Risk Protection Arrangement – Department for Education (DFE) Update
As you may be aware the DFE issued an initial formal notification on Friday 14 February 2014 with an update which followed on 8 April 2014, setting out important funding information to all outlined schools. It relates to the introduction of a voluntary Risk Protection Arrangement for a number of educational establishments coming out of Long Term Agreements as at 1 September 2014.
Aon has actively engaged with the DFE to understand how the arrangement will be administered and whilst full detail on the arrangement and its structure in relation to claim settlement and risk management is currently in development, we have confirmation from the DFE that this will be a placement facility only with no advice being provided by local government.
An extract from the DFE response is provided below:
Aon - "How do the DFE intend to manage the day to day requirements of running the Scheme? Will they be employing people to do this and what level of experience do they have of school insurance?"
DFE - "The Department for Education is not acting as an insurer and will not be providing any insurance advice to Academies. A third party administrator will be appointed to handle claims."
DFE have confirmed that the arrangement will include the following lines of business on an arranged basis only:
· Premises including terrorism
· Increased cost of working
· Liabilities:
Employers
Public
Abuse
Legionella
Asbestos
Hirers
Governors
· Personal accident
· Travel - UK
· Goods in transit
· Legal expenses
· Employee dishonesty
· Professional indemnity
· Libel and slander
· Money
· Contract works
· Loss of freezer contents
· Property – Offsite
In addition to the cover areas provided by the DFE arrangement, schools may need to consider insurance on:
Cyber liability
School trips outside the UK off site travel insurance
Engineering insurance and inspection
Staff absence
Minibuses
Occasional business use – Motor
Aon are fully supportive of all initiatives in the education sector that look to offer improvements on risk placement and offer cost efficiencies. We also recognise that schools benefit greatly from independent guidance and advice on risk level placement, together with day to day support on understanding exposures that apply to their school. This allows for individual identification of risk areas, ensuring that solutions best serve the needs of the school, whilst supporting advice requirements around placements levels.
For schools coming out of Long Term Agreements from 1 September 2014 this presents a need to consider independent advice and placement services. Whilst funding will be available for those lines of cover provided under the arrangement, each school will be required to ‘self fund’ all lines of insurance that fall outside the arrangement, in addition to the cost of consultancy fees for any independent advice.
It might be that a school opts not to insure some risk areas, but any decision not to insure would in our view need to be carefully considered on the basis of the risk involved. Independent advice could well be needed in this case to ensure full consideration is undertaken of the individual risk exposures.
Aon remains committed to offering cost effective solutions for schools in light of the DFE changes and as the single broker appointed to lot 3 (single sourced insurance brokerage) of the CCS (Commercial Crown Services) and Pro5 insurance services framework, we currently offer set cost fees for advice and insurance placement. Aon intend to cap costs for advice requirements on risk protection areas and placement of additional lines, at a maximum fee amount that assists with costs not covered by available funding.
In addition to the above Aon will continue to offer its current schools insurance propositions via recognised Education Funding Agency routes, covering all insurance lines of business, for those schools who opt out of the DFE Risk Protection Arrangement.
Aon will look to continue to provide guidance in the coming weeks as the DFE release further information in relation to DFE Risk Protection Arrangement and the extent of this proposed solution for schools. Please keep an eye on this webpage for further information.
Last updated 28 April 2014
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