In an open-market tender, competing brokers will reach out to all their partner insurers with a request for quotation. If the business has already been quoted on for another broker, and the proposal is more or less the same, then the insurer is obliged to come back with the same price.
When the prices obtained by competing brokers are all very similar, this can lead to a ‘Dutch auction’ style frenzy with each broker lowering their price, either by reducing their fee or in giving up commission.
And it is more common than you think for insurance brokers to work at a large loss simply to secure or retain business.
While this may seem like a good result for the business in the short term, the long term effects of the broker bun fight can have negative implications for your business.
This can all be avoided up front by securing a quotation below market rate with The Confidential Review.