The Problem

Following a series of significant insurable losses during the previous 24 months, the client – an ASX Top 100 Company – was in a distressed state, and had just three months until renewal.

The insurance broker had advised the client its upcoming insurance premium was likely to cost at least four times the existing programme.

RAS was contacted to undertake an independent insurance review which unearthed the distressed nature of its existing insurance arrangements. For example, the client’s loss history appeared far worse than it actually was – because many of the insurable losses had remained open for an excessive period of time with inflated reserves.

The insurance broker had not completed a review of the client’s risk tolerance appetite, or undertaken any analysis of the most cost-effective retention structure.

No service contract existed between the insurance broker and the client.

The Solution

After the incumbent broker failed to provide a strategy to improve matters, we advised the client to conduct an insurance broking tender for the distressed class of risk.

RAS was then engaged to facilitate the tender process. We were able to persuade the industry’s two most experienced insurance brokers, as well as the incumbent broker, to participate.

Individual risk workshops provided each broker with the best opportunity to understand the client’s needs, and allowed them to complete a risk tolerance exercise with senior executives. Key insurable risks were fully analysed and quantified.

The Outcome

  • The two alternative insurance brokers presented the client with clear insurance program designs, placement strategies, and cost savings.
  • The successful broker reviewed open claims prior to renewal, and was able to reduce the majority of reserves.
  • Premium and deductible increases were contained to less than half the amount quoted by the incumbent broker.
  • An insurance broker service contract was executed, which included the scope of services, terms of the contract, fees, and measurable financial Key Performance Indicators (KPIs).