In cost-conscious times, more companies think about switching in-house, says law firm
Businesses are considering cutting out brokers and arranging their own insurance programmes in-house to save cash, a leading insurance law firm has claimed.
Corporate insurance specialist O’Connors – which handles firms with turnovers of about £100m, including FTSE 250 companies – says more are seeking advice about whether negotiating their insurance arrangements direct with insurers could save them paying a broker’s commission fees.
Nigel Wallis, a partner at O’Connors, said firms were keen to find out if they could reduce the work that was outsourced to brokers.
“In the past 12 months, as people have become more and more conscious of cost, they have been asking if it is necessary to have a broker at all,” he said. “We have to justify it and work out by a cost-benefit analysis which is the right way to go.”
He said that some firms that had their own risk committees were already carrying out a lot of a broker’s work and that services such as claims handling could be brought in-house.
He said that it was unrealistic, however, for the role of a broker to be performed in-house. “We have always recognised that there are very significant benefits to staying with the broking community. We find that there is very little saving to be made going direct.”
Association of Insurance and Risk Managers chief executive John Hurrell said that, despite some talk among members, there was no new evidence that firms were cutting out brokers.
But he added that it could be more cost effective for firms to bring some services in-house if brokers offered low value. “Brokers are having to justify their fees far more articulately than they have done in the past.”
Biba defended brokers after its latest research revealed that 91% secured increased claims payouts for clients from insurers, sometimes up to 20% more than first offered.
Chief executive Eric Galbraith said: “This is strong evidence to demonstrate the value of the broker.”