The fair funding regulations effective from April 1999, provide an option for schools to manage their own insurance cover. Research by Zurich Municipal has identified that to date only 190 LEA schools have requested to fund their own insurance, while 70 grant maintained schools have actually chosen to opt back into their LEA insurance services.
LEA schools represent around two hundred billion pounds worth of public assets. Earlier this year, Zurich Municipal wrote to 50,000 headteachers and chairs of governors, highlighting the significant risks associated with managing delegated insurance budgets and the benefits of LEAs retaining this responsibility.
* Additional costs may also be incurred as a result of the LEA needing to retain some degree of cover for the school assets.
* Whilst some schools may be able to arrange cover on an individual basis, schools which are perceived by insurers to be a bad risk may find it difficult or even impossible to secure cover.
* In the event of a major incident, such as a school fire, the risk management and insurance function of a local authority co-ordinates the necessary support. Those schools who manage their own insurance will face all the responsibility for handling any such crisis.
* Schools are continuously facing new types of claims. Recent court cases have included new areas such as claims against schools for failing to recognise medical conditions such as dyslexia, stress cases brought by teachers, and compensation claims for the effects of bullying. Such claims may appear many years after an incident occurs.
Bill Walker, from Zurich Municipal said:
' The management of insurance by individual schools could increase the premiums collected by the insurance industry four fold. Despite this, at Zurich Municipal we feel strongly that this would be a retrograde step resulting in a decline in the quality of risk management in schools and, as a consequence, increased costs.
'Schools may be attracted to short term savings, but these can hide additional administration and longer term costs. Schools who are considering managing their own insurance must ensure that they are fully aware of these implications.'