Corporate insurance renewal 2009

Report: 12
Date: 17 September 2009
By: Treasurer and Director of Resources on behalf of the Commissioner

Summary

This report outlines the insurance renewal programme for 2009/10 and seeks approval for the various renewals.

A. Recommendation

That

1. members agree to the renewal of the insurance programme with effect from 1 October 2009, on the basis outlined in this report (and its exempt appendix); and
2. note that subject to confirmation of the final property insurance premium and in line with current policy, the identified savings for the 2009 renewal are up to £65,914, of which savings of £12,447 in 2009/10, and £24,895 in a full year, will be transferred to motor liability reserve on the balance sheet and savings on the property policies of up to £20,509 in 2009/10, and up to £41,019 in a full year, will be transferred to the property damage insurance reserve on the balance sheet.

B. Supporting information

1. Heath Lambert, the Authority’s insurance broker, has completed its renewal and tender process for the main classes of insurance, with effect from 1 October 2009. The outcome of which, is summarised in the Exempt Appendix 1. The results of this year’s process confirms that the insurance strategy is sound and continues to deliver benefits in both cover and cost.

2. In terms of risk financing, the Service seeks to make a provision for realistic estimates of the future settlement of known liabilities in respect of legal compensation and accident claims that fall under the self insured arrangements, which are regularly reviewed to ensure adequacy. Reserves for property and motor are similarly managed and reviewed to ensure adequacy. In terms of organisational learning, the MPS has a number of mechanisms in place that help it learn from third party accidents, it receives in the form of claims. The DPS Prevention and Reduction Team, Pollcolls recording and management systems and Safety and Health accident reporting mechanisms all contribute towards accident and prevention management. DLS are looking towards providing BOCUs with standard public liability claims reports in order to empower the BOCUs with claims data to help determine trends and implement appropriate controls and also liaise with Safety and Health on received employer’s liability claims.

Environmental and sustainable development implications

3, There are no significant environmental impacts arising from the renewal proposal. Insurers who responded to the tender had to complete the Environmental questionnaire.

C. Race and equality impact

There are no specific race and equality implications arising from the general insurance renewal programme. Insurers who responded to the tender had to complete a diversity questionnaire.

D. Financial implications

1. The financial impact of the proposed insurance premium arrangements is set out in the Exempt Appendix 1 and results in an overall savings of £65,914 (£34,393 property damage, £24,895 motor liability and £6,626 on contractors all risks).

2. The motor reserves stands at £2,124,000 (and in line with agreed policy is to build up to £5M). The saving on motor premiums this year (compared to the premium quoted in 2006 of £1,139,395) is £731,070 (including this year’s saving of £24,895). This will be transferred to the motor reserves, making a total of £2,855,070.

3. In line with agreed policy it is intended that the property reserve will be built to £2M. The savings on property premiums this year (compared to the premium quoted in 2007 of £1,631,893) is £227,182 (including this year’s savings of £34,393 property damage and £6,626 on contractors all risks). This amount will be transferred to the property damage reserve. Property premiums may however be affected by a property insurance valuation currently being undertaken on the estate. Any resultant change in premiums will affect the level of contribution to the property damage reserve

4. The adequacy of all earmarked reserves is under consideration and will be reviewed as part of the development of the 2010-13 budget submission which will be considered by the Authority in November 2009.

E. Legal implications

1. The Authority has power to enter into contracts to provide its functions and services related to those functions under s1 Local Government (Contracts) Act 1997. Section 140 of the Local Government Act 1972 also allows the Authority to enter into a contract of accident insurance in relation to Members.

2. The report demonstrates the contract has been tendered in an open, fair and transparent manner as required by the Public Procurement Regulations 2006, and that the OJEU and tender compliance was managed by the MPA’s insurance broker (Health Lambert Limited) via the use of the restricted procedure.

F. Background papers

• Health Lambert 2009 Renewal Report.

G. Contact details

Report author: Gordon Mitchell, MPS Strategic Insurance Manager.

For information contact:

MPA general: 020 7202 0202
Media enquiries: 020 7202 0217/18

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