Issue - meetings

Report of the Director of Finance and Corporate Resource

The Cabinet considered a report of the Director of Finance and Corporate Services that sought approval of a procurement process to purchase further insurance for a range of services for a period of up to 5 years. 

The Council purchased a variety of insurance policies including property, terrorism, contract works, fine art, combined liability, crime, personal accident and travel, school journeys, computers, medical malpractice and motor fleet.  These insurance policies were procured via an OJEU compliant ESPO/CCS framework. The contract would expire on 30 November 2020. The Council’s Financial Procedure Rules required that the Cabinet approved any procurement which involved an annual contract value in excess of £1m per annum.

The Council’s activities resulted in a certain amount of predictable financial loss. It was not considered financially viable to insure against all these losses, as the insurance company will charge a pound in premium for each pound it anticipates it will pay in claims. In addition, it will charge a further amount for its administrative expenses, profit and insurance premium tax. In these circumstances the purchase of insurance is uneconomic. The Council’s strategic approach to the purchase of insurance was to insure large losses which would have a significant impact on budgets and the provision of services. This was achieved by purchasing insurance with a deductible (the amount you pay before your insurance is triggered). The Council carried substantial self-insurance and the external insurance cover protected the Council above the policy deductible. Most losses/claims were paid from the Council’s internal self-insurance fund.

In 2019-20 the Council’s premiums amounted to £941,588 plus £112,990 for insurance premium tax. There was an additional charge of £66,360 for claims handling services. The total was £1,120,938.

This report sought approval for the Council’s nominated insurance broker, Arthur J Gallagher, to carry out a further competition (on behalf of the Council) against an OJEU compliant DPS (ESPO 649) for insurance services. The intention was to enter into a three-year contract with the potential of a further 2 years extension period. A one-year contract would only be accepted if premiums were much higher than anticipated.

RESOLVED that the Cabinet:

1)  Grants authorisation for Arthur J Gallagher to (on behalf of the Council) carry out a further competition against ESPO 649 Framework for Insurance Services for a period of up to 5 years.

2)  Grants delegated authority to the Deputy Chief Executive (People) and the Director of Finance and Corporate Services, following consultation with Director for Law and Governance, to undertake all necessary due diligence and, following completion of the competition, to agree the contract award to the successful suppliers under the Framework.

3)  Grant authorisation to the Director of Law and Governance to enter into a 3-year contract (with a potential extension for a further 2 years) with the successful suppliers.