A Guide to Completing a Successful Review

Transcription

1 A Guide to Completing a Successful Review

2 Contents Why Review? 2 What to Expect from a Review 3 What type of Review? 5 Basic Truths 7 About Us 8 The Portmore Review 9 1

3 Why Review? A periodic review of your business insurance needs is becoming a necessity Led by regulation and legislation, the Management of Risk is a vital part of running any business. It sits alongside the need to maintain reputation, ecological and social responsibility and a competitive edge. A periodic review of your business insurance needs is becoming a necessity to respond to: Your changing business profile Corporate Governance requirements Changes in the insurance market New products and services that could transform your ability to manage risk in your business A periodic review can generate significant savings in premium and enhancements in cover Currently the insurance market is going through a period of change with insurance companies buying brokers (in part or in whole) and brokers setting up Underwriting Agencies - often backed by insurance companies or other capital providers (including the reinsurance market). There are many new insurers and underwriters, often with specific industry focus, who could provide a more tailored and economic solution for your business. A periodic review can generate significant savings in premium and enhancements in cover, whilst at the same time introducing opportunities for innovative solutions to risk management issues. 2

4 What to expect from a Review Getting the best from an insurance review requires you to have a clear understanding of what you are trying to achieve The principle benefit of a comprehensive review is to evaluate your approach to risk and the insurance of the business, its assets and liabilities. The process should involve a comprehensive appraisal of your business in terms of the following: Asset values of property owned or for which the business is responsible. Comprehensive evaluation of any property or other assets that you are required to protect contractually - an especially close look at the demands of contracts entered into for hired, leased or rented property, where there can be an expectation of full replacement cost rather than written down values Business Interruption - a complete appraisal of the issues upon which the business depends for its future success. This can include dependencies on specific supplier or customer contracts, exposure to local conditions that may prevent access to operations, data integrity and recovery timescales Limits - what limits of liability are right for your business, having regard to business size, contractual obligation and exposures. This can be benchmarked against similar businesses and trades Cover appraisal - looking at the extent and limitations of the cover that is in place and are these right for the business in its present and future form Claims analysis - fundamental to the pricing of the programme - are the claims costs being challenged and what tangible benefits accrue from managing these more effectively Evaluation of the business tolerance to risk - for smaller enterprises this can be the level of policy excess applied and whether there is consistency across the programme. For larger businesses evaluation of the benefits (or otherwise) of a higher self-insured retention to alleviate excessive premium cost Cost savings alone will not necessarily produce the best value - sadly this is often only realised at the point a claim is refused Continued on the next page 3

5 Cultural understanding of the business - what are the drivers (financial and other) for the business in its market place and are there additional mechanisms that would protect the business? P eople - establishing the key people, their roles in the business and to what extent the future prosperity rests on their shoulders. Taking the appropriate action/ protection measures to minimise future losses Price - possibly the key driver for reviews Value - the establishment of a correctly designed programme that provides economical protection balanced against self-insurance retention or policy excesses G overnance - ensuring that the covers in place or proposed are tested against alternative views and that the business can document a regular review cycle Rather a large list - but, using our experience, these issues can all be dealt with in a single review exercise. It is vital that any review takes account of any uninsured areas and the opportunities that exist for you to bridge these gaps if they exist This will provide your management with the data required to make informed decisions about your insurance spend 4

6 What type of Review? Managing the timescale of a review is vitally important to achieving the best results. How much time has to be committed by senior management to interviewing brokers, providing data and answering subsequent questions, broker presentations etc. will largely be determined by who and how many brokers are approached and the style of review undertaken. Insurance companies do not want to provide several different quotations for one business and tend either to select a single broker to support or alternatively provide a single quotation based on one broker presentation There are a number of different review methodologies: Costed broker tender Conceptual review Formal tender Costed Broker Tender This is the most common type of review exercise but sometimes the least effective. Broadly this entails asking an alternative broker (or multiple brokers) to compete for your business against your existing provider. Each broker will be talking to mostly the same insurance companies - often with different stories, values, limits and requirements. Insurance companies do not want to provide several different quotations for one business and tend either to select a single broker to support or alternatively provide a single quotation based on one broker presentation. Emphasis is squarely on cost (not a bad thing) but often results are: Identical in content and price OR Are so variable in their response that there is no clarity 5

7 Conceptual Review The basic premise of a conceptual review is to divorce the insurance premium from the insurance programme design, service proposition and broker fee. This forces the reviewer to concentrate on your business issues and the risk exposures without clouding the issue with insurance company pricing. The key outputs of a conceptual review should be: A ground-up review of programme structure - limits, values, covers and uninsured areas - and a defined service proposition A programme designed in a bespoke way - not relying on historical programme design or insurer interests, an opportunity for innovative thinking A review of the business tolerance to risk - evaluating what the business can sustain by way of self-insurance (policy excess, uninsured exposures) and how this might translate into price Formal Tender There are no simple answers - with some review methods being time consuming and others producing a poor result because of ineffective negotiating We have some clear recommendations but before we go there, there are some basic home truths that determine the success of a review Favoured largely by Public Sector businesses, this process is one of strict control where public accountability is required. Many businesses are very familiar with this process when purchasing goods or services - particularly commodity products where there is little or no qualitative difference between competing products. With complex services or products like insurance, the business needs to build a very well defined tender document - we can assist here. For any Public Sector body, if a single policy commands premiums in excess of 2000 the insurance tender must follow the procedures of the Official Journal of the EU (OJEU). We can help with that process. 6

8 Basic Truths Things you need to understand when conducting a Review. There are some fundamentals points: Insurance reviews need some level of commitment from you - mostly in time but also a commitment to a potential change of broker/insurer Have a very clear objective in mind - what result do you want to see from a review? Do not hide the real reasons for a review behind noble ideals - if it is about cost then be specific Insurance brokers will all be fishing in a similar pond - the more brokers involved will mean much less interest from the insurance companies approached Results from a multi-broker review usually produce many different recommendations and it can be hard to compare apples with apples Review frequency is important - annual reviews exhaust the market. Brokers and insurance companies (in particular) become disinterested over time if the same business insurance programme is constantly re-presented in the market, especially if business doesn t move Be clear about the broker s ability to service your business - consider their experience, their location and whether the representing individual has an on going responsibility for day-to-day servicing Your broker should be providing expertise, innovation, service, problem solving skills and negotiation skills - they should also be meeting regularly with you to keep abreast of your business References can be useful - as validation of quality Underwriters quote on perhaps as little as 40% of the presentations they see from brokers - a sobering statistic From our experience any business using six brokers to chase around the insurance market will quickly find that their presentations sit firmly at the bottom of the underwriter s pile Be aware of how the broker deals with claims. Do they outsource their claims handling? Do they have a dedicated in-house claims department or do they expect you to deal direct with the insurer? 7

9 About Us We are an independent broker that places a strong emphasis on understanding our clients needs, so we can provide them with innovative and service driven solutions to cater for the ever changing demands and needs of the modern business. Our success has revolved around our team of motivated insurance professionals who have a customer focused approach and take time to understand your business. This enables us to tailor insurance protection to meet your requirements, helping us to help you in the event of a claim. Our desire to work with the best people extends to insurance markets and we devote a lot of time and energy to developing and maintaining excellent relationships with world leading insurers, which enables us to deliver security and peace of mind to our clients. We have developed a collaborative process that you and your business can rely upon to deliver a high standard of care throughout the process When we are appointed, that executive remains your point of contact for the full insurance cycle We have a reputation for providing the businesses that we deal with a truly different approach, having the ability to bring simplicity to the complex world of insurance. 8

10 The Portmore Review We have developed a collaborative process that you and your business can rely upon to deliver a high standard of care throughout the process, governed by our own strict internal protocols and standards and our relationship with insurers. Our executive staff handle all reviews personally. When we are appointed, that executive remains your point of contact for the full insurance cycle - Broking, placement, administration, review, claims and renewal. Confidentiality is assured throughout the process and we will always seek your permission prior to sharing information with insurance companies. Our suggested timetable is: 100 Days before Renewal: An informal meeting to establish your needs; to start to get an understanding of your business and to formulate a timetable around your next review. This is an opportunity for you to interview us about our business and to establish synergy. 90 Days before Renewal: We will provide an outline of the terms of the review according to your demands and needs. This will include agreement on our activities, your preferred type of review and timescales. On agreement, we will meet with you and your key people to establish the information and data we need to conduct the review - there may be a need for additional meetings if you have remote sites or where we need to do physical surveys and meet key individuals. 75 Days before Renewal: You will need to provide a letter (we have a template) authorising us to approach your existing insurers for claims experience and policy information. We will then draw up a specification based on the data you provide and you will sign this off before we approach insurance companies. 60 Days before Renewal: The specification will be broked into the insurance market and pricing and terms negotiated 9

11 14-21 Days before Renewal: We will then report back to you and present our findings with a firm recommendation for you to consider, with all terms and conditions to enable certainty of contract. Details of our remuneration and scope of our service will be addressed at this meeting so that you have our proposition in full 10 Days before Renewal: Once a decision is made to appoint Portmore, we will place and bind insurance cover according to your instructions, fine-tuning revisions to the programme according to your needs 5 Days before Renewal: We will issue full insurance company documentation once this is received and checked - interim and compulsory documents and certificates will be issued so that you have evidence of cover from attachment date This is an ideal timescale based on early authority to commence a review. We recognise that most businesses have other priorities particularly at financial year-end when the majority of insurance programmes fall due for renewal. We are able to move extremely fast to respond to your needs and can accommodate reviews more swiftly to suit your business. On agreement, we will meet with you and your key people to establish the information and data we need to conduct the review We are able to move extremely fast to respond to your needs and can accommodate reviews more swiftly to suit your business 10

12 Contact Us Portmore Insurance Brokers Limited Portmore House Yeoman Park Test Lane Southampton So16 9JX Tel: Station Road Portslade Brighton West Sussex BN41 1AG Tel: Fax: High Street Caterham Surrey CR3 5UE Tel:

13 Authorised and regulated by the Financial Conduct Authority Registration No Registered in England & Wales: Portmore Insurance Brokers (Sussex) Ltd is an Appointed Representative of Portmore Insurance Brokers Limited who are authorised and Regulated