05 June 2008
Companies are turning to a new breed of "insurance procurement experts" to buy cover and manage their relationships with brokers.
And their primary motivation is to regain control of the process and save money. Paul O'Connor, partner at legal firm O'Connors, which conducted the study, said firms had "lost control" of the insurance buying process to brokers.
"Companies are realising using procurement specialists to clarify the roles and responsibilities of their brokers can significantly improve the situation," he said.
Firms were initially wary of using general purchasers - who perhaps did not fully understand the insurance market - to buy cover, which has led to the rise of those specialising in the category.
Nigel Wallis, also a partner at O'Connors, said although its research among FTSE 350 companies did not show a shift to eliminating insurance brokers entirely, those firms that employed procurement expertise had reaped the benefit, often saving millions.
"It's saying in a clear brief what type of services are needed and bringing a greater clarity of what is needed from a broker," Wallis said.
"Any broker doing a good job has nothing to fear from the process. It clarifies the roles and responsibilities and sometimes this is all that is needed and can lead to a longer, happier relationship."
Brokers have also had a poor impression of procurement in their sector (News, 27 April 2006). But O'Connor and Wallis believe those that work with purchasing experts will get the most out of the process.
O'Connor said: "Brokers that have embraced the process are better able to serve their customers' needs."