Personal Insurance Indemnity Policy - progress report

Report: 12
Date: 15 February 2007
By: Treasurer and the Director of Strategy, Modernisation and Performance on behalf of the Commissioner

Summary

The 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 personnel should be indemnified by the MPA in certain tightly defined situations where their own personal life and accident insurances do not provide an indemnity.

The Finance Committee noted the contents of the first progress report supplied at the end of 2005 and asked that a further annual progress report be provided on the scheme summarising key developments since implementation of the policy.

A. Recommendations

That Members:

1. note the results of the continuing communications exercise to bring the indemnity policy to the attention of key MPS personnel and use of the policy in specific instances;
2. note the minor revisions to the policy wording to conform to current MPS Policy procedures and to make the Policy and associated Standard Operating Procedure (SOP) easier to read;
3. consider whether they wish to agree a limit of £500,000 per claim to include tax and National Insurance; and
4. note progress on the approach to the Home Office for a Central Government indemnity to MPS personnel in relation to catastrophe risks.

B. Supporting information

1. To date two further briefing sessions have been conducted with senior management teams representing areas of MPS business most likely to be affected by the policy. These sessions have been given by the Deputy Director of Strategy, Modernisation and Performance Directorate and the Head of Accident Claims to Specialist Operations (now Counter-Terrorism) and the senior management team of the CO19 Firearms Unit. These sessions have been well received and the information given has been cascaded to key personnel who may be directly affected by the policy.

2. There have been four specific enquires from MPS personnel about the policy and its application during the year

3. The wording of the policy has been slightly amended since 2005 to ensure that the policy fully complies with the required format for all MPS policy and associated SOP as well as the request from Members that it should be easier to read and be understood. The revised policy wording has been agreed by the lead representative of the Corporate Policy Unit and the Solicitor MPA. A copy of the amended Policy is attached at Appendix 1. The associated SOP is available for members in the members’ room.

4. There has also been discussion about the tax and NI liability for officers seeking indemnity under the terms of the policy. Following the receipt of advice from HM Revenue and Customs it has been confirmed that officers receiving a payment under the PIIP would have a liability for tax and NI contributions (this could be up to 40% of the possible payment). The MPS considers that officers or their Estate should not be penalised financially for having to make a claim under the PIIP and that payments made should be on the basis that the net amount paid should be equivalent to the sum that the officer would have received from his/her insurer under the terms of the policy.

5. The MPA Treasurer awaits to hear further from the APA about the proposal to enlist their support for an approach to Central Government to fund catastrophic risk claims under the PIIP. The Director of Risk Management has been in touch contact with ACPO to arrange a meeting to discuss PIIPs with the Terrorism and Allied Matters Chemical, Biological, Radiological and Nuclear (TAM CBRN) lead. This is because a force without a PIIP or equivalent may be regarded as placing the national programme to increase the number of CBRN trained officers at risk. It is hoped that the ACPO TAM CBRN lead will take up the matter with Ministers.

Abbreviations

ACPO

Association of Chief Police Officers

APA 

Association of Police Authorities

MPA 

Metropolitan Police Authority

MPS 

Metropolitan Police Service

NI

National Insurance

PIIP 

Personal Insurance Indemnity Policy

SOP

Standard Operating Procedures

TAM CBRN

Terrorism and Allied Matters Chemical, Biological, Radiological and Nuclear

C. Race and equality impact

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

D. Financial implications

To date there have been no claims for indemnity under the policy and no money has been paid out under the policy.

The proposal to bear any tax and NI liability (paragraph 4) could be a significant additional cost on top of the indemnity cost. In the worst case a payment of £500,000 plus maximum tax liability would cost the MPA £700,000. It would be open to the Authority to agree the limit of £500,000 per claim should be applied as a ceiling to include any tax and NI liability. Members are asked to consider this.

E. Legal implications

The changes to the policy and standard operating procedure are in accordance with advice from the MPA’s external lawyers, and are designed to make interpretation easier and avoid disputes. The provision of an indemnity in accordance with the policy is considered to be within the powers of the MPA.

F. 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 2005 Progress Report on the Personal Insurance Indemnity Policy

G. Contact details

Report author: Nick Chown, Director of Risk Management MPS

For more information contact:

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

Appendix 1: Metropolitan Police Service Personal Insurance Indemnity Policy

Introduction

The Metropolitan Police Service (MPS) Management Board and the Metropolitan Police Authority recognise the need to ensure that in certain situations MPS police officers and police staff are indemnified by the Metropolitan Police Authority (MPA) where their own qualifying insurance fails to provide an indemnity or where the member of staff cannot obtain qualifying insurance or only at an excessive premium.

The meaning of words and phrases in italics is shown in the glossary at the back of the Standard Operating Procedure (SOP) associated with this policy.

Application

This policy applies with immediate effect.

All police officers and police staff, including the extended police family and those working voluntarily or under contract to the MPA must be aware of, and are required to comply with, all relevant MPS policy and associated procedures.

This policy applies to MPS police officers and police staff who are or may be engaged in high risk duties.

Purpose

The purpose of this policy is to provide an indemnity to MPS police officers and police staff who are or may be engaged in high risk duties who all must comply with this policy and the associated SOP.

Scope

This policy:

• applies with immediate effect on a continuous 24 hour basis, irrespective of the nature and destination of the duties being performed;
• does NOT extend to police officers or police staff seconded to the MPS; and
• is subject to conditions set out in the associated SOP.

Policy Statement

MPS employed officers and staff:

• are responsible for arranging their own adequate insurance cover;
• must make full and accurate disclosure of high risk duties to their insurers unless this contravenes operational security requirements;

Those who are not able to make a full disclosure must comply with the steps set out in the SOP associated with this policy.

Benefits

The availability of the indemnity provided by this policy and associated SOP will provide reassurance for MPS police officers and police staff who are or may be engaged in high risk duties who may find themselves in a situation where their qualifying insurance fails to provide cover or is not available.

This policy also demonstrates the willingness of the MPA as an employer of choice to address issues of concern to MPS police officers and police staff in the performance of their duties in today’s society.

Responsibilities

The Business Risk Management Team (BRMT) owns this policy and is responsible (together with Accident Claims) for implementing, monitoring and reviewing the policy

For further information about this policy and associated SOP please contact Gordon Mitchell/Nick Chown, of the BRMT, on extension 782944/1 or Mike Birt of Accident Claims Unit on 58902

Associated Documents and Policies

• Personal Insurance Indemnity SOP
• Overseas Travel Policy and associated SOP
• Information from the Association of British Insurers at www.abi.org.uk

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