How to cut portfolio programme costs while securing desirable coverage

A common concern among private equity firms considering a portfolio insurance programme is whether cost savings could impact cover quality.

That trade-off, however, is largely a myth. When a portfolio programme is structured in a strategic way, it can deliver both the desired level of protection and lower costs.

The key to an effective portfolio programme often lies in drawing on collective buying power. By coordinating insurance spend across portfolio companies, firms may secure more attractive pricing and broader terms that may not be available through standalone placements. By using scale, private equity firms may be better able to drive value, achieving reduced premiums while also creating opportunities to secure better cover, fewer exclusions, and more favourable policy conditions.

Showcasing the benefits of portfolio programmes

While concerns about trade-offs between savings and cover are common, a well-structured and supported portfolio programme can achieve both cost efficiency and cover that remains tailored to your portfolio’s specific needs.

Consider, for example, a portfolio that includes several companies with cyber risk exposures. By pooling and presenting them as a unified portfolio to the market, firms may be able to negotiate more comprehensive cover, higher sub-limits, and even broader definitions of loss — all at a lower cost than standalone programmes.

There are numerous benefits to a coordinated approach, including:

Cover benefits. Consolidated purchasing can result in desirable policy language, higher limits, and tailored endorsements.
Cost efficiency. Coordinated negotiations can lead to lower premiums, eliminate redundancies, and reduce administrative fees.
Greater insurer engagement. Insurers are more likely to offer favourable terms when underwriting a larger overall programme for a multi-entity portfolio than they would for a single company.
More streamlined claims handling. Centralised programmes can streamline claims management, often bringing greater consistency and reducing delays.

Importantly, these savings often don’t require private equity firms or their portfolio companies to compromise. With thoughtful structuring and experienced guidance, portfolio programmes can maximise value, delivering the desired protection tailored to each company’s unique risk profile, while reducing overall cost.

This publication is not intended to be taken as advice regarding any individual situation and should not be relied upon as such. The information contained herein is based on sources we believe reliable, but we make no representation or warranty as to its accuracy. Marsh shall have no obligation to update this publication and shall have no liability to you or any other party arising out of this publication or any matter contained herein. Any statements concerning actuarial, tax, accounting, or legal matters are based solely on our experience as insurance brokers and risk consultants and are not to be relied upon as actuarial, accounting, tax, or legal advice, for which you should consult your own professional advisors. Any modelling, analytics, or projections are subject to inherent uncertainty, and any analysis could be materially affected if any underlying assumptions, conditions, information, or factors are inaccurate or incomplete or should change.

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How to cut portfolio programme costs while securing desirable coverage

Showcasing the benefits of portfolio programmes

Portfolio Management | Value Creation