Personal Indemnity Insurance Policy - annual progress report

Report: 08
Date: 21 January 2010
By: Treasurer and the Director of Resources on behalf of the Commissioner

Summary

MPA Finance Committee ratified informal approval of the Personal Insurance Indemnity Policy (PIIP) in November 2004. This followed agreement in principle by MPS Management Board that MPS officers and staff should be indemnified by the MPA in certain tightly defined situations where their own personal life and accident insurances do not provide an indemnity.

Finance Committee required that the PIIP be subject to annual renewal and that an annual progress report be provided summarising key developments since implementation of the policy. This is the 2009 progress report.

A. Recommendations

That members

1. approve renewal of the Personal Insurance Indemnity Policy for a further 12 months
2. note activity in year in respect of enquiries about the policy and the volume of claims and/or payments set out in in the report.

B. Supporting information

1. Activity – The Policy and Standard Operating Procedure continue to give a level of reassurance to officers and staff involved in high risk duties, whereby they will not be financially penalised in the event their own personal insurance arrangements refuse to pay out because the job restricted what they can disclose.

2. During 2009, two main briefings took place to key Specialist Operations (SO) and Specialist Crime Directorate (SCD) officers as regards the PIIP and how it dovetails with the personal insurance arrangements of the officers concerned. Clarity around this issue is complex as different insurer company policies have different terms and conditions that policyholders must comply with, as well as the issue about what they can and cannot disclose to their insurance company (reference to material facts which is defined as any fact or circumstance that may affect the judgement of the insurer in considering whether or not to accept the risk and, if willing, at what rate of premium and on what terms and conditions). Work is on-going with SO in this area as regards clarity of communication on this issue.

3. The internal reserve set aside for these eventualities currently stands at £680,000 and this will be increased by the usual amount of £175,000 should renewal be agreed. During the next 12 months, the adequacy of the level of reserve is to be reviewed.

4. There have been a number of formal specific notifications (as well as informal enquiries) to the Insurance Management Team covering 28 MPS officers in 10 deployments, regarding the PIIP and its possible application during the year. The main reason for the enquiries, is seeking clarification that the MPA indemnity will come in to play when for reasons of operational security, the activity cannot be disclosed to the officers insurers. Reassurance is given on this basis as well as reminders to officers that the PIIP is primarily a contingent cover, in that it will only come in to play should their own personal insurances default in the payment of a legitimate claim.

5. The maximum amount payable under this PIIP is £500,000 in respect of any one accident, occurrence or incident giving rise to a claim or claims under qualifying insurance (defined as a personal life insurance or personal accident insurance policy arranged by or for the benefit of a member of staff, their family and their other dependents and in the aggregate in respect of all claims under such qualifying insurance). The current limit of £500,000 remains adequate for PIIP purposes.

6. It is recommended that the PIIP be renewed for another 12 months.

C. Race and equality impact

;1. The policy applies to all MPS police officers and police staff and the work to promulgate the policy and response to enquires has been carried out on that same basis.

D. Financial implications

1. To date there have been no claims received by the Insurance Management Team for consideration by the indemnity offered under the PIIP and therefore no money has been paid out under a reserve set aside to cover these eventualities. This reserve will stand at £855,000 (as at 31 March 2010). It has previously been agreed that this reserve is to be increased by £175,000 per annum.

2. A suggested top-up indemnity from the Home Office (to cover mass claims arising from a catastrophe situation and thus capping the Authority’s potential financial liability at a level consistent with its self-insurance limits) has previously been rejected, thus the financial risk remains with the Authority. It is therefore considered prudent to continue to build up the self insured reserve to take in to account this possible shortfall.

E. Legal implications

1. External legal advice obtained confirms the MPA, is a relevant authority for the purposes of s101 of the Local Government Act 2000 has the power to grant the proposed indemnity under an Order made under the above Act, namely, the Local Authorities (Indemnities for Members and Officers) Order 2004 (“the Order”). The powers to provide the indemnity under the Order are set out in article 5 and are subject to the limitations elsewhere in the order. In the alternative, the MPA may rely upon its powers under s6 of the Police Act 1996, and s111 of the Local Government Act 1972.

2. The contents of the indemnity have also been cleared by external legal advisers.

E. Background papers

• MPA Finance Committee November 2004: Report on the Personal Insurance Indemnity Policy and Management Board reports MB(04)77 and MB(04)99
• MPA Finance January 2006: Progress Report on the Personal Insurance Indemnity Policy
• MPA Finance October 2007: Report on Approach for Central Government Indemnity
• MPA Finance December 2007: Progress Report on the Personal Insurance Indemnity Policy
• MPA Finance December 2008: Progress Report on the Personal Insurance Indemnity Policy

F. Contact details

Report author(s): Gordon Mitchell, Strategic Insurance Manager, MPS

For more information contact:

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

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