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THE TENDER TRAP
01 April 2006
Is a broker tender the best way for an airline to get value for money for its insurance? Len Spooner, executive director at Alexander Forbes Risk Services, offers his view on the aviation tender process.
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airline
Airlines
Aviation
Insurance is an important consideration for all airlines. Having appropriate and comprehensive levels of insurance coverage are key elements of balance sheet protection, but so is obtaining insurance at the right cost.
So the question is: how can the buyer be sure it is getting the correct product at the correct price? Is using a broker tender the best way?
Many airlines have had the same brokers for many years, so the relationship is well established and there will probably be service-level agreements or similar in place. Brokers will have provided the airline with benchmark analysis to justify the airline's relative position.
The market is being pushed to adopt LMP (London Market Procedures) slip wordings and conditions. Industry practitioners hope this attempt by the London market regulators to standardize and harmonize slip and policy wordings will ultimately lead to contract certainty.
As a further consequence, the market is becoming increasingly...
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