Definition:Request for quotation (RFQ)
📄 Request for quotation (RFQ) is a formal solicitation used across the insurance industry in two distinct but related contexts: procurement of goods and services, and the placement of insurance or reinsurance coverage. In procurement, an RFQ invites vendors to submit firm pricing for a clearly specified product or service — such as software licensing, claims handling services, or printing of policy documents — where the scope and specifications are already well defined. In the underwriting and placement context, an RFQ (or its equivalent, often called a "submission" or "indication request") is the mechanism by which a broker or insured invites underwriters to quote terms and pricing for a specific risk, providing the risk details, desired coverage structure, and requested limits and deductibles.
🔧 In the underwriting context, the RFQ process begins when a broker assembles a risk submission containing the information an underwriter needs: loss history, exposure data, financial statements, engineering reports, and a description of the coverage sought. This package is distributed to multiple markets — whether Lloyd's syndicates, domestic carriers, or reinsurers — who evaluate the information and respond with quoted premiums, proposed terms, conditions, and any exclusions or warranties they require. The broker then compares quotes, negotiates on the insured's behalf, and ultimately binds coverage with one or more carriers. In the procurement context, the process is analogous but focused on operational needs: the issuing organization defines the deliverables precisely, vendors respond with unit pricing and delivery terms, and the organization selects based on price competitiveness, quality, and reliability. Both contexts share the principle that the RFQ presumes the buyer knows exactly what it wants — distinguishing it from the more exploratory RFI and the more solution-oriented RFP.
💡 Efficient RFQ management has become a strategic priority across the insurance value chain. On the placement side, digital platforms and insurtech solutions — including electronic trading systems at Lloyd's and various broker-market connectivity tools — aim to streamline the RFQ workflow, reducing the days or weeks historically needed to collect and compare quotes for complex commercial and specialty risks. Standardized data formats such as ACORD standards facilitate cleaner, faster information exchange between brokers and underwriters. On the procurement side, insurance companies managing large technology or services budgets use structured RFQ processes to demonstrate value-for-money accountability to boards and regulators. Whether the objective is placing a multimillion-dollar excess-of-loss reinsurance tower or purchasing a fleet of laptops for a claims department, the RFQ discipline ensures that decisions are grounded in transparent, comparable pricing.
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