Inex24 opens doors to state-owned buyers as interest grows

Test client for the first batch of tenders is the Austrian Federal Railway Österreichische Bundesbahn (ÖBB). “As a state-owned company we have to follow the strict contract award regulations,” said Olaf Köhler, Risk Manager at ÖBB. “We can only invite tenders when prices and conditions are absolutely comparable—this is what Inex24 helps us with.” Mr Köhler believes that Inex24 will make the industrial insurance market more transparent. “Corporate clients can now see what insurers are bidding and how the brokers are negotiating terms and conditions—this will change the sales process completely.” Inex24 is an electronic tool that allows industrial companies to invite bids for risks via an online platform. It then allows them to bargain with insurers and brokers over prices and conditions. Furthermore, the system promises to make the process of buying insurance more transparent and avoid breaches of compliance rules.hideÖBB’s Mr Köhler appreciates this aspect of the tool. “Inex24 helps us to get non-binding comparable price offers from different insurers so we can handle the tender process in a completely compliant way,” he said. To use Inex24 participants have to pay an annual fee, depending on their volume of cover placed. Earlier attempts to establish such a system failed. Eleven years ago, insurance brokers tried to set up an electronic broker platform called Insure XL. The plan failed. The same is true for Riscovery, which was meant to improve data transfer between industry and brokers. Inreon, which was an initiative by Swiss Re and technology services company Accenture, also had to be closed down. Inex24 started in July 2011 with prominent supporters such as engineering giant ThyssenKrupp, the leading automotive company Bosch and coffee firm Tchibo. HDI-Gerling, Axa, Zurich and Gothaer joined from the insurers’ side. Insurance broker Aon also plans to organise all of its future calls for tenders for industrial insurance customers in Germany via Inex24. “We have fifty five insurance companies participating and plan to have more than sixty by the end of the year,” said Inex24 management board member Rainer Witzel. “Niche companies that specialise in marine or financial lines insurance and Austrian insurers are on the site now too.” There are about 30 brokers and in-house brokers using the placement platform. “Altogether we plan to have five hundred invitations to tender in 2012,” Mr Witzel said. “By the end of 2013 we intend to more than double the number.” He emphasized that Inex24 has installed several innovations in order to make it more user-friendly. “With the wording manager we have installed a tool with which insurers and brokers can negotiate wordings. With other tools brokers and risk managers can rank the offers by qualitative criteria, price, rating or limits.” The Inex24 management is thinking about making the platform more attractive for all participants. “For us it is an interesting option to make our structure compatible with our participants’ back offices,” Mr Witzel said. “At the moment users have to log in and log out again and transfer the data to their own systems. It would be much more comfortable if companies could link the processes on the platform with their own administration,” he added. However, critical voices remain. Not all risk managers believe that Inex24 is the future for industrial insurance business. “I do not see that an IT platform that allows us to place all risks via the internet will work out, at least not in big industry’s ambitious underwriting arena where you see high exposure at its best,” said Gregor Köhler, Head of Insurance at German chemical giant Bayer. “Our risks are sensitive and volatile to a high degree and I prefer to speak to the insurers’ management board members when the cover is in a final state. At the moment I do not see any possibility to deal with that on an IT basis,” he added. For Reiner Siebert, Head of insurance at German airline Lufthansa, the platform is not an alternative for the bidding process his company already participates in. “As an international operating company we have used our own electronic platform already for two and a half years,” he said. It allows his company to presents wordings, risk evaluations and ratings to insurers and also uses other mediums like films, pictures and newsletters to inform insurers and brokers about the latest developments. All business partners get a password in order to log in to the platform and to see bids and offers. “The most time-consuming thing is to collect all relevant information,” Mr Siebert said. “This has to be done by hand—a platform does not help us with that.” Jurand Honisch, Risk Manager at media company Bertelsmann, sees another problem with Inex24. “In the decision process on whether a company should buy cover from insurer A or B objective criteria like the price or the sum insured will get out of hand,” he said. “The importance of other criteria like the trust in one or the other insurer will decrease and finally everything will be decided by price.” Corporate insurance is much more complicated than that, he argued. “The insurer wants to know whether a customer can handle the risks, the risk manager wants to know whether the insurer has a good performance or only wants to collect the premiums,” Mr Honisch said. Many things depend on the personal contact between the parties, he believes, an aspect Inex24 is neglecting. Mr Köhler from ÖBB is more optimistic about this issue. “Personal conversations, meetings and phone calls will not be cancelled in the future,” he said. The role and future of Inex24 and electronic negotiation in the industrial insurance market was discussed in some depth during CRE’s Austrian Risk Frontiers roundtable published in the September issue that will also be available to members of DVS at the Symposium this week.

Inex24 opens doors to state-owned buyers as interest grows

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