Agenda item

Report of the Interim Chief Executive (Section 151 Officer)

The Cabinet considered a report of the Interim Chief Executive (Section 151 Officer) which indicated that the Council purchases a variety of insurance policies including property, business interruption, contract works, fine art, employers’ liability, public liability, crime, engineering inspection, personal accident and travel, school journeys, computers, and motor fleet. These insurance policies were procured via an Official Journal of the European Union (OJEU) compliant Eastern Shires Purchasing Organisation (ESPO) framework. The three-year contracts will expire on 30 November 2023 and there are options to extend the long-term agreements for two further years.

The Council’s Contract Procedure Rules require Cabinet to approve any procurement which involves an annual contract value in excess of £1m per annum.

In 2022-23 the Council’s premiums were £1,517,000 including insurance premium tax. There is an additional charge of £66,000 for claims handling services. The total is £1,583,000. This total includes a premium for terrorism insurance of £75,000.

Cabinet noted that the purchase of terrorism Insurance will be outside of any tender. The reason for this is that terrorism insurance is provided by the Lloyds of London insurance market, and they do not respond to local authority tenders. The provision of the insurance through Lloyds will involve a traditional purchase of insurance using multiple insurers via, what is known as a line slip. This method is not suitable for procurement routes and there is no available framework that will address this. Terrorism insurance is specialised and involves significant input from the Insurance Broker who models potential maximum losses based on certain terrorist type events to ensure best value.

For the remaining insurances, the intention is to run a further competition on those insurance policies where the Insurer has not honoured the long-term agreements (contractually they can do this) and have indicated that they require a further rating increase in 2023-24. Early consultation with an Insurer indicates a rating increase of 10%, which would be in addition to increased premiums caused by sums insured going up. Where an Insurer has indicated that the rate will not go up (premiums may still increase because sums insured have gone up) the recommendation is for the Council to extend the long-term agreements where this can be done.

The intention is to appoint Arthur J Gallagher via low value Direct Award through the Yorkshire Purchasing Organisation (YPO) 964 Framework to act as Insurance Brokers for the Council. Arthur J Gallagher will then in turn run a further competition under the YPO Insurance Placement Dynamic Purchasing System (DPS) on behalf of the Council, where the contracts cannot be extended at the rates provided by the current long-term agreements.

RESOLVED that the Cabinet:

1)  Grants authorisation for Arthur J Gallagher to (on behalf of the Council) carry out a further competition against a YPO Insurance Placement Dynamic Purchasing System for a period of up to 3 years (with a potential extension for a further 2 years) on those policies where extensions of the long-term agreements cannot be obtained at the current rates.

2)  Grants delegated authority to the Interim Chief Executive (Section 151 Officer), following consultation with the Chief Legal Officer, 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)  Grants authorisation to Interim Chief Executive (Section 151 Officer) to enter a 3-year contract (with a potential extension for a further 2 years) with the successful suppliers.