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 2025/26 was presented for the committee’s consideration. The annual report outlined the Council’s current insurance arrangements, claims activity and key trends and challenges.

The Head of Audit and Risk presented the report noting that the Council uses a combination of self-insurance and external cover to address the financial consequences of risk. To meet the self-insured element of any claims, the Council maintains an Insurance Fund within an earmarked reserve and an Insurance Provision account. The fund is reviewed annually to ensure it is sufficient to meet the liabilities without being over resourced. Working with insurance broker, Marsh, a comprehensive tender exercise was undertaken in 2024 and a 3 year contract was awarded to Zurich Municipal, the incumbent provider. The tender process highlighted that elements of the sums insured were out of date, which led to a comprehensive revaluation of building sums insured during the first year of the policy to ensure accurate cover. Following policy renewal in October 2025, external premiums increased due to sector wide rate rises and claims performance, particularly in relation to property.

The Head of Audit and Risk confirmed that overall, claims volumes remain stable with strong repudiation rates, though pressures persist in specific areas. Public liability claims remain consistent with high repudiation rates and modest settlements, although 71% of 2025/26 claims have yet to be concluded. Motor claims have stabilised, with 53% of claims in 2025/26 attributable to errors by the Council’s own drivers; these are being addressed through continued monitoring and driver assessment. Property claim numbers and costs  have been highly volatile, representing the Council’s largest financial exposure with storm damage and house fires a factor. Although the number of property claims in 2025/26 reduced significantly compared to the previous year, the damage suffered and therefore the total claims cost were significant. 

She highlighted increasing risks and challenges, including climate change impacts, new WHQS 2023 requirements, inflation and the Council’s past claims history, all of which are expected to increase premiums in the coming years. Demonstrating that the Council has acted on lessons from significant claims and has controls in place to mitigate risk will be essential in minimising future premium rises.

The committee questioned how potential insurance claim excesses are accounted for when setting the annual budget. The Director of Function (Resources)/Section 151 Officer explained that the Council holds a budget to cover both insurance premiums and potential excesses which is supported by a provision on the balance sheet that is reviewed regularly. The provision increases or decreases depending on the value of outstanding claims and whether an adjustment to premiums is required. He noted that premiums form the main cost while movements in the provision fluctuate each year according to claims activity.

The committee was also informed that, as Anglesey is the only authority in the region that publishes a publicly available annual insurance report, no comparative benchmarking data is available.

It was resolved to note the trends identified and mitigations set out in the Annual Insurance Report for 2025/26.