27 April 2006 | Paul Snell
Procurement departments are now more likely to get involved in insurance cover purchases, according to a recent study.
However, brokers are not always happy about it, says the research by brokers Jardine Lloyd Thompson. "The fear is that procurement's cost-cutting approach could result in insufficient attention being paid to long-term relationships and overall value," the survey of insurance procurement trends concluded. Insurance Procurement: how can large organisations develop a more integrated and effective broker selection process?
quizzed 136 risk and insurance managers and conducted interviews with more than 30 organisations such as BT, Tesco and CIPS. Although 71 per cent of organisations surveyed are not yet using procurement to buy insurance, it found the situation is changing rapidly.
"There has been a 100 per cent increase in the use of procurement by companies over the past three years and it is set to continue," Tony Tyler, associate and marketing manager at Jardine Lloyd Thompson, told SM
. But he said "tick box" exercises are "stifling innovation" when it comes to improving relationships.
But the study concludes that procurement's involvement is good for their companies. Blending the skills of purchasers and insurance buyers is providing more objectivity, discipline and transparency to the process, in addition to better deals, it found.
Tim Ussher, director of procurement at BSkyB, said: "Procurement is well placed and involved with all the decision makers on a day-to-day basis."
Meanwhile, a study of 29 London borough councils led by Croydon Council concluded "substantial savings" could be made when buying insurance together. The London Centre of Excellence has provided £115,000 in funds, should the project get the go-ahead.