SUMMARY/PURPOSE

1. This report sets out the current insurance arrangements of the Council, which members are asked to note and comment on as appropriate.

BACKGROUND

2. Like any large organisation the Council faces a range of insurable risks, and must judge whether it is preferable to take cover from an external insurer, or to bear the risk itself. The premium cost, the likelihood of a claim, and the maximum potential loss are all factors which influence that decision.

3. Most external policies involve a ‘deductible’ (or ‘excess’) which the Council has to meet first, with the insurer only becoming liable for the costs of an individual claim which exceed that level. For example, the first £125,000 of each Public Liability claim is met by the Council, so all but the largest cases are effectively born internally.

4. Having said that, some policies or groups of policies are subject to an annual ‘stop loss’ which limits the total loss which the Council can suffer in any one year. It is unusual to reach the ‘stop loss’ – it is £1.3 millions for the liabilities policies - but it does provide a comforting protection against a year when large numbers of ‘deductibles’ are incurred.

5. Most policies also carry a limit of indemnity on any single incident. It is important that this is set at an adequate level (currently £30 millions for the liabilities policies).

6. Where risks are carried internally, either directly or through the operation of a ‘deductible’, there is the potential for major expenditure fluctuations from year to year. It is important that adequate reserves are carried to prevent that causing volatility to the Council’s budget. This applies equally to non-insurable risks.

7. Given that a degree of self-insurance is unavoidable in many cases, and that even where external cover is available the level of premium will be heavily influenced by claims experience and prospects, the importance of risk management will continue to grow.

8. Details of the current policies held by the Council are shown in the appendices to this report, as are the principle risks borne in-house.

STRATEGIC CONTEXT

9. Insurance arrangements are a key element of the risk management measures by which the Council seeks to minimise threats to the delivery of its objectives.

CONSULTATION

10. Insurance arrangements are made in the light of advice from the Council’s Insurance Advisors.

FINANCIAL/BUDGET IMPLICATIONS

11. There are no direct financial consequences arising from this report, but insurance arrangements have significant financial implications in terms of premiums paid and claims incurred.

LEGAL IMPLICATIONS

12. The local authority has specific powers to procure insurance (for example for elected members and for volunteers), more generally the power to insure is ancillary to the substantive functions of the council under s111 Local Government Act 1972.

OPTIONS

13.1 To note the current insurance arrangements

13.2 To require further work to be undertaken on insurance cover arrangements.

EVALUATION/RISK MANAGEMENT

14. It would not be possible to remove all aspects of risk in connection with insurable risks. Such cover no longer exists and, even if it did, would be prohibitively expensive. The arrangements are designed to strike an appropriate balance between risk and cost.

RECOMMENDATIONS

15. To note the current insurance arrangements.

BACKGROUND PAPERS

16. None

APPENDICES

17. Appendix 1 - Major Policies

18. Appendix 2 - Principal ‘uninsured’ risks

19. Appendix 3 - Other policies

ADDITIONAL INFORMATION

20. Details of current insurance arrangements

Contact Point : Paul Wilkinson, Chief Financial Officer ( 823606 email : [email protected]

PAUL WILKINSON

Chief Financial Officer

REG BARRY

Portfolio Holder for Resources