The Vale of Glamorgan Council
Cabinet Meeting: 14 December, 2015
Report of the Leader
Property Insurance Renewal Report
Purpose of the Report
To obtain the consent of Cabinet to renew the long term agreement for property insurance as the current arrangements are due to expire on 31st March 2016
That the Header of Finance be given delegated authority, in consultation with the Leader of the Council, to award a contract for the Council's Property Insurance to the most economically advantageous tenderer.
Reasons for the Recommendations
To ensure the Council provides adequate insurance cover in order to protect its financial integrity in the event of a major incident occurring and ensures that day-to-day financial activities are protected from the potential effect of insurance claims.
The Council's long term agreement for property insurance cover will expire on 31st March 2016 and as such the Head of Finance must now consider the most appropriate insurance options for the Council.
The Council manages insurance risk through its own internal fund (the Insurance Fund) and by paying premiums to external insurers where it is considered financially prudent that the financial consequences are not borne in-house. Organisations such as the Council enter into long term agreements for insurances as it provides certainty and insurers will offer discounted rates for longer term insurance arrangements.
The Crown Commercial Service's (CCS) framework was used in the Council's retender exercise for insurances other than property at the end of the 2013/14 financial year, at which time the Council's Audit Section gave that tender exercise a substantial assurance review. As such it is proposed to use that framework for the tender exercise to renew the property insurances.
Welsh Government's National Procurement Service is currently considering its own insurance framework, however that framework will not be in place in time for the renewal of the Council's property insurance policy.
This report sets out the proposed approach to the tendering process for the renewal of long term insurance provision for the Council.
Relevant Issues and Options
As part of the Budget Review in 2012/13, Scrutiny Committee (Corporate Resources) received a report on the Insurance Review at the meeting of 24th April 2012.
In accordance with the recommendations of that report, the Risk and Insurance Officer has continued to promote low/no cost risk management measures and provides corporate support and advice to departments on mitigating risks. For example, drawing Secondary Schools attention to the Foreign and Commonwealth Office's advice regarding school trips to France after the events of November 13th 2015.
The Scrutiny Committee (Corporate Resources) report also recommended that the Council should maintain its existing agreements until the end of the contract term and at that time should consider options for the 2014/15 financial year and beyond including whether increased or decreased risk should be a factor.
Proposed Project Approach to the Insurance Renewal
Marsh Ltd (the Council's appointed insurance brokers) will undertake the mechanics of the tendering exercise in conjunction with the Council and in accordance with the CCS Framework and the Council's Financial Procedure Rules and Contract Procedure Rules.
It is proposed that the award criteria used for all lots be weighted 70% on price and 30% on quality in line with the Crown Commercial Services' scoring criteria.
Insurance Premium Tax (IPT), a non-recoverable tax charge on insurance premiums, has risen to 9.5%. The Council's Officers have deemed it appropriate to request tenders for cover at higher excess levels in an attempt to realise premium savings as a lower premium results in a lower IPT charge. The tenders will be requested for long term agreements of 4 years plus an option to extend for a further year allowing the Council suitable exit points.
Resource Implications (Financial and Employment)
The proposed costs of insurance premiums in respect of Insurance are built into the Council's budget proposals for the 2016/17 financial year and beyond.
Sustainability and Climate Change Implications
There are no sustainability and climate change implications arising from this report.
Legal Implications (to Include Human Rights Implications)
The tender process will be undertaken in accordance with OJEU requirements and the Council's Financial Procedure Rules, Contract Procedure Rules and Procurement Code of Practice.
Crime and Disorder Implications
There are no crime and disorder implications arising from this report.
Equal Opportunities Implications (to include Welsh Language issues)
There are no equal opportunities implications arising from this report..
The utilisation of this framework agreement will ensure the management of the Council's money efficiently and effectively in order to maximise its ability to achieve service aims and the service objective of providing sound financial management.
Policy Framework and Budget
This is a matter for Executive decision.
Consultation (including Ward Member Consultation)
Relevant Scrutiny Committee
Scrutiny Committee (Corporate Resources) 24.04.12 Council Insurance Review
Geraint Jones, Risk & Insurance Officer
Head of Finance
Operational Manager, Exchequer Services
Rob Thomas, Managing Director