Insurance And Liability Provision

Report: 11
Date: 23 September 2004
By: Treasurer

Summary

This paper describes the insurance renewal programme 2004/05 and seeks approval. Delegation to the Treasurer is proposed to enable agreement for some outstanding insurance matters. A limited extension to the scope of the Authority’s general indemnity provision for named Volunteer Forensic Accountants is also proposed.

A. Recommendation

1. that the insurance renewal proposals be operative from 1 October 2004;
2. the proposed approach to outstanding insurance matters (paragraph 1a to 1e in the linked exempt appendix – Agenda item 21);
3. the Treasurer be given delegated authority to finalise arrangements for outstanding insurance matters;
4. that four named ‘Volunteer Forensic Accountants’ are added to the Authority’s general indemnity in respect of professional liability, subject to the Deputy Clerk agreeing a suitable amendment; and
5. subject to the agreement of the Clerk and Treasurer, future ‘named’ specialist volunteers using their professional skills to aid the MPS in an agreed capacity be added to the Authority’s general indemnity arrangements.

B. Supporting information

Insurance Renewal

1. Willis, the Authority’s insurance advisors have now prepared their renewal programme for both liability and property insurances, to be effective from 1 October 2004. Details of the renewal are included in the linked exempt appendix (Agenda item 21), which summarises the renewal position on each major class of insurance, including options for members consideration where appropriate.

2. The results of the 2004 broking exercise has suggested that the MPA insurance strategy is beginning to work, and in particular Willis have identified that four new insurers have indicated a willingness to participate in the liability programme, the liability programme itself has stabilised, premium rating reduction have been achieved on the property programme and a 3 year long-term agreement with one of the liability underwriters has been proposed.

Indemnifying the Liability of ‘Specialist Volunteers’ Within the MPS

3. In August 2003, the Economic and Specialist Crime OCU working in partnership with the Institute of Chartered Accountants began establishing the Volunteer Forensic Accountants scheme. The objective was to utilise the skills of qualified ICA members in serious economic crime investigations and prosecutions.

4. There are now four volunteers on this scheme. The attached Appendix 1 gives a more detailed description and the benefits of the scheme. However, the issue of professional indemnity cover for the volunteers needs to be addressed. The volunteers’ own professional liability indemnity cover is not appropriate. Neither is it possible, at present, to apply the MPA’s own general indemnity arrangements (agreed on 9 June 2003).

5. It is therefore proposed that the Authority’s general indemnity be amended to add ‘specialist volunteers’ to the existing indemnity cover simply by updating the existing document to include an additional category of ‘unpaid specialist volunteer’ to those ‘employed’ and naming the individuals and the capacity in which they are acting.

6. It is proposed that if members are content with this approach, that the Deputy Clerk be authorised to agree a suitable form of wording to amend the existing general indemnity as a matter of urgency.

C. Race and Equality impact

1. There are no specific implications resulting from the general insurance renewal programme.

2. Support to participants in the Volunteer Forensic Accountants Scheme allows public-spirited individuals to aid the ‘fight against crime’ in a wider variety of roles and tasks than the traditional one of a warrant card carrying uniformed Special Constabulary Officer with all their associated legal powers, physical duties and requirements. In this way the scheme allows people with professional or life skills to use them to support police in an effective yet perhaps less confrontational way. Because of this, the scheme allows individuals who would have previously encountered difficulties in offering their services to come forward, including the disabled, older citizens and those from minority groups who may not wish to be in the ‘full glare of the spotlight’.

D. Financial implications

1. The linked exempt report outlines the costs resulting from the insurance renewal programme.

2. The exact financial implications to the Authority of indemnifying ‘specialist volunteers’ are difficult to quantify, as this issue is more a question of ‘potential risk’. It would be difficult to give an average cost of a successful litigation against police as damages are set on the exact circumstances of the case.

3. However, it is felt that adding a small quantity of named, professional ‘volunteers’ to the thousands of ‘paid employees’ already covered by the Authority’s general indemnity does not significantly alter the level of ‘risk’ as:

• These individuals are highly qualified and experienced professionals acting in their own arena
• The MPS is taking due care with regard to their vetting, selection, supervision, mentoring and training including ‘quality assuring’ their work prior to future court proceedings
• The exclusions of the existing indemnity will still apply with regard to ‘deliberate acts’ of negligence or impropriety, meaning that only honest or unforeseeable errors are indemnified
• The MPS will clearly notify the specialist ‘volunteers’ of the extent of their ‘professional indemnity’ to avoid confusion and ensure compliance.

4. This should be contrasted against the real financial risks associated with not supporting such an indemnity, such as dwindling numbers of participants or recruits leading to increasing or continuing high ‘professional charges’ and potential litigation against the Authority by professionals who have been placed at ‘risk’ by assisting police with no ‘safety net’ in place.

E. Background papers

• Metropolitan Police Authority indemnity cover document- Finance Committee meeting 9th June 2003.

F. Contact details

Report author: Ken Hunt Deputy Treasurer, Stuart Dark, Detective Chief Inspector, Economic and Specialist Crime OCU (SCD6)

For more information contact:

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

Appendix 1

Specialist Volunteers within the MPS

1. The Metropolitan Police Service is committed to developing new approaches to policing that will enhance efficiency, effectiveness and partnership working.

2. The use of ‘Volunteers’ in policing is one such innovative approach that has caught the public’s imagination. The Home Office, industry and the MPS support it. The size of the scheme is likely to increase in the future as opportunities for using volunteers are identified and developed.

3. Under the scheme, suitable members of the public who wish to assist police may now do so in a variety of roles. These roles might be of a general nature such as aiding at the front counter of the local police station (following suitable training), or ones that require the application of a specific skill, qualification or attribute that the volunteer already possesses.

4. In August 2003, the Economic and Specialist Crime OCU (SCD6) working in partnership with the Institute of Chartered Accountants began establishing a pioneering ‘Volunteer Forensic Accountants scheme’ in line with this concept. The idea being to utilize the specialist skills and experience of professionally qualified Chartered Accountants in serious economic crime investigations and prosecutions, thereby building up a ‘pool’ of increasingly experienced individuals to enhance police effectiveness and generate substantial cost savings.

5. There are now four volunteers on this particular scheme, who have undertaken many hours of unpaid analysis to date. Given that the figure for engaging the services of such professionals is estimated to be in excess of £130 per hour and MPS legal services have recently quoted a comparative figure of £5000 to £10,000 to use a similarly qualified accountant in an impending ‘cash seizure’ action at court the savings are clear.

6. However, during an ‘end of first year’ review of this scheme it has been established that the question of ‘professional liability’ is an issue causing ‘volunteers’ anxiety, and this is particularly so for those using their specialist skills in an associated policing context.

7. The volunteer concept and in particular the ‘SCD6- Volunteer Forensic Accountant scheme’ was initiated after the Authority agreed its indemnity cover policy (item 12- Finance Committee- 9th June 2003). Consequently, this policy only refers to ‘employees of the Metropolitan Police Authority’ as being indemnified by it and does not take those assisting it by acting as ‘volunteers’ into account.

8. Enquiries which include the Home Office and Counsel employed by the MPS’s Legal Services have shown that these ‘professional volunteers’ currently hold no ‘professional indemnity’ by virtue of their unpaid, volunteer status under the strict wording of this policy, as they are not ‘employees’.

9. SCD6- Volunteer Forensic Accountants’ provide significant factual evidence that is often fundamental to the prosecution case in serious economic crime. Consequently, they are required to provide statements for court, give evidence and make themselves available to cross-examination. All of these activities bring their judgement and skill into a critical, sometimes confrontational environment, which they would not ordinarily be exposed to if they were not helping police.

10. If such a serious, economic crime case were to fail, litigation for damages and loss of reputation etc may be complex, lengthy and costly and significant damages may be awarded if such an action is lost.

11. By virtue of this, the ‘volunteers’ existing own ‘professional liability indemnity’ policies are not fit for purpose as to use a comparison, ‘it would be like using your third party, fire and theft car insurance for business purposes’.

12. It therefore seems inequitable that all ‘employees of the Metropolitan Police Authority’ involved with an investigation, acting in good faith, are protected by this ‘umbrella of protection’ and by their respective trade associations and yet a public-spirited individual aiding them in a professional capacity is not.

13. Advice from counsel engaged by the MPS on this question shows that if Authority members are minded to add ‘specialist volunteers’ to the existing indemnity cover this can be simply done by updating the entire document to include an additional category of ‘unpaid specialist volunteer’ to ‘those employed’ and naming these individuals and the capacity in which they are acting.

14. A potential definition of a ‘specialist volunteer’ would be words similar to:

• “A professional person vetted and selected to act as an unpaid ‘volunteer’, using their particular skills at the direction of, and in support of, the Metropolitan Police Authority/Metropolitan Police Service”.

15. This appears to be the only viable option as it is counsel’s opinion that the Authority would be on difficult legal ground if it attempted to classify the volunteers as ‘employees’ solely for the purpose of ‘shoe-horning’ them into the indemnity’s existing wording, as they are not legally ‘employees’ and there are also implications around the potential for them to claim associated ‘employees rights and privileges’ as a consequence of any intimation of this status.

16. Counsel for the MPS has offered to draft this minor amendment in consultation with the Authority as a matter of urgency. In view of the urgency it would be appropriate for the Deputy Clerk to scrutinise and agree a suitable amendment.

17. The first appearance of a ‘specialist volunteer’ at a contested court hearing takes place on the 14 October 2004.

DCI Stuart Dark, Economic and Specialist Crime OCU (SCD 6)

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