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The governing body of the school may wish to competitively compare the insurance and risk management services provided by the Council with the insurance market. When doing this there are several issues to be considered:
- the cover that is required
- accessing the insurance market
- evaluation of any quotations that are obtained
- other services required in addition to insurance.
Insurance cover required
It is a requirement that schools wishing to purchase insurance cover outside of the arrangements provided by the Council must ensure that the insurance matches the standard of cover available through the Council. Minimum insurance standards can be obtained from the Insurance and Risk Management Section.
Accessing the insurance market
Schools will require the assistance of an insurance intermediary to enable them to obtain competitive quotations from the marketplace. Before deciding upon a broker, the schools governing body must ensure that the broker is the most able to provide best value advice and assistance in the procurement of insurance services.
It is recommended that any schools wishing to obtain alternative quotations use a broker that is affiliated with the Financial Services Authority, the insurance sector regulatory body.
When engaging the services of a broker, school will need to consider the following:
- the wording of any contract for services, the period of engagement of the broker, service levels and termination rights.
- on what basis is the brokers' fee chargeable - commission based through the insurer or fixed fee payable by the school.
- services that will be provided by the broker before and after the inception of any policy and how will these be chargeable.
- Who will handle advice and policy enquiries.
- How, and by whom, will any claims be handled. This is of particular importance in relation to claims for personal injury where the Civil Procedure rules apply.
The appointed broker will assist the school in preparing a market presentation and will then approach insurers who have expressed an interest in that sector of business.
The broker will require the following data for the presentation, please note that this list is not intended to be exhaustive:
- Building and Contents Sum insured
- construction details of the school, such as traditional brick or other materials
- fire and security alarm systems installed
- the schools health and safety policy
- budgeted payroll
- salary of the highest paid employee
- the number of full time staff employed
- pupil numbers
- the number of volunteers
- details of claims made by and against the schools for a five year period.
Evaluation of quotations
Provision of all classes of insurance contract are regulated by the Financial Services Authority. In addition, there is a security assessment that is used by all major insurance brokers to safeguard their clients' interests.
Schools will need to decide in advance the criteria on which the decision to accept any policy will be based. Will they be based on price alone or other factors such as policy wording, level of cover and proposed claims handling service? Schools will also need to decide the technical and financial criteria that will be used to assess the respective merits of the insurers who respond to the formal tender invitation, and who will carry out this evaluation.
Ensure that a specimen copy of the proposed policy is provided with the written quotation so that the level of cover, policy excesses, any conditions imposed and any exclusions from cover are clearly stated and understood before any commitment is made. An experienced broker will be able to report on the comparitive merits of the different policies and advise on which is the best buy.
Schools may wish to consider taking a contract with a particular insurer of, for example, three years and find out whether or not it would be placed on a fixed premium irrespective of the prevailing claims experience. If this is not the charging basis, agree in advance how any revision of rating would be proposed and specify by what date prior to annual renewal the school will require confirmation of the proposed renewal terms. Ensure that this will leave the school sufficient time to go through a new tendering exercise if necessary. If performance rabates have been agreed, establish clearly how they will be triggered and paid. Schools should also ensure that they are clear as to the circumstances under which the agreement can be terminated.
Other services required
In addition to the purchase of insurance protection, insurers and brokers offer a wide range of insurance and risk management services. Schools should consider which of these services may be required and how they will be arranged and charged.
The following are examples of ancilliary services available:
- security and property risk assessments
- property valuations
- liability risk assessments
- project specific advice and guidance.
Schools can seek advice on the procurement of insurance from the Insurance and Risk Management Section. The Council is unable to provide broker services and can only provide schools with cover under the centrally arranged insurances that cover the entireity of the Council's portfolio of risk.
CG amended 6.10.08
Insurance and Risk Management section
Financial Services Authority
Insurance and Risk Management
RES1415, Shire Hall, Castle Hill, Cambridge, CB3 0AP
Mark Greenall - Insurance and Risk Manager
Tel: 01223 699112