Reality check – where does your public money end up?
As a public body you are exempt from all insurances. The future is not as unpredictable as you think. Our full healthcheck will demonstrate better ways to finance risk, to keep council tax down.
All public bodies are exempt from the normally compulsory insurances (employers liabiity and motor third party). Whilst this is widely known, the implications and opportunities this brings public sector Insurance Buyers are not widely understood or widely marketed
(Why is this the case? Public bodies are funded/controlled by central government, which rarely insures as it can print money/raise taxes to pay claims)
For this reason, public sector organisations are not covered by the FSCS (which generally protects those who are statutorily required to buy insurance), thus public bodies use insurance at their own risk!
In turn, by using insurance, they are paying IPT (c12%) back to their funders (central government) which is very inefficient!!
A typical local council client had paid £25m in premiums over last 25 years.Where did the money go?
- Tax (c10%) (back to central government!)
- Claims (c20%)
- Insurer Profit (70%) (insurer admin costs, commission to brokers, insurer profit)
- FSCS levy (c1%)
In other words, a typical local council client recovered only c£5m in claims over the last 25 years. This £25m spent/£5m recovered story is common to many public sector clients.
In addition, a typical council client has financial liabilities arising from its’ use of insurance in the past (past MMI clawbacks, future MMI clawbacks and no longer receiving 100% of future claims from MMI), some council clients have significanly more liabilities from other failed insurers (Independent) and admin costs of regularly considering the latest “flavour of the month” alternative solutions (such as mutuals, captives etc etc).
Insurance premiums are simple really, but widely misunderstood – premiums are generally unrelated to your own claims data.Once this simple fact is understood, alternative solutions become unnecessary.