Agenda item

Corporate Services (C-012-2021-22) – to agree to retender our corporate insurance contracts.

(1)        The Cabinet approved the procurement and re-tender of the Council’s insurance contracts on a three-year long-term agreement (LTA) with the option of extending for a further two years to be effective from 1st July 2022; and

(2)        The Cabinet approved delegation of the contract decision and final award of contract to the Strategic Director/S151 Officer.

The Corporate Services Portfolio Holder and the Section 151 officer introduced the report on the upcoming insurance tender.

They noted that obtaining insurance from the insurance market was part of the risk transfer mechanism in risk management. The Council had a range of insurance policies that provide financial protection against insurable risks. The classes of business include public liability, employer’s liability, motor fleet, property and engineering along with a number of miscellaneous covers.         

The Council’s insurance programme was last tendered in July 2015 on a five-year long-term agreement (LTA) with the option to extend for a further two years. The current arrangement would expire on 30 June 2022. Owing to the value of this contract which currently stands at approximately £900,000 p.a there was a requirement to undertake a full Tender exercise on the open market to ensure the Council obtained the most comparatively advantageous terms. It was recommended that we tendered for a three-year long-term agreement (LTA) with the option of extending for a further two years.

The current insurance policies are provided by Zurich Municipal Insurance through a package arrangement. The only exception being the airside liability cover which has been placed with Global Space.

There are other providers in the market who specialise in Public Sector risks and who will find EFDC an attractive proposition, thus providing competitive challenge to the Zurich Municipal rates currently being charged.

Councillor Philip asked that the relevant calculations would be done in time to feed into the budget process for 2022 and if when covering some risks ourselves would that come from the General Fund Reserves or was Capital set aside to use. Mr Small was not sure if they would have the figures in time for the budget process, but they would put some conservative assumptions into the budget and work around that. Any self-insurance provision would provisionally be a revenue provision and any provision would have to be earmarked within revenue budgets as we could not use capital for that purpose.

Councillor Patel asked how they saw the impact of Covid impacting on our insurance premiums going forward. The reason for asking was he wondered if there was any upside in looking for a longer or shorter period for this contract. He was told that they should ask how had Covid increased claims and they were not sure that it had for any of the risks that the council had to insure for. We were working with insurance advisors to help us through this exercise and it was their opinion that this was set at a correct timescale. Councillor Patel asked if the Council balanced the cost of the excess when processing a claim; what was the thought process around processing some of the smaller claims. He was told that was something that they wanted to test through this procurement exercise looking to see how we could set excesses at different thresholds and then do a cost benefit analysis.

Decision:

(1)        The Cabinet approved the procurement and re-tender of the Council’s insurance contracts on a three-year long-term agreement (LTA) with the option of extending for a further two years to be effective from 1st July 2022; and

(2)        The Cabinet approved delegation of the contract decision and final award of contract to the Strategic Director/S151 Officer.

Reasons for Proposed Decision:

The current insurance arrangements expire on the 30 June 2022 creating a need to re-tender the Council’s insurance programme to ensure we were achieving value for money and to comply with the Procurement rules owing to the significant expenditure involved. Failure to ensure that insurable risks are insured with external providers would expose the Council to significant financial risk.

Cabinet approval was required as this is a key decision.

Other Options for Action:

The Council’s current insurance policies cease in June 2022 and there are no other options but to re-tender the Council’s insurance programme.