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FE Insurance Market Update

Published

By Lisa O'Shea

You may find the following useful if you are considering using CPC’s Insurance and Associated Services for Colleges framework at some point over the next year, or if you have utilised it and would like to understand some of the challenges that insurers have been and are currently faced with in the market: 

1. The insurance market for colleges has always been limited, even going back to initial incorporation in the early 1990s. 

2. The CPC frameworks attract the leading insurers to the FE sector, such as QBE, Royal & Sun Alliance, Travelers, Zurich  Municipal and most recently, Aviva. It is unfortunate when a leading insurer withdraws from the market completely, as we have seen with Royal & Sun Alliance in recent years. 

3. The CPC framework model involves suppliers (insurance brokers) forming partnerships with insurers for the main classes of insurance, including property, business interruption and the majority of liability covers. This has created a transparent insurance market which gives colleges unhindered access to these insurers. In addition, the leading direct insurer is also a supplier. 

4. There is no limitation to the range of insurers that can be approached for specialist insurance covers which may include management liability, cyber, engineering insurance and inspection services, motor, marine, aviation, personal accident and travel, and legal expenses. This ensures full market coverage and compares very favourably to other frameworks that might be available. 

5. When we go through the process of renewing frameworks, leading candidates are always approached to see if they are interested in joining. Examples have included A J Gallagher and Aon (in 2020) but both declined to take part due to lack of available insurer partners who would be competitive with the current CPC insurers. As a matter of interest, A J Gallagher’s usual partner is Zurich Municipal, so there is no gain to CPC members. Aon’s partner is Ecclesiastical Insurance who were an insurer on previous CPC frameworks but, again, were unable to compete. 

6. Despite the fact that few insurers have an appetite for further education colleges (or the education sector generally), there is a good level of competition between those on the CPC framework. 

7. The success of the CPC framework has resulted in significant cost savings being achieved for further education colleges and this has been consistent over the last 10 years at least. The arrival of Aviva as a new insurer in 2017 has increased competition and a further reduction in premium costs. These savings have continued at subsequent tenders. 

8. Clearly, this level of competition is good for colleges but has created a situation where other suppliers believe they cannot compete on cost. We know from experience that if the difference in cost is more than 15% - 20%, it is unlikely that the higher bid will be successful. 

9. It should be borne in mind that there is a considerable cost attached to the preparation of a tender response. If the initial view is that a premium will not be competitive, then suppliers are reluctant to commit resource. 

10. As far as this academic year is concerned, the large number of tenders from the education sector (colleges, universities and academy trusts) has placed a high demand on available resource at suppliers. We believe this ‘bulge’ in demand is due to the fact that tenders have been postponed during the last two years. As an example, we know that Zurich Municipal have been faced with tenders from 60 university clients alone and this is in addition to other clients in the education sector. The resulting pressure on resource has led to the situation where individual cases are put through a triage process and a decision is made on whether to commit resource to a particular case. 

11. CPC works hard to encourage suppliers to respond to all tenders from colleges but, given the current situation, it is not possible to insist that this happens. There would need to be a significant change in underwriting attitude on the part of Aviva for other suppliers to be more positive in future.

I hope you have found some of this information useful. It should be noted that the market does change over time, so it is worth keeping an eye out for articles such as this, or to contact Graham at [email protected] for further information, who is very knowledgeable about the changes taking place in the world of insurance. 

If you have any queries or concerns relating to this framework, please contact Lisa O’Shea, Senior Procurement Officer on 0161 974 0947 or [email protected]. 

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