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College insurance category training


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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.

Published in: Education
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College insurance category training

  1. 1. College Insurance Procurement & Risk Pat Condon Head of Procurement Crescent Purchasing Consortium 1
  2. 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 2
  3. 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 3
  4. 4. RISK Buildings and Contents Terrorism Income Protection Employers and Public Liability Travel Professional Indemnity Medical & Treatment Risks Motor Fleet Other Risks TypesofCoverGenerallyIncepted 4 Risk Insurance Cover £
  5. 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 5
  6. 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 6
  7. 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 7
  8. 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 8
  9. 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 9
  10. 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 10
  11. 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 11
  12. 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 12
  13. 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 13
  14. 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 14
  15. 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 15
  16. 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 16
  17. 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 17
  18. 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 18
  19. 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 19
  20. 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 20
  21. 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 21
  22. 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 22
  23. 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 23
  24. 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 24
  25. 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 25