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📜 '''Procurement policy''' is the formal set of rules, thresholds, approval hierarchies, and governance standards that an [[Definition:Insurance carrier | insurance organisation]] establishes to control how goods and services are sourced, purchased, and paid for. In an industry that depends heavily on external providers — from [[Definition:Third-party administrator (TPA) | third-party administrators]] and technology vendors to [[Definition:Loss adjuster | loss adjusting]] firms, legal panels, and [[Definition:Reinsurance broker | reinsurance brokers]] — a robust procurement policy ensures that spending decisions are transparent, compliant with regulatory expectations, and aligned with the company's strategic priorities.

⚙️ A well-drafted procurement policy in an insurance context typically defines several key elements: monetary thresholds that dictate when competitive bidding is required versus when direct awards are permissible; the composition and authority of procurement committees or tender boards; mandatory due-diligence steps for new suppliers, including financial health checks, [[Definition:Data security | data security]] assessments, and regulatory screening; and rules governing [[Definition:Conflict of interest | conflicts of interest]] and related-party transactions. For [[Definition:Lloyd's | Lloyd's]] market participants, procurement policies must also account for market-specific requirements, such as compliance with Lloyd's minimum standards on [[Definition:Outsourcing | outsourcing]] and [[Definition:Delegated underwriting authority (DUA) | delegated authority]] arrangements. In practice, the policy feeds directly into the [[Definition:Procure-to-pay (P2P) | procure-to-pay]] workflow, ensuring that [[Definition:Purchase order (PO) | purchase orders]] cannot be raised without the requisite approvals and that contracts are executed in accordance with pre-agreed terms and [[Definition:Rate card | rate cards]].

🛡️ Regulatory pressure has made procurement governance a board-level concern across the global insurance industry. Under [[Definition:Solvency II | Solvency II]], the system of governance requirements expect insurers to maintain adequate internal controls over outsourcing and material service arrangements, and supervisory authorities in jurisdictions from Singapore to Canada have issued analogous expectations. An insurer whose procurement policy is weak or poorly enforced risks not only financial waste — through maverick spending, duplicate contracts, or unfavourable terms — but also regulatory sanctions if material [[Definition:Outsourcing | outsourcing]] is found to lack proper oversight. Conversely, a clear and consistently applied policy empowers business units to move quickly within defined guardrails, accelerates the onboarding of [[Definition:Insurtech | insurtech]] partners, and provides internal audit and [[Definition:Compliance | compliance]] teams with the documentation trail they need to satisfy both regulators and external auditors.

'''Related concepts'''
{{Div col|colwidth=20em}}
* [[Definition:Procurement lifecycle]]
* [[Definition:Procure-to-pay (P2P)]]
* [[Definition:Preferred supplier]]
* [[Definition:Outsourcing]]
* [[Definition:Vendor management]]
* [[Definition:Corporate governance]]
{{Div col end}}

Definition:Procurement policy - Revision history

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