If an organisation and methods consultant came into your business and studied your processes and reported that by making a few simple changes you could save up to, in the region of £170,000* every couple of years you would bite their hand off.
Many insurance business hours are taken up checking, changing and negotiating insurer-broker Terms of Business Agreements (TOBAs), time that can surely be more profitably spent in both insurance companies and in insurance brokers.
Why not then, without the help of an expensive consultant, simply begin using a new standardised template? That is the big question.
It can’t be done was the cry of some doubters when BIBA began a project to see how we could move towards a TOBA nirvana for the benefit of the whole industry! But Lloyd’s already has a simple solution – it is producing one for risk transfer and one for non-risk transfer, so, buoyed by this, BIBA carried on.
In consultation with insurance brokers, insurers and legal experts and along with many hours of ‘desk-research’ it became clear that many common clauses appear in all TOBAs andmake up more than 70% of the usual content. This knowledge provided a perfect platform to create a voluntary template incorporating a standard format for all of these common clauses. By taking all the aspects of commonality floating around in various TOBAs, yet allowing more nuanced and bespoke elements to be incorporated where needed, it is surely possible to gain widespread acceptance and voluntary use of the template.
Insurers and brokers alike will benefit from increased efficiencies and reduced costs. The next time a company is reviewing its TOBA they would benefit from examining the template and working it into their process – brokers will know what to expect and there will, as a result, be fewer queries, uncertainties and dissatisfaction. Though its concept and launch is revolutionary for the general insurance market its take-up will be a matter of evolution.
Expecting wholesale and immediate market change is not expected nor is it feasible but in time it could become the norm as the process of agreeing a TOBA will be less onerous will put less strain on employee resources reading, checking and challenging content.
BIBA members are behind this, insurance companies are interested in adopting the approach, customers are unaware of the strain this put on their broker or insurers and will benefit indirectly from the efficiencies generated. It’s a major change in process but undoubtedly it is a win-win-win situation.
*Average TOBA is circa 12,000 words. Average reading speed for technical content is around 75 per minute - 12,000 @ 75pm = 160 minutes per highly technical TOBA. Ave junior/middle management salary circa £38,000 = £21.50 per hour (Reed). Insurers potentially check 3000 tobas (if every broker agency queries something). 3000 x 2.66hr x £21.50 = £171,570.
