Risk Tip: Allocate Markets When Seeking Competitive Proposals

When a company is seeking competitive insurance proposals, it is a common practice for one or more of the agents to lock up the marketplace by quickly approaching numerous insurers about the account, including insurers the agent does not intend to use. Once approached by one agent, most insurers will not quote the account through another agent, which quells competition. To keep this from occurring, it is wise to seek proposals from a limited number of qualified agents and assign insurers to them. This is done by asking each agent for a prioritized list of the companies he/she wishes to work with and advising them not to approach any markets until the markets are assigned. Then use the prioritized list to assign each insurer to only one agency, attempting to give each agency its first or second choice and working down from there. Advise all agents of the markets they may approach and inform them that they will be disqualified if they approach any others. The result is a coordinated approach to the marketplace that will maximize the competitive process. Source: Derived from one of the recommendations in “101 Ways To Cut Business Insurance Costs” http://www.irmi.com/products/bookdescriptions/101ways.asp