Issue details

21/00082 - Insurance Tender - Award of Insurance Programme Contracts

Proposed decision

The Cabinet Member for Finance, Corporate and Traded Services to agree the award of a new contract for Kent County Council’s insurance arrangements to the successful provider identified through a procurement exercise for the period of 3-5 years, with the possible option to extend for a further 1-2 years.

 

Reason for the decision

The current insurance programme was due to be tendered during 2020 but as a result of the impact of Covid-19 and the volatility in the market, a decision was taken to agree one-year policy extensions.   The tender process re-commenced in 2021 and new arrangements are due to be in place for 1st January 2022. 

 

Background

Insurance cover is required to protect the Council’s financial position in respect of losses it may suffer when undertaking its business.  

 

Kent County Council’s main insurance programme is currently held with Zurich Municipal under a 5-year Long Term Agreement.   The agreement requires Zurich Municipal to provide cover by way of casualty (Public Liability & Employer’s Liability), motor and property policies.

 

Options

Kent County Council has three options, when the arrangement with Zurich Municipal ends on 31st December 2021, 

 

1.    To seek a further 12-month extension to the current programme. 

2.    To do nothing and self-insure without additional insurance cover.

3.    To undertake a tender exercise to procure a new insurance programme 

 

It is recommended the Council proceeds with a tender exercise to procure a new insurance programme for the next 3-5 years.  Whilst a further extension might be available, the proposed terms are currently unknown, and it is likely that prices would be increased in the absence of competition.  

Proceeding without insurance cover is not recommended as the Council would risk significant claims spend – particularly if a total property loss was to be suffered or a catastrophic personal injury claim was to be received. 

 

How the proposed decision meets the objectives of ‘Setting the Course’: Kent County Council’s Interim Strategic Statement 2021-2022’

 

The proposed decision responds to the financial challenge articulated in ‘Setting the Course’ as the insurance tender will seek to secure value for money. 

 

Decision type: Key

Reason Key: Expenditure or savings of more than £1m;

Decision status: For Determination

Division affected: (All Division);

Notice of proposed decision first published: 16/09/2021

Decision due: Not before 15th Oct 2021 by Deputy Leader and Cabinet Member for Finance, Corporate and Traded Services
Reason: in order that the proposed decision can be published for a minimum of 28 days, in accordance with statutory requirements

Lead member: Deputy Leader and Cabinet Member for Finance, Corporate and Traded Services

Lead director: Zena Cooke

Contact: Lee Manser, Insurance Manager 03000 416428 Email: lee.manser@kent.gov.uk Email: lee.manser@kent.gov.uk.

Consultees

The proposed decision was considered by the Policy and Resources Cabinet Committee on 22 September 2021 and was endorsed. 

 

Financial implications: The three available options all carry financial uncertainty. The insurance fund provides cover for these but the recommended option of proceeding to tender, is considered to carry the least amount of risk in terms of financial impact. Extending current contracts – the terms of these extensions would be unknown at this stage, and it is likely that premium prices would further increase in the absence of competition. To do nothing and self-insure – the Council would have no insurance cover and be totally exposed to unpredictable expenditure. The premium spend would be saved but there would be potential for significant claims spend. Complete the tender exercise – the market remains unsettled but there has been the emergence of several new insurance companies since the last tender in 2015 and a tender provides the opportunity for the Council to test the market and hopefully reduce premium spend

Legal implications: The Council will be supported throughout the tender process by its broker Gallagher, who will complete the evaluation process on its behalf and ensure that all legal requirements are upheld appropriately.

Equalities implications: An Equalities Impact Assessment has been carried out and no adverse impacts have been identified.

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