This presentation is designed specifically for those with responsibility of procuring insurance services within a further education college environment. The video addresses the types of insurance policies to be bought, the risks of over or under insuring, the insurance marketplace, tender preparation and evaluation and risk mitigation.

1. College Insurance Procurement & Risk
Pat Condon Head of Procurement
Crescent Purchasing Consortium
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2. • To understand the types of insurance policy a College may have within their portfolio
and the rationale behind each policy
• To understand the risks in under- or over-insurance
• To provide knowledge of specialist policies outside of the normal scope of business
activities
• To understand the insurers within the educational insurance market
• To be able to advise colleagues on tender preparation
• To consider potential pitfalls during tender analysis
• To understand why risk mitigation and management are critical business skills
Objectives
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3. • New Act from August 2016 which has had a significant impact on procuring insurance
• Introduced Duty of Fair Presentation. The objective is to give you (the Insured) clearer
guidance on:-
• what needs to be disclosed to insurers
• who in the organisation has the relevant knowledge
• how that information should be presented to insurers.
• New standard of ‘Fair presentation’ covers:-
• Disclosure
• Insured must disclose every material fact or circumstance that it knows or it
ought to know.
• Involve senior management (significant decision makers) and all those
responsible for purchasing or managing insurance in providing this information
• The term ‘ought to know’ is important and places the onus on Insured to carry
out a reasonable search to discover information
• Presentation
• Present all information in a manner which would be “reasonably clear and
accessible to a prudent insurer.”
• Misrepresentation.
• All information relating to matters of fact must be substantially correct and
• every material representation as to a matter of expectation or belief must be
made in good faith.
InsuranceAct2015
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4. RISK
Buildings
and
Contents
Terrorism
Income
Protection
Employers
and Public
Liability
Travel
Professional
Indemnity
Medical &
Treatment
Risks
Motor Fleet
Other Risks
TypesofCoverGenerallyIncepted
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Risk
Insurance Cover £

5. • Buildings:
• General perils as standard
• Fire, explosion, earthquake, aircraft, riot & civil commotion, malicious damage
• Flooding, storm, bursting pipes, impact by vehicles
• Theft with or without break-in
• Accidental Damage
• Terrorism cover is purchased separately at additional cost based on location
• The definition of a terrorism event can vary from one insurer to another
• Contents:
• General perils as standard as above. Also includes:
• Theft with or without break-in
• Both policies will have an excess as standard – generally £1,000 but can be lower
Buildings&ContentsCover
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6. • Cover is purchased separately at additional cost based on location
• The definition of a terrorism event can vary from one insurer to another
1. Cover should include “An act of terrorism or sabotage”
2. Definition of Terrorism: “…use of force or violence by any person/groups … committed
for political, religious or ideological purposes including .… to influence any government
or put the public in fear”. Sabotage is similar.
3. “72 hour clause” meaning sequential events within this period will be treated as a
single event
4. Extensions to cover: Denial or restriction of access; cyber attack; incidents at supplier’s
premises
5. Exclusions: Chemical, biological attack, radiological or nuclear (CBRN)
TerrorismCover
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7. • Covers any potential loss of income to the College following a major
incident
• Indemnity limit (insured amounts) determined by calculating potential
maximum income loss and additional costs following such an incident
• Indemnity period should be up to 3 years (or longer) to allow for complex
claim settlement and take into account the time it will take to:
• Clear site
• Draw up plans and obtain permissions
• Rebuild
• Re-commission
• Complex claims may require the appointment of a loss assessor to work for
the College. Loss assessor insurance cover is available at relatively low
cost.
• Insurers and/or brokers will have crisis management teams
LossofIncome&AdditionalCostofWorkingCover
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8. • This is a statutory insurance cover
• Statutory minimum indemnity limit is £5m but colleges always purchase a higher limit,
i.e. £20m or £25m
• Protects the College against claims from employees where the College has potentially
not ensured the health and safety of its employees
• Does not cover the College for any fines incurred under a formal HSE prosecution but
will cover defence costs
• Does cover the costs and awards subsequently made by the courts as a result of a
successful employers liability claim
• Cover can be purchased in ‘layers’ provided by more than one insurer
EmployersLiability
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9. • This is not a statutory cover but all colleges purchase it
• General minimum indemnity level for colleges is £10m but higher limits can
be purchased, i.e. £25m+
• Protects the College against claims from members of the public and
students where the College has not potentially ensured the health and
safety of these individuals
• Does not cover the College for any fines incurred under a formal HSE
prosecution but will cover defence costs
• Does cover the costs and awards subsequently made by the courts of a
valid Public Liability claim
• Some areas of College business may fall outside of the cover and it’s
important that Colleges recognise where there is potential for no cover to
be in place
• Cover can be purchased in ‘layers’ provided by more than one insurer
• Data Protection Act cover
PublicLiability
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10. • Areas to consider that may be outside of the scope of the policy cover:
• Check hair and beauty treatments and training, including:-
• Botox
• Intense Pulse Laser therapy
• Dermal Rollering
• Administration of drugs to students
• Check policy wording for definition
• Check internal policy on drug administration
• Consider using qualified agency personnel with their own cover; e.g. SRN
• The College may require a medical malpractice policy if carrying out more complex
activities
PublicLiability
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11. • Protects the College against claims made by learners for inadequate teaching – “failure
to educate”
• Protects the College for the professional advice that it gives to 3rd parties
• Training
• IT services
• Management services including accounting (academies)
• Data protection Act and loss of data
ProfessionalIndemnity
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12. • Also known as Directors and Officers Insurance
• Protects the College against fiduciary mismanagement
• Cover is available to protect individuals and the college itself
Governors&OfficersLiability
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13. • Also known as Theft by Employee or Employee Dishonesty Insurance
• Protects the College against theft of money or property by internal fraud over a period
of time
• Can also include theft by third parties accessing IT systems
• Policies will include ‘conditions precedent’ relating to systems of check, cheque signing,
references for employees etc.
FidelityGuarantee
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14. • Motor Fleet
• Protects all the usual risks for driving on business
• Drivers may need to be aged 25 to 70 years to drive minibuses
• All details must be kept up to date on Motor Insurance Database (MID)
• Consideration should be given to insuring hire vehicles
• Occasional Business Use
• Provides cover for employees who might use their own vehicles on college
business
• Motor Trade
• For Colleges that offer vehicle servicing or MOTs to 3rd parties
• Environmental Liability
• Covers sudden and unforeseeable environmental incidents
OtherPolicies
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15. • Personal Accident
• Not a compulsory cover
• Benefits can be selected lump sums or multiple of salary
• Can include employees, governors, students and volunteers
• Benefit payable to college, not the individual
• Travel
• ‘Blanket’ annual policy covering all trips, ranging from UK only to worldwide
• Can include employees, governors, students and volunteers
• Cover includes cancellation, delayed departure, medical expenses, hi-jack, business
and personal property and money
Other Policies
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16. • Engineering Insurance & Inspection Services
• Insurance: Covers damage to plant such as boilers, lifts, pressure and lifting plant
which is not normally insured by a property damage policy
• Inspection: Provides statutory inspection services for that equipment and plant to
an agreed schedule with insurers who issue certificates of safety or advise on
issues that could affect safety. This will include any remedial action required to
comply with the relevant HSE regulations
• Loss Assessor Insurance
• In the event of an incident a Loss Assessor can be appointed to the College to act
on their behalf
• Marine craft (Ship Hull) Insurance
• Used where the College has maritime activities and covers damage to vessels and
liability claims that result from operations
• Airside Liability & Aircraft
• Used where Colleges have activities at airports and may require to access certain
operational areas airside of the public buildings
OtherPolicies
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17. • Cyber Insurance
• Cover 1. “First Party” or College’s own costs; breach costs including notifications to ICO
and data subjects; hacker damage; business interruption; cyber extortion; and privacy
protection.
• Cover 2. Legal liability for losses incurred by others following data breach
• Contractors All Risks Insurance
• This covers damage to property, such as damage to buildings and other structures being
constructed or to the existing building in which the construction is being carried out.
• Tends to be in joint names
• Designed to ensure that insurance funds are available if damage occurs to the
insured property
• The insurer cannot subrogate the loss against one of the named parties if the other
one claims
• Check that policy includes Minor Works Contract cover as standard extension, up
to £500k or £1m
• Restrictive Covenant Insurance
• Normally procured where a College buys land or buildings to protect against a claim for
use of the land or buildings outside of the original intention or where a legal covenant
has been put in place
Other Policies
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18. • There is generally limited appetite for educational risks and as a result a limited
number of insurers. This is because
• Educational activities are viewed as high risk
• Sports
• Motor vehicles
• Hair & Beauty
• Engineering
• Offshore & firefighting
• Often involves insuring extensive liability issues
• Insuring children and vulnerable adults
• Insuring open access buildings with little security
• Market generally will not compete with insurers that are established in the sector
• Limit to number of insurers does not mean lack of competition
InsurersintheEducationalMarketplace
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19. • Claims can be expensive
• Educational buildings are targeted more frequently by arsonists
• Injury claims from young people can have significant financial costs for the future,
e.g. long term disability and method of calculating damages
• Perception that funding cuts lead to lower risk management budgets
• Health and safety management within education can be varied
Insurers in the Educational Space
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20. Insurance Type Main Suppliers
Property & Business Interruption Aviva, RSA, NFU (land-based), QBE, Travelers, UMAL, Zurich Municipal (ZM)
Employers and Public Liability Aviva, RSA, NFU (land-based), QBE, Travelers, UMAL, Zurich Municipal (ZM)
Professional Indemnity Aviva, RSA, NFU (land-based), QBE, Travelers, UMAL, Zurich Municipal (ZM)
Governors & officers liability Aviva, RSA, NFU (land-based), QBE, Travelers, UMAL, Zurich Municipal (ZM)
Motor Zurich Municipal, QBE, Equity Red Star, NFU (land-based)
Motor Trade Aviva, RSA, QBE, Travelers, UMAL, Zurich Municipal (ZM)
Personal Accident & Travel AIG, Allianz, Aviva, Chubb, RSA, Travelers, Zurich Municipal (ZM)
Engineering Zurich Municipal (ZM), British Engine, Allianz
Terrorism PoolRe (via insurers as above; Lloyds Syndicates (Angel, Tasker, Hiscox)
Main Insurers in the Educational Space
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21. Colleges will need to prepare a specific tender pack, to give potential insurers as much information as possible relating to college
operations and activities
 CPC Framework Questionnaire
 Information about all buildings, including construction
materials method, gross internal area, height and
occupation
 Claims data covering the last 5 years at least
 Schedule of motor vehicles
 Schedule of engineering plant for inspection
 Campus layout plan
 Photos of buildings
 Planned capital infrastructure projects
 College sample risk assessments
 Latest published Financial Statement/Annual Report
 Business Continuity Plan
 College Broker Service & Insurance Cover specification
document as prepared by Risk 2 Value
 Weightings to be applied to selection criteria when
evaluating tenders
Insurers will access College websites for additional information relating to courses delivered, and the college’s policies such
as Health & Safety and Safeguarding.
It is likely that the successful supplier will require a number of proposal forms to be completed. These can include
Professional Indemnity, Governors & officers Liability, Cyber & Data, and other specialist types of insurance.
CPC works with Risk 2 Value as our appointed insurance specialist in the marketplace
Tender Preparation
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22. • Colleges should also consider
• Open day for potential Insurers to view the College and meet key stakeholders
• When evaluating the bids received, the following should be considered under the award
criteria
• Customer service
• Claims handling
• Policy administration
• Quality of the underwriting and risk management throughout the term
• Cost of insurance covers
• Long term agreements
Tender Considerations
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23. • Colleges should carefully consider the following when evaluating bids
• Does the bid include all of the insurance covers requested?
• Are there any exclusions on the policy that may render a potential claim invalid?
• Are there any conditions precedent applied to the policies that may invalidate or
reduce the cover provided?
• Is the College comfortable with the levels of excess that will apply to claims?
• Is a better deal available if you enter a Long Term Agreement (LTA)
• What is the financial strength rating of proposed insurers? It should be at least A-
• Are the indemnity levels suitable for the risks identified? Be aware of under- or
over-insuring the business
• If using a broker ensure they declare their income from placing the insurance
business
Tender Analysis Considerations
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24. • Does the policy require a run off period that can add cost to the premium base?
• If changing insurer, do special terms apply to any of the existing insurance covers?
These may relate to reporting any known claim circumstances prior to the end of
the current period of insurance.
• If a new insurer is appointed, they will often require inspection visits to qualify the
tender information and specifics which can add costs or conditions or exclusions
dependent on the outcome of the inspection
• Remember to take into account any pertinent Insurance Premium Tax (IPT) and VAT
TenderAnalysisConsiderations
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25. • To understand the types of insurance policy a College may have within its portfolio and the rationale behind
each policy 
• To understand the risks in under or over insurance 
• To provide knowledge of specialist policies outside of the normal scope of business activities 
• To understand the organisations within the educational Insurance market 
• To be able to advise Colleges on tender preparation 
• To advise Colleges of common pitfalls during tender analysis 
• To understand why risk mitigation and management are critical business skills 
Objectives
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