A presentation to explain the Council’s insurance arrangements, including the types of covers the Council has and does not have in place, and to provide the Committee with the opportunity to ask questions about the Council’s insurance arrangements
Minutes:
The Head of Audit and Management Assurance and the Insrance & Risk Manager gave a presention, a copy of which had been circulated to each Member and a copy of which appears as Appendix 'A' to these Minutes in the Minute Book.
The presentation provided an overview of the Council’s insurance arrangements, including the types of covers the Council does and does not have in place. The Committee were told that the Council’s annual internal and external insurance spend was £4.2 million. It was explained that this gross cost was not drawn entirely from the general fund. This also included costs charged to the Housing Revenue Account (HRA) relating to the Council’s housing stock. The cost of the Insurance team including 5 full-time employees and also normal excess payments is also included.
The Committee were told that BCP had inherited and been operating with a variety of insurance arrangements from the legacy Councils. April 2023 would be the first time that a fully tendered BCP insurance arrangement would be in place.
Members were informed that there are around 800 claims per year on aggregate. More specifically, 100 of these claims relate to buildings and contents. It was explained that an example of when the number of types of claim was high was when the area experienced storms and strong weather earlier in the year.
Third party claims totalled 475. Members heard that these claims often related to public liability and would normally be due to trips and slips, potholes or tree damage for example.
230 of the claims involved the Council’s other, more specific insurance policies. These include: business interruption, official’s indemnity, professional negligence, libel & slander, fidelity guarantee, motor, mechanical lifting bridges, engineering inspection, engineering insurance, fine art, personal accident & marine.
It was explained that the Council repudiated around 80% of the third party insurance claims it faced but would pay claims where legally liable. The Committee were told that the Council’s Insurance Team were responsible for observing trends with the number of claims in order to monitor the Council’s statutory responsibilities were being fulfilled, such as the maintenance of potholes.
The Insurance & Risk Manager explained that when the need to claim on insurance arose, the Insurance Team would submit an electronic form to the insurer as soon as a damage or loss occurred. It was explained that not all events were insured and that the Council can, in most intances, choose what is covered. This selection of coverage is normally listed as ‘perils’, with differing levels of coverage applying to different premises or items.
The Committee were told about the variety of assets, events and situations that were covered in the Council’s insurance policy. These premium policies included but were not limited to: insurance of the two lifting bridges in Poole, terrorism, drone flying, and select events such as the Air Festival. Members heard that it was not economic to insure all risks and that all decision that are made around insurance policies are balanced, this includes the tendering process.
It was explained that the insurance tender would result in a long-term agreement (LTA) which may be linked to inflationary factors each year, resulting in a possible increase in absolute cost terms.
The Committee asked questions of the Head of Audit and Management Assurance and the Insurance & Risk Manager on the presentation.
It was clarified that the term ‘fidelity guarantee’ related to an event of theft by Officers of Council property. It was explained that in the case of ‘accidental losses’, despite the Council’s reasonable duty of care, damage can occur. The example that was used was storm damage.
The Monitoring Officer offered to respond to several questions from Councillors outside of the meeting, these questions included:
• Potential conflicts of interest between Council and claimants.
• Whether there was any cover for the outcome of employment tribunals.
The Committee heard that the Council sought to take out cover that was widespread, however it could not reasonably cover everything. On this basis, the Council’s Insurance Team would learn from events that have happened elsewhere and would review claim patterns nationally to assess how best insurance coverage should be applied.
Members heard that the Insurance Team had a key role in liaising with different services and that observing trends and agreeing mitigations with offciers was imperative to minimize losses and costs to the Council..
It was explained that the claims process would certainly slow down if a large volume of claims was received in a short period of time. This was evident after the storms earlier this year. There are legal timeframes and deadlines, however, that the Insurance Team must work to and these timeframes are often very lengthy, giving the team a ‘reasonable’ time to respond to complex claims in a manner that is thorough and professional.
The Committee heard that the insurance of highways infrastructure was not normally offered by the insurance market and that learning from others was a key part in insuring BCPs seafront aspects.
RESOLVED that the Audit and Governance Committee notes the update on the BCP Council Insurance Arrangements together with the specific additional comments made during the discussion at the meeting.
The Chairman thanked officers for their presentation and contributions to the meeting. Members were informed that there would be an additional Committee meeting that would seek to cover some of the following items: the risk register, financial sustainability and transformation. This additional meeting was suggested to be on Monday 10 October at 18:00 and would be confirmed with Democratic Services nearer the time.
The Chairman gave a short statement on the passing of Queen Elizabeth II before bringing the meeting to a close.
NOTE: The Chief Executive announced, during the meeting, that Queen Elizabeth II had died.