Procurement Act 2023 – insurer insight

The Procurement Act 2023 came into force on 24 February 2025 for procurements commencing on or after that date. For those entering the tender season, the landscape for securing insurance contracts has changed, bringing opportunities and new responsibilities. 

Understanding the Procurement Act 2023

The Act, alongside a new National Procurement Policy Statement (NPPS) laid in Parliament on 13 February 2025, marks a new era in public procurement across the UK.

Replacing earlier regulations shaped by European Union directives, it is designed to empower public sector bodies such as local authorities, NHS organisations, educational institutions, and central government departments. Its goal is clear: to create a procurement system that is more streamlined, transparent, and adaptable, while ensuring that spending delivers value to the public.

Key features affecting insurance contracts

• Flexibility and simplification. The Act simplifies previous procedures and gives public bodies greater freedom to tailor their insurance tenders. This means you can now negotiate insurance coverages and terms more directly, allowing for contracts that better match your specific risk profile and operational needs.
• Emphasis on value, not just cost. One of the most progressive shifts is the requirement to look beyond price, seeking insurance solutions that add social value, promote innovation, and support sustainability. Insurers will help meet these expectations by offering risk management support or advice, training initiatives, and community engagement alongside insurance cover.
• Transparency and accountability. The Act requires enhanced transparency in procurement, making it easier to compare providers and monitor contract performance. The intention is to keep these processes smooth: responding to notices quickly, providing clear documentation, and working with customers to set modest but meaningful contract performance indicators or Key Performance Indicators (KPIs).
• Supplier access and competition. As a provider, we welcome the Act’s push to open the market. Smaller and specialist insurers can now access public sector opportunities with fewer barriers. For buyers, this means a wider choice of partners, potentially more competitive premiums, and access to niche expertise.

How the Act has worked in practice

Here are some practical observations from the market since the Act’s implementation in February 2025:

• Client experience. The new negotiation freedoms help secure cover that aligns more closely with complex and evolving risks attributed to the public sector.
• Implementation challenges.  Whether it’s adjusting procurement documentation or revising evaluation processes, engage with your insurance partners to share experiences and best practice.
• Market innovation. The new regulatory environment is fostering innovation in product offerings and service levels. There is expanding challenge and demand on insurers to provide improved risk management services and support for ESG targets alongside traditional cover.

Recent updates and guidance

As implementation continues, several updates may be relevant for insurance procurement teams:

• Expanded guidance: The Cabinet Office and industry bodies have published tailored advice for specialty areas such as insurance, clarifying how social value and contract performance apply to protection products.
• Digital procurement tools: enhanced digital systems for notice publication and contract management, like Central Digital Platform (CDP), should support the procurement cycle. Insurers can support this transition to these platforms and provide compliant documentation. Resolving challenges: early feedback has led to improvements in how suppliers and authorities resolve procurement disputes, making outcomes fairer and swifter.

Opportunities

As insurers, the Procurement Act 2023 is an opportunity to collaborate more closely with public sector clients.

Insurers can now:

• Use the new flexibility to structure insurance programmes and risk management support that reflect your operational realities.
• Compete transparently and strive to deliver coverage and service that advances your public mission.
• Maintain rigorous standards, help document social value contributions, and ensure contract performance is met and evidenced.
• Participate in supplier onboarding post-award to meet the Act’s goals.

While the new notices may seem an administrative burden, they will be worth the effort as they support suppliers to build a more meaningful and sustainable proposition. Government wants buyers to engage with suppliers early and stats are showing there has been a substantial increase in PINs since the act went live.

The Central Digital Platform is continuously enhanced with the ambition to become a one stop shop for public sector procurement. Pipeline information is vast and useful, so providing opportunities for buyers to work together and suppliers to be ready to respond to the needs of prospective customers, is very useful.

Getting value from social value

Social value continues to be a hot topic but there cannot be a one size fits all procurement approach. Early supplier engagements facilitate a meaningful social value proposition to benefit local communities. There continues to be rapid growth and development in approaches to social value delivery and measurement.

With innovation at the heart of the Act, we encourage buyers to consider working in partnership with procurement departments to design social value criteria that reflects both the needs of society and the capabilities of their suppliers.

Locally delivered social value has traditionally leant itself better to contracts such as construction than to highly regulated industries such as insurance. We welcome the Government’s 2025 consultation on further procurement reforms, where it is recognised that in certain contracts it is more appropriate to specify that social value can be delivered outside of the contracting authorities’ area of responsibility.