The Framework Agreement: “smart” insurance

With a framework agreement, the approach taken is the opposite of what is usually done. For “simple” or “standard” risks, a model agreement will be proactively negotiated with an insurance company for a group of companies with the same activity. In order to achieve this, we proceed according to our usual methodology. First, the specific and less specific coverage requirements of the relevant group of companies are identified, on the basis of which specifications (type of cover, guarantees etc.) are drawn up. This document will also set out a certain number of eligibility criteria for companies (turnover, size, claim history, etc.). A call for tenders to insurers will be then be issued on the basis of these specifications.

The terms include a requirement for the retained insurer to agree to the broker handling the risk underwriting process on its behalf. Once this framework agreement has been signed with the insurer, any company that meets the criteria may take out an insurance directly with their broker, in record time and without having to wait for the insurer’s acceptance. The broker will have full responsibility for the administrative management of the agreement.

In addition to facilitating the procedure for taking out a policy and saving time, a framework agreement provides many other advantages that are no less important.

1.    Cost savings: Preferential rates are possible with a framework contract thanks to risk pooling and the effect of volume. It achieves true economies of scale.

2.    Better coverage, lower excess: As the coverage and guarantees will have been negotiated in a centralised manner upstream, a framework agreement generally offers more favourable terms than an individual contract negotiated on clause-by-clause basis. N.B.: it is important not to confuse “framework agreement” and “framework conditions”. The latter only offer premium discounts, without necessarily providing better terms of coverage.

3.    Simplified administrative management: A single contract managed directly by the broker means easier management. In addition, the Qualibroker-Swiss Risk & Care Group is developing digital solutions for in-house contract management, administrative follow-up etc.

4.    Flexible customised agreements: A framework agreement may be designed to fit the specific requirements of the insured group. Various coverage options and levels of protection may be included to allow a certain degree of customisation for eligible companies.

   

There are framework agreements for all types of insurance, and they can be set up for a wide range of activities. In Switzerland, however, this type of mandate is still rarely used.

At Qualibroker-Swiss Risk & Care, we firmly believe that this solution should be developed further. We already offer it with Building Insurance for property owners (private individuals, corporate and institutional entities) and for Construction Work and Project Manager’s Civil Liability (TC-RCMO) insurance. We have also set up several framework agreements for the healthcare sector, covering their requirements for Civil liability, D&O fraud, legal protection and motor vehicle fleet insurance. A framework agreement is also available for self-employed professionals and their associates, which offers many benefits including particularly advantageous maternity allowances. We intend to go further and will shortly be launching a special offer of insurance policies (personal/life/non-life) for SMEs.

There are still plenty of possibilities…