areas such as claims, risk management consultancy, and in limiting potential reputational damage if there is a problem? Ultimately, by setting your objectives from the beginning you can be clear about what it is you are seeking from your risk and insurance provider.
Give opportunity to build relationships
Often procurement professionals give short timescales for brokers to respond to a tender with no opportunity to meet key stakeholders with the expectation of receiving a comprehensive response based on limited information. Given insurance is a significant investment and one that protects the business and its people financially across a multitude of risks, the process arguably deserves opportunity to build relationships with prospective brokers ahead of the RFP landing. This will not only assist your selection process but also helps all key stakeholders to be better informed on how future relationships might work.
Engage and communicate with heads of service and key stakeholders within the business
Involving key stakeholders will ensure the results are in line with the organisation’s appetite but also have the authority level to decide if an alternative approach offered could be beneficial. An RFP benefits from contribution from its key stakeholders such as clinical and care, IT, facilities, and legal. Brokers value meeting key stakeholders during the tender process as this allows them to better understand the risk profile of the business and identify where they can bring relevant solutions. Most tenders do not allow sufficient time or resource for this to happen.
Creating your ‘Request for Proposal’
The request for proposal document sets your requirements in detail when tendering for a business need. It should include a scope of services that are required, a description of your business and timelines for each stage of the process. A range of questions aligned to what is important to you will give you opportunity to learn how other brokers may manage your account, deal with claims or may approach your programme differently. You will also be expected to provide relevant information about your current programme and claims. There should be provision for each broker to submit their individual requests for information during the process.
Provide a comprehensive tender pack
Good data is key to achieving your desired results and allowing brokers to get to know you and your risk challenges. In our experience, tender packs vary, some include policy schedules, premiums and claims listings whilst others are more reserved. Understandably, where you have selected multiple brokers then there may be a reluctance to share, however we would always recommend sharing information that you would like feedback on, for example, if you are seeking commentary on the current programme, then you should provide policy schedules. A comprehensive business summary is essential, report and accounts are also helpful. And if you’re not doing everything you should from a risk management perspective, it’s important to be transparent and if you can demonstrate you have plans in place to remedy the issue; insurers see progress as a positive.
Is your current insurance programme right for you?
If you haven’t reviewed your insurance or your risk advisory needs for several years, there is a strong chance that your current programme is no longer fit for purpose. New and emerging risks will impact your risk profile creating a need to review the coverage you buy. The economy is not as stable, insurance market conditions are different and regulatory changes create new pressures; in response your organisation’s risk appetite may change and your needs in a risk advisor will change too.
The evaluation process - how will you select the winning broker?
The evaluation process needs to be clear, and you should set your criteria to reflect what’s important to you. This should take into consideration factors such as price, quality of service and innovation. A heavily weighted fee could restrict the value-added areas that a broker may offer. Try not to be tempted by competitively priced or low-priced benchmark premiums – whilst attractive, they are not reflective of your true risk profile and with significant variance on premiums and terms in the market are not an accurate indication. Whilst pricing is important, its essential to have an effective insurance programme that will respond to claims and to be supported by a knowledgeable team that can share their expert advice on all areas of risk that your business faces.
More information
At Aon, we have considerable experience of helping health and social care organisations navigate their procurement process for a wide range of services including commercial risk, health care consulting services, investments, wealth and employee benefit solutions.
Speak to your account manager Laura Jennings ([email protected]) or contact Sarah Triggs ([email protected]) UK Health and Social Care Industry Leader for more information.
About Aon
Aon plc (NYSE: AON) exists to shape decisions for the better — to protect and enrich the lives of people around the world. Our colleagues provide our clients in over 120 countries and sovereignties with advice and solutions that give them the clarity and confidence to make better decisions to protect and grow their business.
This article has been compiled using information available to us up to 04/07/2023.
Whilst care has been taken in the production of this article and the information contained within it has been obtained from sources that Aon UK Limited believes to be reliable, Aon UK Limited does not warrant, represent or guarantee the accuracy, adequacy, completeness or fitness for any purpose of the article or any part of it and can accept no liability for any loss incurred in any way whatsoever by any person who may rely on it. In any case any recipient shall be entirely responsible for the use to which it puts this article.
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