DMFD4 Insurance arrangements for the London Fire Brigade
The LFB has a range of insurance policies in place to protect against the financial impact of liability claims and loss of assets, with annual premiums paid to insurers to provide the required level of cover. The existing insurance arrangements expire on 30 June 2018.
The LFB has undertaken a complex OJEU tender exercise for the provision of insurance services presented in 16 lots to address all insurance requirements. Insurers were invited to bid for single or multiple lots – and in some cases insurers offered packaged solution for multiple lots. The process was supported by the Brigade’s insurance Broker (Gallagher). The report to the Commissioner LFC-0025 provides details on the current insurance arrangements, the consideration of alternative collaborative arrangements, the response to the invitation to tender, and proposes to delegate the appointment of insurers from 1 July 2018 to the Commissioner’s Director of Corporate Services.
The Deputy Mayor for Fire and Resilience consents to the London Fire Commissioner putting in place new insurance arrangements from 1 July 2018, subsequent to the procurement process, budgets, and delegations described by the report to the Commissioner LFC-0025.
Part 1: Non-confidential facts and advice
The LFB has insurance policies in place to protect against the financial impact of liability claims and loss of assets, with annual premiums paid to insurers to provide the required level of cover. The current insurance arrangements have been in place since 2013. The existing policies were awarded following on OJEU tender process, with contracts awarded on the basis of a three-year Long Term Agreement (LTA) with the option of a two-year extension. The decision on the two-year extension was taken in 2016, so the existing insurance arrangements expire on 30 June 2018.
A complex insurance tender process consisting of 16 lots, with insurers able to offer responses to single or multiple lots, or packaged solutions for multiple lots, has been conducted to seek proposals to provide insurance services to the Brigade. The Invitation to Tender (ITT) drew heavily on previous experience from the last procurement exercise in 2013, together with recently undertaken Broker-led exercises by way of an Actuarial Fund Review and subsequent Programme Design Analysis to inform the future provision of insurance services. The ITT was published via the Blue Light portal on 20 March.
The Brigade received a strong response with 13 insurers submitting tenders across the 16 lots. Resultingly, the clarification and evaluation of the insurance options has taken some time and is ongoing. Due to complexities arising towards the end of the process, requiring further due diligence and consideration, it is proposed the Deputy Mayor consents to the delegation to the Commissioner’s Director of Corporate Services the authority to appoint the successful insurers, providing the annual costs are within the approved budgets, currently £1,699kpa. This ensures that the Brigade is in a position to have the necessary insurance in place by 1 July 2018. The tender proposes a three-year commitment extendable by two years, providing for an £8,495k financial commitment, excluding any annual increases agreed with insurers to reflect changes in say payroll or property valuations, and to reflect market changes and claims history, with the cost managed through the central contingency for inflation.
This Decision ensures that the London Fire Commissioner remains to have access to appropriate insurance arrangements beyond 30 June 2018.
The Public Sector Equality Duty – and the potential impacts of this decision on those with protected characteristics (age, disability, gender reassignment, pregnancy and maternity, race, gender, religion or belief, sexual orientation) – has been considered by the London Fire Commissioner and the Deputy Mayor for Fire and Resilience. No impacts have been identified.
The Decision consents to the delegation of the appointment of insurers to the London Fire Commissioner.
The expenditure is to be funded through sums available to the Commissioner. There are no direct financial implications for the GLA.
Under section 9 of the Policing and Crime Act 2017, the London Fire Commissioner (the “Commissioner”) is established as a corporation sole with the mayor appointing the occupant of that office. Under section 327D of the GLA Act 1999, as amended by the Policing and Crime Act 2017, the mayor may issue to the Commissioner specific or general directions as to the manner in which the holder of that office is to exercise his or her functions.
By direction dated 1 April 2018, the mayor set out those matters, for which the Commissioner would require the prior approval of either the mayor or the deputy mayor for fire and resilience (the “Deputy Mayor”).
Paragraph b of Part 2 of the said direction requires the Commissioner to seek the prior approval of the Deputy Mayor for commitments of capital or revenue expenditure of £150,000 or above.
This decision seeks the Deputy Mayor’s approval for the Commissioner’s revenue expenditure on insurance matters, having considered the advice of her General Counsel as described in the attached report. The Deputy Mayor may approve the requested expenditure if she be so minded.