How to Run a Broker RFP for Commercial Insurance in India: Evaluation Criteria, Timelines, and Common Mistakes

The decision to run a broker RFP (request for proposal) for commercial insurance is not routine, and it should not be taken lightly. Changing brokers, or formally evaluating whether your current broker should be retained, involves significant time investment, market disruption, and transition risk. Yet periodic broker evaluation is a governance best practice that most Indian companies neglect, resulting in entrenched relationships that may no longer deliver optimal value.

The most common triggers for a broker RFP include:

• deteriorating service quality from the incumbent broker (slow responses, errors in policy documentation, passive claims handling)
• a significant change in the company's risk profile (M&A activity, expansion into new geographies or business lines, major capital projects) that requires broker capabilities the incumbent may not possess
• premium outcomes that consistently exceed market benchmarks, suggesting the broker's market access or negotiation effectiveness has declined
• audit or board-level recommendations to review the broker relationship
• governance requirements, particularly for listed companies or public-sector enterprises, that mandate periodic competitive evaluation of key service providers

The frequency of broker RFPs varies by company type. Public-sector enterprises and government bodies typically mandate broker re-appointment through competitive bidding every three to five years. Listed companies increasingly follow a similar cycle as part of their vendor management frameworks. Private companies tend to run RFPs less frequently, often only when a specific trigger arises, though best practice suggests a formal broker review (even if not a full RFP) every three years.

Timing is critical. A broker RFP should be initiated at least 6 months before the principal policy renewal date. This allows 8 to 10 weeks for the RFP process itself, 4 to 6 weeks for broker transition (if the broker changes), and sufficient time for the new broker to prepare the renewal submission and negotiate with insurers. An RFP initiated less than 3 months before renewal creates unreasonable pressure on all parties and often results in a compromised outcome: either the new broker does not have time to add value to the renewal, or the company retains the incumbent by default because there is insufficient time to transition.

The RFP is not solely about changing brokers. In many cases, the outcome is a re-appointment of the incumbent broker, but on improved terms, with clearer service expectations, and with both parties having renewed confidence in the relationship. The process of articulating requirements, evaluating alternatives, and benchmarking the incumbent's offering against competitors is valuable in itself, even when the broker does not change.

A well-designed RFP document communicates the company's requirements clearly, enables comparable responses from participating brokers, and provides a structured basis for evaluation. A poorly designed RFP generates vague, marketing-heavy responses that are difficult to compare and evaluate objectively.

The RFP should contain the following sections. Company overview: provide sufficient context for the broker to understand your business, including industry sector, annual revenue, number of locations, employee count, nature of operations, and any recent or planned changes (M&A, expansion, new product lines). This section need not be exhaustive. One to two pages is sufficient.

Current insurance programme summary: list all current policies by class (fire, marine, motor, liability, engineering, health, miscellaneous), insurer, sum insured, annual premium, and key terms. Include the current broker's name. This information allows participating brokers to assess the programme's complexity and identify areas where they might add value.

Scope of services required: define precisely what you expect the broker to do. This should include:

• policy placement and renewal (market approach, quotation analysis, binding, documentation)
• claims management (intimation, follow-up, advocacy, settlement support)
• risk management advisory (risk engineering coordination, loss prevention advice, programme design)
• day-to-day servicing (endorsements, certificates, policy queries, premium payment coordination)
• management information and reporting (quarterly claims reports, annual programme reviews, market intelligence)

Be specific about expectations. Instead of 'provide claims support,' specify 'acknowledge all claim intimations within 4 working hours, provide written claim status updates fortnightly, and represent the company in meetings with the insurer's surveyor and claims team.'

Evaluation criteria: disclose the criteria and weightings you will use to evaluate proposals. This transparency ensures that brokers address the areas that matter most to you and allows you to defend the selection decision if challenged (particularly relevant for public-sector or listed companies). A typical weighting might be: technical capability 30%, industry experience 20%, service team and resources 20%, claims handling track record 15%, and commercial terms 15%.

Response format: specify the format in which you want responses submitted. Require structured responses that follow the RFP's section order, rather than allowing brokers to submit their standard marketing presentations. Include a pricing section that requires the broker to state their proposed remuneration structure (commission, fees, or a combination) in a comparable format.

Timeline: include clear dates for RFP issuance, queries and clarifications, proposal submission deadline, presentation or interview dates, and decision announcement. Keep the overall timeline to 8 to 10 weeks.

Mandatory requirements: specify any non-negotiable requirements, such as IRDAI broker registration (with registration number), minimum years of operation, [professional indemnity insurance](/glossary/professional-indemnity) coverage, and any sector-specific certifications or experience requirements.

The most common mistake in broker RFPs is over-weighting price (the broker's commission or fee) at the expense of technical capability and service quality. A broker who charges 2% less in commission but provides inferior market access, weaker claims advocacy, or less proactive risk advisory will cost the company far more in suboptimal premium rates, under-recovered claims, and unidentified coverage gaps.

Technical capability assessment should evaluate the broker's understanding of your industry's specific insurance requirements, including familiarity with the relevant policy wordings (SFSP, marine cargo, CGL, CAR/EAR), knowledge of industry-specific risks and loss patterns, and the ability to design a programme structure (primary, excess, co-insurance arrangements) appropriate for your risk profile. Ask the broker to present a preliminary programme review identifying at least three areas for improvement. This tests their analytical capability and willingness to invest effort.

Industry experience is best assessed through reference clients. Request the names of 3 to 5 current clients in the same industry sector (or a closely related sector) and contact them directly. Ask specific questions: How responsive is the broker's service team? How effective were they in the last renewal negotiation? Can you describe a claims scenario where the broker added value? Would you recommend them? References from clients who have been with the broker for more than three years are more valuable than references from recent wins, as they reflect sustained service quality rather than new-client enthusiasm.

Service team assessment is critical because in practice, your relationship will be with the specific individuals assigned to your account, not with the brokerage firm as a whole. Require the broker to identify the proposed account team by name and designation: the relationship manager, the technical broking specialist, the claims handler, and any sector specialist. Review their qualifications, experience, and current workload. A broker that assigns a senior, experienced team with manageable workloads will deliver better service than one that presents impressive credentials at the pitch but assigns your account to junior staff post-appointment.

Claims handling track record is best assessed through specific examples. Ask the broker to describe three commercial claims they managed in the past two years, including the claim circumstances, the broker's specific actions, the outcome, and the timeline. Look for evidence of proactive advocacy (the broker identified issues in the insurer's assessment and negotiated a better outcome), not just administrative processing (the broker forwarded documents between the company and the insurer).

Commercial terms evaluation should compare total cost of broking services, not just the headline commission rate. Some brokers charge lower commissions but earn additional income from insurer-paid placement fees, reinsurance commissions on facultative placements, or service fees for ancillary activities. Request full remuneration disclosure as required under IRDAI broker regulations, and evaluate the total cost relative to the service scope. A broker charging INR 15 lakh in total fees who provides dedicated claims support, quarterly MIS reports, and proactive risk advisory may deliver better value than one charging INR 10 lakh but providing only transactional policy placement.

A rigorous evaluation process ensures that the broker selection is defensible, objective, and aligned with the company's actual needs. For companies subject to audit committee oversight or procurement compliance requirements, the process must be documented at every stage.

Initial screening eliminates proposals that do not meet mandatory requirements. Check that each responding broker holds a valid IRDAI license for the relevant category (direct broker, reinsurance broker, or composite broker). Verify the license status on IRDAI's website. Confirm that the broker meets any minimum requirements specified in the RFP (years of operation, minimum professional indemnity coverage, sector experience). Proposals that fail the initial screen should be excluded with documented reasons before technical evaluation begins.

Technical scoring applies the evaluation criteria and weightings disclosed in the RFP. Create a scoring matrix where each evaluator independently rates each proposal on each criterion using a defined scale (for example, 1 to 5 or 1 to 10). Use descriptive anchors for each score level to ensure consistency: a score of 5 on 'industry experience' means 'demonstrated deep expertise in our specific sector with multiple relevant reference clients,' while a score of 3 means 'general commercial insurance experience but limited sector-specific exposure.' Multiple evaluators (ideally 3 to 5 from different functions: risk management, finance, operations, procurement) reduce individual bias.

Shortlist the top 3 to 4 scoring proposals for presentations. The presentation stage allows the evaluation team to assess the proposed account team's personal competence, communication skills, and cultural fit with the organisation. Structure the presentation as follows: 30 minutes for the broker's presentation (focusing on their understanding of your programme, proposed improvements, and service approach), 20 minutes for Q&A, and 10 minutes for the evaluation team to discuss their impressions immediately after the broker leaves.

Prepare a standard set of questions to ask each shortlisted broker during the presentation, ensuring comparability. Useful questions include: 'Walk us through how you would handle a major fire claim at one of our manufacturing locations, from first notification through settlement.' 'What do you see as the three biggest coverage gaps in our current programme, and how would you address them?' 'How would you structure the renewal market approach for our fire and BI programme, specifically, which insurers would you target and why?'

After all presentations, reconvene the evaluation team to finalise scores. Calculate the weighted total score for each broker. If the scores are close (within 5% of each other), consider a second round of evaluation focused on the differentiating factors. If a clear leader emerges, proceed to commercial negotiation.

Document the entire evaluation process: the initial screening results, the scoring matrices from each evaluator, the shortlisting rationale, the presentation assessments, and the final selection decision with supporting reasons. This documentation is essential for audit trail purposes and for responding to any challenges from unsuccessful brokers.

Before appointing a broker, the company must verify that the broker holds a valid IRDAI license and complies with all regulatory requirements. Engaging an unlicensed or non-compliant intermediary exposes the company to regulatory risk and may compromise the enforceability of policy placements.

IRDAI issues broker licenses under the IRDAI (Insurance Brokers) Regulations 2018, which replaced the earlier 2002 regulations. Broker licenses are issued in three categories:

• Direct broker: can place business directly with insurers on behalf of clients.
• Reinsurance broker: can place reinsurance on behalf of insurers or reinsurers.
• Composite broker: can act as both direct and reinsurance broker.

For a commercial insurance buyer, the relevant license is the direct broker or composite broker license.

Verify the broker's license by checking the IRDAI website's intermediary database, which lists all licensed brokers with their registration number, license category, validity dates, and registered address. Cross-reference the registration number provided by the broker in their RFP response against the IRDAI database. Check that the license is current and has not been suspended, cancelled, or subject to regulatory action.

The broker regulations prescribe specific requirements that the company should verify. Minimum capital: direct brokers must maintain a minimum paid-up capital of INR 50 lakh, and composite brokers must maintain INR 2 crore. Professional indemnity insurance: brokers must maintain PI coverage, with limits as prescribed by IRDAI. Principal officer: the broker must have a designated principal officer with at least 10 years of insurance industry experience. The company should confirm the identity and credentials of the proposed principal officer. Training and certification: broker staff involved in soliciting and processing insurance business must hold IRDAI-approved certifications. Confirm that the proposed account team members hold the required certifications.

The broker must maintain separate client accounts for holding premium collections and claim proceeds. The company should verify that the broker has a designated client account with a scheduled bank and that funds are not commingled with the broker's operating accounts.

Remuneration disclosure is mandatory. Under the broker regulations, the broker must disclose to the client the nature and quantum of remuneration received from the insurer (commission) and any additional fees charged to the client. Request this disclosure in writing as part of the appointment process and include it in the broker agreement.

Conflict of interest provisions in the broker regulations require the broker to disclose any ownership, financial, or business relationship with any insurer. If the broker is a subsidiary of or affiliated with an insurer, this creates a potential conflict of interest in placing business on the company's behalf. The company should assess whether this conflict is material and, if so, whether adequate safeguards are in place.

For public-sector enterprises, additional procurement requirements apply. Central government guidelines on procurement of services may require competitive bidding, publication of the RFP on the Central Public Procurement Portal (CPPP), and compliance with General Financial Rules (GFR) 2017. Public-sector risk managers should consult their procurement department early in the RFP process to ensure compliance with applicable government procurement norms.

The broker appointment should be formalised through a written agreement that defines the scope of services, performance expectations, remuneration terms, and the process for review and termination. Many Indian companies appoint brokers through a simple letter of appointment that specifies little beyond the fact of appointment. This informality creates problems when service expectations are not met, because there is no documented standard against which to measure the broker's performance.

The broker agreement should include the following components. Scope of services: define every service the broker is expected to provide, from policy placement through claims handling to management reporting. Use the scope of services section from the RFP as the basis, as the broker has already committed to delivering these services in their proposal.

Service level agreements (SLAs) translate service expectations into measurable standards. Effective SLAs for an insurance broker include:

• response time for routine queries (target: 4 working hours for acknowledgment, 2 working days for substantive response)
• endorsement processing time (target: 5 working days from request to confirmed endorsement)
• claim intimation submission (target: within 24 hours of receiving loss notification from the client)
• renewal timeline (target: first renewal proposal presented 90 days before expiry, final placement confirmed 15 days before expiry)
• management reporting (target: quarterly claims report within 15 working days of quarter end, annual programme review within 30 days of renewal)

Remuneration terms should specify whether the broker is compensated through insurer-paid commission, client-paid fees, or a combination. If commission-based, specify the commission percentages by policy class (not exceeding IRDAI-prescribed maximums). If fee-based, specify the fee amount or calculation methodology, payment schedule, and any performance-linked components. Include a total remuneration disclosure clause requiring the broker to disclose all income earned in connection with the company's insurance programme, including placement fees, contingent commissions, and any income from reinsurance arrangements.

Performance review provisions should specify the frequency of formal performance reviews (recommend annually, aligned with the renewal cycle), the metrics used for evaluation, and the consequences of sustained underperformance. Include a remediation process: if the broker fails to meet SLAs in two consecutive quarters, the company issues a formal performance improvement notice, and the broker has one quarter to demonstrate improvement before the company has the right to terminate without notice.

Termination provisions should allow either party to terminate with reasonable notice (typically 90 days), and should include provisions for an orderly transition: the outgoing broker must transfer all policy documents, claims files, and programme data to the company or the incoming broker, and must continue servicing outstanding claims during the transition period. Include a non-solicitation clause preventing the outgoing broker from approaching the company's insurer contacts to redirect the business.

Duration should match the evaluation cycle. A three-year agreement with an annual performance review and an option to extend for one year provides stability for both parties while maintaining accountability. Avoid indefinite or automatically renewing agreements that reduce the company's bargaining position and motivation to periodically evaluate the relationship.

Several recurring mistakes consistently undermine broker RFP processes and lead to suboptimal outcomes.

Mistake 1: Running the RFP too close to renewal. Starting the RFP 8 weeks before the renewal date means the winning broker has no time to add value. They inherit the incumbent's market approach, accept whatever terms the insurers offer, and spend the first year simply learning the account. Start the RFP at least 6 months before renewal.

Mistake 2: Inviting too many brokers. An RFP sent to 10 or 12 brokers signals that the company is price-shopping rather than seeking a genuine partnership. Experienced brokers may decline to participate, recognising that the effort-to-probability-of-success ratio is poor. Limit the RFP to 4 to 6 carefully selected brokers who have the relevant capability and capacity.

Mistake 3: Selecting solely on commission rate. The broker's commission or fee represents 10-15% of the total insurance cost. The premium (85-90% of total cost) is determined by the insurer's underwriting assessment, which is influenced by the broker's market approach, negotiation skill, and technical presentation of the risk. A broker who charges 1% less in commission but achieves a 5% higher premium rate costs the company significantly more overall.

Mistake 4: Failing to check references. Brokers present their best capabilities in proposals and presentations. The most reliable indicator of future performance is past performance with comparable clients. Always check at least 3 references, and ask specific, probing questions rather than accepting generic endorsements.

Mistake 5: Not involving the right internal stakeholders. An RFP run solely by the procurement department optimises for procurement KPIs (lowest cost, compliance with bidding procedures) rather than risk management outcomes. The risk manager, CFO, and operations heads should participate in the evaluation to ensure that technical capability and service quality are properly weighted.

Mistake 6: Treating the RFP as a one-time exercise. The value of a broker RFP diminishes rapidly if the company appoints the broker and then does not actively manage the relationship. Without ongoing performance measurement, the broker's service quality typically declines to the minimum level that avoids complaints. Implement the SLAs and performance review provisions described in the previous section to maintain service standards throughout the appointment period.

Mistake 7: Ignoring the transition risk. Changing brokers is disruptive. The incoming broker needs time to learn the programme, build relationships with the insurers, and understand the company's operational context. If the transition is not managed carefully (with a formal handover process, document transfer, and a 60-day overlap period where both brokers are accessible for queries), the company's insurance programme may suffer during the transition. Always plan for transition costs, both in time and in temporary service degradation, when deciding whether to change brokers.

Mistake 8: Not disclosing the evaluation criteria. When brokers do not know how they will be evaluated, they produce generic proposals that emphasise their strongest areas (which may not align with the company's priorities) and omit or downplay areas of weakness. Transparent evaluation criteria produce better, more relevant proposals.

The RFP conclusion is not the end of the process. Whether the company appoints a new broker or re-appoints the incumbent on improved terms, the post-RFP period requires active management to ensure the expected value is delivered.

If a new broker is appointed, plan a structured transition. Issue a formal termination notice to the outgoing broker with the contractually required notice period. Simultaneously issue the appointment letter to the incoming broker with a clear mandate and the agreed SLAs. Schedule a handover meeting where the outgoing broker transfers all policy documents (original policies, endorsements, cover notes), claims files (for all open and recently settled claims), correspondence with insurers, risk survey reports, and programme data (premium history, claims history, loss ratio analysis). The incoming broker should verify that the handover is complete by checking the received documents against the insurance register.

During the transition period, maintain a direct communication line with each insurer to ensure continuity of coverage. Confirm with each insurer in writing that the broker of record has changed. Ensure that no policies lapse during the transition due to missed renewal dates or communication gaps.

Year-one priorities for the new broker (or the re-appointed incumbent with a refreshed mandate) should include a full programme review within the first 60 days, identifying coverage gaps, sum insured adequacy issues, and potential premium savings. The broker should present a renewal strategy at least 90 days before the principal renewal date, incorporating market intelligence, loss experience analysis, and recommended coverage modifications. Establish the management reporting cadence from day one: quarterly claims reports, monthly open claims status updates, and ad-hoc reports as needed.

Set up a formal mid-year review at the 6-month mark. Assess the broker's performance against the SLAs agreed in the broker agreement. Discuss any teething issues, clarify expectations, and adjust priorities for the second half of the year. This early review signals to the broker that performance management is real, not theoretical, and creates an opportunity to course-correct before the first annual review.

For the re-appointed incumbent, the post-RFP period should feel different from the pre-RFP period. The RFP process should have generated clearer expectations, updated SLAs, and renewed commitment from both sides. If the incumbent's behaviour reverts to pre-RFP patterns within six months, the exercise has failed, and the company should consider whether a more assertive approach, including potential broker change, is warranted at the next evaluation cycle.

Finally, capture the RFP learnings. Document what worked and what did not in the RFP process: which evaluation criteria were most useful, which RFP sections generated the most informative responses, and where the process created unnecessary friction. This institutional knowledge improves the quality and efficiency of future RFPs, whether for insurance brokers or other professional service providers.