Tendering business insurance is not always worth it - experts tell you why

Tendering business insurance requires time and special expertise. It is often recommended to rely on the help of an experienced and expert insurance broker who has a deep understanding of the insurance market, insurance pricing and the importance of risk management and claims statistics to the whole. The broker is able to identify the essential issues in terms of tendering and can present the client's needs in the best possible light to the insurance companies.

Too frequent tendering can bring problems

There are many types of companies operating in the insurance brokerage market, some of which are profiled especially in insurance tendering. These brokers may recommend tendering even annually. It is good to remember that tenders are a key part of the earnings logic of these operators. However, it's not always worth looking at the price alone, since excessive pursuit of discounts can cause significant harm to your own company's insurance coverage and risk management.

Annual tenders are particularly problematic in situations where the company's insurance differs from the insurance company's standard conditions. Extensions and special conditions negotiated for previous contracts may not be included in new contracts in all situations. The advantages and disadvantages of tenderings must therefore be weighed carefully on a case-by-case basis.

If you are considering hiring a tender broker, you should pay special attention to the broker's professionalism and responsibility. Insurances should never be tendered too hastily, as incorrect tendering procedures can lead to serious consequences, such as loss of insurance coverage or completely wrongly dimensioned insurances. Responsible brokers always strive to make changes that seek a sustainable competitive advantage in relation to competitors in the long term.

When is the right time to tender?

Although the benefits of regular insurance tendering may be obvious, it is important to understand that tendering must take place at the right time and on the right grounds. Tendering should not seek quick profits, but understand the long-term nature of the development of insurance coverage.

The market situation has a significant impact on the outcome of the tendering. The broker's task is to ensure that the insurance coverage meets the client's needs in the future as well, and that the bidding process is in line with the company's strategic goals.

The optimal timing and strategy for tendering vary depending on the situation, as the supply of the insurance market varies according to economic cycles and trends. In a situation where the supply is already in short supply, for example, it is not necessarily fruitful to start tendering for insurance.

In addition to the market situation, the right tendering time is also influenced by, among other things, the risk profile of your own organization and the latest claims statistics. For this reason, it is not possible to define a general good time to tender, but the right time to is determined by the situation of your own organization.

The importance of the insurance management contract in the development of insurance coverage

Tendering is best done when the insurance broker knows their client's business, its affiliations and the history of the organization as well as possible. In this case, insurance coverage and its price can be developed in the long term by making controlled changes to the insurance and at the same time developing activities within the company as well. For example, insurance pricing can be influenced by various risk management measures.

A continuous insurance management contract enables proactive monitoring of the price development of insurance coverage. Insurance contracts are renewed every year, in connection with which the broker always checks insurance companies' policies for the new season and reacts if necessary. The broker therefore actively monitors the development of its customers' insurance coverage and its price level and tries to prevent unjustified price increases already when the insurance company proposes them.

In general, insurance tendering is a significant measure in companies' risk management, which, regardless of the implementation method, always requires some kind of time investment from the client company as well. It should always be based on an in-depth insurance analysis and understanding of the market situation and the customer's needs and goals. A responsible bidding process is the key to a successful insurance strategy and business continuity.

Do you need help with insurance matters?

Our experienced insurance brokers are happy to help with both risk management and insurance policy planning. Contact us and arrange a complimentary online meeting in which we will assess whether your organization could benefit from the services of an insurance broker.

The meeting does not bind you to anything yet, but you will get information about whether there are development opportunities in your organization's insurance coverage.