Agenda item

As part of this item a presentation will be provided on Risk 1.4: If claims relating to uninsured risks materialise or continue to increase then LCC will need to find increased payments from reserves, impacting on funds available to support services.

The Committee considered a report of the Director of Corporate Resources, the purpose of which was to provide an overview of key risk areas and the measures being taken to address them. A copy of the report, marked ‘Agenda Item 8, is filed with these minutes.

The Committee also received a presentation on Risk 1.4 on the Corporate Risk register: If claims relating to uninsured risks materialise or continue to increase then LCC will need to find increased payments from reserves, impacting on funds available to support services. A copy of the presentation slides is filed with these minutes.

Presentation – Uninsured Risks

Arising from the presentation the following points were noted:

(i)        Prior to 1964 the County Council did not have insurance in place however the Council was still receiving claims from the 1950s which had to be dealt with.

(ii)       Between 1969 and 1992 the County Council was insured by Municipal Mutual Insurance (MMI). Around that time there were not many insurance companies in the local government market to choose from. Unfortunately MMI conducted little risk management and wrote business with no excesses. As a result the company paid out on a large amount of claims which caused them to go into administration. The subsequent scheme of arrangement put in place to run off the company’s tail of claims triggered a levy against all creditors of 25%.

(iii)      The County Council was now using self-insurance to a greater extent than previously which had the advantage that there was no insurer profit, lower broker commission and the insurance premium tax did not have to be paid. This position allowed for greater control over claims and the opportunity for enhanced risk management. Consideration would be given by the County Council in future to whether the level for self-insurance should be higher.

(iv)      Academies were a separate legal entity and should have their own insurance or be part of the government scheme. Responsibility for defending claims against academies would not be borne by the County Council.

(v)       In response to a question from a Member regarding whether local authorities could be responsible for claims arising against a predecessor authority that was in existence prior to local government reorganisation, it was explained that there were occasions when this would be the case. For example; following Local Government Reorganisation (LGR) in 1974 the County Council became responsible for dealing with claims from Leicester Corporation which ceased to exist. This was the case if the County Council took over the function in question. If a claim pre-dating the 1997 LGR arose from within the City boundary, and related to a function for which the County Council was responsible, the claim would be handled by the County Council in line with the insurance arrangements in place at the relevant time.

Risk Register

(vi)      In response to a question from a Member regarding whether there was any further information regarding Risk 4.2 and the Arriva concessionary travel appeal, the Director of Corporate Resources stated that the most up to date position was as set out in the report. Members stated that they would monitor the situation with regards to Arriva.

RESOLVED:

(a)       That the contents of the report be noted;

(b)       That the current status of the strategic risks and emerging risks facing the Council, as detailed in the report, be noted;

(c)       That the update regarding counter fraud initiatives be noted;

(d)       That a presentation and report be provided for the next meeting of the Committee on Risk 3.6: If a replacement Enterprise Resource Planning (ERP) system is not implemented effectively and by 2020 then the organisation will not reap the full benefits of change.