Agenda item

To present the report of the Head of Audit and Risk.

The report of the Head of Audit and Risk incorporating the Annual Insurance Report for 2020/21 was presented for the Committee’s consideration. The report provided information about how the Council has managed its insurance activity over the last five years and its challenges going forwards.

The Risk and Insurance Manager provided an overview of the summary of claims included in Appendix A to the report which provided a breakdown per policy per financial year for the Council as a whole of the number of claims that have been paid; those settled without cost or payment being made and those where the claim has not yet been settled. It was emphasised that not all “still open” claims that have a reserve against them will be paid or settled for the amount reserved which is especially true of liability claims which are often settled for much lower sums or at no cost at all. Also, the number of claims might increase over time as claims are sometimes presented several years after the event. There are 4 public liability claims that pre-date the timescale covered by the report that remain open and for which there are outstanding reserves of approximately £215k.

Some of the key points to be noted include the following –

·         The Council uses a combination of self-insurance and external insurance to address the financial consequence of risk; in some cases the Council has arranged external insurance but self-insures a large proportion of the claims paid by opting for a large excess.

·         The external premiums paid in 2021/22 were approximately £718.5k (an increase of 8% since 2020/21) including £73k of insurance premium tax. Whilst a proportion of the increase relates to inflationary factors, there have been rate increases as a result of losses incurred by insurers globally due to weather events and should not therefore be considered as specific to Anglesey.

·         The number of claims for personal injury presented by employees (Employers Liability Claims) remains low at 2 to 3 per year over the 5 year period.

·         The number of public liability claims has continued to fall over the last five years; whilst historically, injury to road users and damage to other vehicles on the highways make up a significant proportion of these claims the number of highways related claims remains low with only 10 such claims having been made since April, 2021. Claims incurred by other services are few but include claims with high reserves relating to child protection issues and a maritime related claim which together have reserves amounting to £325k.

·         The number of motor claims has fallen over the last two years which can be attributed to fewer officers travelling during the pandemic. The cost of motor claims has however increased due to the increased cost of parts, increased cost of hire cars and the increased sophistication of modern vehicles.

·         Property claims are primarily driven by the weather with Storm Ophelia and more recently Storm Arwen having caused damage to Council property.

·         Overall, the trend is that the number of claims are low; however claims are becoming more expensive.

The Risk and Insurance Manager advised that looking forward although the pandemic has had a positive impact on claim numbers it has introduced new risks in the form of new ways of working and home working arrangements which could give rise to claims of a different nature; the pandemic also saw an increase in fraudulent activity and fraud in the form of fictitious or exaggerated claims remains a possibility post pandemic. Climate related incidents are on the increase and have a serious impact on both individuals and communities and on insurers in terms of the costs of settling the resulting claims. Generally the cost of claims is rising which in the case of non-injury claims is due to the increased cost of parts and materials and in the case of injury claims is due to the cost of care as people live longer and prognosis gets better. All these factors will affect the amounts that insurers pay to settle claims and will in turn drive up the premiums charged meaning that it is important that the Council continues to implement risk management and risk reduction measures. Managing risk well can allow the Council to accept more risk by increasing excesses and deductibles, thus keeping the balance between the risks insured and the cost of the premium.

In response to questions by the Committee, the Risk and Insurance Manager advised that with regard to reviewing excess levels, the Council has a long-term agreement with its current insurers within which there is an annual renewal process which includes checking the ongoing appropriateness of excesses. Where it is deemed that a different excess is required an alternative quotation might be sought or the insurer itself might vary its terms including the excess and/or cap levels. She confirmed that a brokerage service was not used when the insurance contract was last tendered but doing so would be considered for the next re-tendering exercise to overcome some issues that had arisen in the process. The contract was last re-tendered 5 years ago on the basis of a competitive tendering process in accordance with a national procurement framework.

It was resolved to accept the Annual Insurance Report for 2020/21 and to note its contents.