The (Not So) Subtle Art of Issuing an RFP for Your Insurance Broker/Consultant

Patrick Haraden
President, Boston-Portland, Lockton Companies
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So, you have to issue a request for proposal (RFP) for insurance broker or consultant services and you are dreading it. Guess what – the brokers and consultants are as well. RFPs are a common method utilized to procure insurance broker and consulting services in the public sector, whereas they are utilized only by larger organizations in the private sector. I have responded to hundreds of RFPs and have made several observations that could assist the issuer obtain their desired result from the process.

Although I understand this is not always the case, I have assumed that the issuance of the RFP is due to contract expiration, rule or regulation, or dissatisfaction with the current broker/consultant. Both sides in the RFP process would benefit from transparency, clarity, and most of all – brevity.

Some tips from the field:

  • An RFP for broker/consultant services (or any service) should not follow the standard company RFP template. The two main reasons for this are the responders get the feeling that their response will be “commoditized” or reduced to a lowest price will win process and the issuer does not understand or will not value any response that is unique or unexpected (even though it may be more beneficial).
  • If not required by your purchasing rules and regulations, have the responders submit the price section of the proposal separately. It will demonstrate that the proposals will be evaluated without regard to price, at least initially.
  • In drafting the RFP, try to anticipate the basic questions from the bidders and include that information. Also indicate what information you will not provide, or only provide to the selected vendor. I have found that the more transparency in the RFP, the better quality of the responses. Some information to consider including:
    • Current broker/consultant, how long, and annual compensation
    • Reason for the RFP
    • Schedule of insurance with carrier, premium, limits and retention
    • Timeline for the RFP (and make a concerted effort to follow it)
    • Criteria for scoring/evaluation
  • Ensure that your questionnaire or requirements do not ask the same question or request the same information in different ways – this eliminates duplication in responses.
  • Some of the best RFPs I have seen do not have too many basic or informational questions (e.g., years in business, office location, etc.) as you should already know the responders that will submit viable proposals. They ask a couple of open ended questions (think essay from college application) as well as some creative ones – what would a sample program look like?, what have you done for similar entities?, etc.
  • When evaluating the response – consider your total cost of risk. Commissions, intermediaries, and any projected savings from selecting the new broker/consultant or program. Just looking at commissions or fees usually does not provide an accurate cost of selecting one broker/consultant over another.

*The views and opinions expressed in the Public Risk Management Association (PRIMA) blogs are those of each respective author. The views and opinions do not necessarily reflect the official policy or position of PRIMA.*

By: Patrick Haraden
President, Boston-Portland, Lockton Companies

As president of the Lockton Northeast Series Boston/Portland office, Pat has overall responsibility for the strategy and growth of the Boston office, P&C and employee benefits business development, and client management. Pat is also in charge of increasing Lockton’s brand awareness in the Boston/New England market. Before joining Lockton, Pat was area president in New England and northeast regional director of the public sector practice for Gallagher, responsible for health and welfare compliance, new business development, and client management. Pat is a widely recognized industry leader with deep expertise in a wide spectrum of property & casualty insurance and employee benefits, as well as health care reform.

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