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Agenda item

Agenda item

ANNUAL INSURANCE REPORT 2022

The Deputy Director of Finance submits a report to the Audit and Risk Committee which presents an overview of the Council’s internal and external insurance arrangements and provides information on the claims received in recent years, and the results of the claims handling process.

 

The Committee is recommended to note the contents of the report, and the Council’s approach to ensuring it is managing the financial risk associated with the claims.

Minutes:

The Deputy Director of Finance submitted a report to the Audit and Risk Committee which presented an overview of the Council’s internal and external insurance arrangements and provided information on the claims received in recent years, and the results of the claims handling process.

 

The Committee was recommended to note the contents of the report, and the Council’s approach to ensuring it was managing the financial risk associated with the claims.

 

The Financial Strategy and Insurance Manager presented the report and drew Members’ attention to the following:

 

·         A significant decision was how the authority purchased insurance. For most types of claim the first £200k was handled as an excess by the authority, the cost of which was managed internally.

·         External insurance was held for catastrophic cases, such as a major fire in a building, or serious injury.

·         An annual budget was held corporately which funded both the cost of external premiums and the amount paid out in deductibles.

·         Schools and the Housing Revenue Account which had a statutory ring fence on it, paid for their own shares. Other departments insurance was held corporately and not in departmental section budgets.

·         The budget setting process in February 2022 had reduced the corporate revenue budget by £0.5million, with a view to paying out less than budgeted due to good performance on claims.

·         On balance over the past seven years claims had been coming in under budget, but could be volatile between years, therefore an insurance fund was held as a corporate reserve on the balance sheet, but in practice managed as one fund. As of 2021 there was nearly £15million in that fund.

·         An external actuarial valuation to find out how much should be held to cover claims to date was being undertaken and a report should be received shortly.

·         The most significant external insurance was for property, liability and motor insurance, with a combined liability policy to cover staff and the public.

·         Externally there had been quite a lot of cost increases, particularly for property insurance, with adverse weather events still concerning insurers.

·         Other issues include an insurance provider withdrawing from the UK market post Brexit. In the future there would be a smaller market and less competition for providers that would make it difficult to get better rates.

·         Claims information focussed on areas with a lot of claims, namely highways maintenance, motor claims, and housing services. It was not a criticism of those areas for having the most claims but was the type of area, for example, trips and falls on highways. It was noted that highways was very good at repudiating claims usually around 80% defence of claims, largely due to having a good system of highways maintenance.

·         Amounts paid could be variable between years, simply depending on when bigger claims were submitted. Employer’s liability claims tended to be of higher value but were fewer in number.

 

In response to Members’ questions, the following information was provided:

 

·         The general approach to spreading risk across was with a £200k excess to keep costs low was applauded. It was asked if the authority had considered further reductions by combining with other authorities. It was reported that it would be very difficult to manage a joint policy between authorities due to legal reasons, with insurance being tied into another authority’s risk management procedures which would involve giving up a lot of control. The Head of Internal Audit concurred with the response and gave an example of the Municipal Mutual Scheme in past years which had become insolvent and for which claims were still being made.

·         Members reported that there were companies contacting tenants directly about disrepair. It was asked if it was having an effect on the number of claims being submitted to the authority. Officers reported the authority was seeing a pressure on the Housing Revenue budget. Further details would be sought from the Director of Housing and provided to Members.

·         Members were informed that they along with officers were covered under the insurance scheme when carrying out official duties apart from fraud and criminal actions.

·         Members stated that trips and bad falls could have a lasting effect, with resident claims being rejected because the height of the trip hazard being within limit. Further it was considered to be a moral issue, particularly when the elderly were involved, and that as a Council could it not show generosity, and even if it did not meet the full insurance claim, could there not be a small compensation amount given? Officers did recognise the situation. 80% of highways claims were being declined, but it did not mean that 80% of claims were fraudulent and not without injury or damage. It was further noted that insurance claims, whether externally funded or not were part of the insurance policy and the authority could only settle those claims where the Council was legally liable.

·         The table at 4.5.4 in the report was referenced, where 45% of the value of claims related to claims related to Employer’s Liability and General Property. It was questioned what was driving some of those figures. Officers responded that it was general people who had a claim through work, where claims tended to be larger in value, for example, trips and slips at work, manual handling injuries, stress claims where people could show a medical injury for the stress.

·         It was asked what prevention strategies were in place to prevent repeatable generic claims. It was responded that there were different types of claims, and, for example, there were Health and Safety measure in place through training, reviewing the individual circumstances of a claim. Also, the authority had been working with schools in particular who were part of the Council’s policies, as there had been some incidents in schools.

·         Detail on the types of motor claims was requested, and what preventatives were in place as the claims were an ongoing cost to the council. Officers responded that it had to be accepted to some extent that with such a large vehicle fleet there would occasions where the drive would be at fault having made a mistake, and there were preventative measures in place to minimise incidents, through training, policy and vehicle safety checks, and so on. It was uncertain that it would be realistic with 700+ vehicles being used most days of the year, that there would not be a number of claims, however it was noted that the vast majority of the authorities motor claims were low value.

·         It was asked if the theme of the claims were being tracked and if any measures were being put in place. It was noted that the question would be put to fleet management to ask if they were doing enough to reduce motor claims, and a response provided to Members.

·         Officers would also look at claims to see if there was a pattern within the employer’s liability claims also, for example, claims with incidents in care facilities. Fuller data on incidents would be provided, ensuring that individuals were not identified.

 

The Chair noted the report and officers’ responses to provide further information.

 

RESOLVED:

1.    That the contents of the report be noted.

2.    That the Director of Housing to be asked for information on additional pressures for the HRA budget from company claims for housing disrepairs.

3.    That information on the tracking of claims and preventative measures would be put to fleet management for a written response to be provided to Members.

4.    That Officers shall analyse employer’s liability claims for patterns, with fuller anonymised details on the types of incidents to be provided to Members.

 

Supporting documents: