Corporate insurance update 2011

Report: 7
Date: 17 November 2011
By: Director of Resources on behalf of the Commissioner and the MPA Treasurer

Summary

This paper outlines the outcome of the 2011 insurance tender/renewal process and movements/alterations to the various insurance reserves.

A. Recommendations

That Members

1. note the outcome of the tender and annual renewals for the insurance programme attached in Appendix 1 and Exempt Appendix 2;and
2. agree the transferring of premium savings to existing Reserves and the overall position on Reserves 

B. Supporting information

1. Insurance Renewals for 2011 - Gallagher Heath (formerly Heath Lambert), the MPA’s insurance brokers, have completed the renewal and tender process for the main classes of insurance, with effect from 1 October 2011 (overseen and agreed by MPS Procurement). The outcome of which, is summarised in the Appendix 1 and Exempt Appendix 2. Savings on last year’s premiums amounts to £146,767. 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. Helicopter Insurance - The MPA placed its aviation insurance outside the NPIA Aviation Framework last year as it did not equate to Value for Money. The NPIA have tendered their aviation broker contract and are looking at alternative aviation placement options for April 2012. The MPA will request quotes on both a standalone basis and as part of the Framework to ensure that it continues to achieve Value for Money on this insurance cover.

3. Reserves - There are 2 reserves established for the property risks and motor liability risks

The property reserve, following this year’s renewal will be increased to £1,170,112 and it is recommended that this continues to be built up to £2M.

The Motor Reserve has reached its agreed limit of £5M therefore allowing any future savings in motor premiums to be released as savings back in to the MPS.

C. Other organisational and community implications

Equality and Diversity Impact

1. The tender and renewal of the insurance programme and the Reserve movements, do not have any specific impact on equality/diversity issues or on any different communities.

Consideration of MET Forward

2. There are no implications on the delivery of Met Forward (re MET Support) as the renewals and funding issues in this report only impact positively on these areas with improved Value for Money.

Financial Implications

3. The financial impact of the proposed insurance premium arrangements is set out in the Appendix 1 and Exempt Appendix 2 and results in an overall savings of £146,767.

4. Property Reserve - In line with agreed policy it is intended that this Reserve will be built up to £2M. Following last year’s renewal and contributions made to the Reserve during the year, the current balance of this Reserve stands at £743,717. The savings on property premiums this year (compared to the premium quoted in 2007 of £1,631,893) is £426,395 (including this year’s under-spend of £200,984 on property damage and over-spend of £8,306 on Contractors All Risks). This amount will be transferred to this Reserve, making a total over the next 12 months of £1,170,112. 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.

Legal Implications

5. The Authority has the power to enter into contracts for services in connection with the discharge of their functions (including Insurance and Insurance Brokerage) under section 1 of the Local Government (Contracts) Act 1997.

6. The property and terrorism procurement tender process was undertaken by the relevant insurance brokers acting as agents for the MPA/MPS.

7. Contracts for Property and Terrorism Insurances were all awarded this year after tender processes were carried out by the Brokers. The Brokers were advised and guided by Procurement Services to ensure compliance with the Public Contract Regulations 2006, as amended.

Environmental Implications

8. There are no environmental impacts arising from the insurance related proposals in this report.

Risk Implications

9. The risk implications remain unchanged as the cover purchased is equivalent to the expiry cover.

D. Background papers

• Heath Lambert Renewal and Tender Reports 2011

E. Contact details

Report authors: 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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