The importance of the Insurance Manager during Local Government Reorganisation
As LGR gathers pace across England, councils are focusing on governance structures, service integration, financial sustainability and the practical challenges of creating the new unitary authorities. As you would expect, considerable effort is being invested in designing future operating models and aligning services – all to hopefully achieve the efficiencies expected from reorganisation.
However, in such periods of great change, one critical role can often be overlooked until it is too late: the role of the Insurance Manager.
Whilst Insurance has often been viewed by some as an administrative function centred on policy renewals, claims handling and procurement exercises, the Insurance Manager can add huge value in meeting the challenge presented by growing demand for services against ever squeezed budgets. Their responsibility is to ensure that the authority understands its exposures and has an appropriate strategy for funding, retaining and transferring risk. It is, therefore, imperative they are a key contributor during reorganisation, when multiple predecessor councils are being brought together into a single organisation with an expanded profile.
The effectiveness of a future insurance programme under reorganisation depends upon understanding the full range of activities, assets and liabilities that will transfer into the new authority. This requires early engagement across all departments and access to comprehensive exposure information. The Insurance Manager needs visibility across all aspects of the organisation including over property portfolios, highways responsibilities, fleet operations, social care services, leisure facilities, trading activities, housing functions and contractual arrangements. Gathering and analysing this data early enough ensures the Insurance Manager can develop an optimal insurance and risk financing strategy.
Few roles within local government provide such a broad view across an organisation as the Insurance Manager. Insurance and risk professionals routinely engage across all departments. Through claims data, incident reporting and risk assessments, they gain valuable insight into operational performance and emerging risks. During LGR, decisions made in one area can have far-reaching consequences elsewhere. For example, changes to highways inspection regimes may influence liability claims.
Having the right insurance cover on day one will impact whether an organisation can confidently discharge its’ duties without exposing itself to enormous financial, reputational and legal risks. A single major event can create multi-million-pound costs, diverting resources away from essential frontline services.
By bringing together these different strands of information, Insurance Managers provide a level of organisational intelligence that supports informed decision-making throughout the transformation process.
Insurance Managers also have an important role in helping shape a new robust risk management framework of the new authority. Being involved at an early stage will help reduce the likelihood of losses occurring in the first place and ensure that, where they do occur, an effective response ensues.
Key risk areas they should contribute to are:
- Development of new corporate risk management frameworks
- Standardisation or development of new policies and procedures
- Design of highways inspection and maintenance regimes
- Fleet management and driver risk controls
- Health and safety governance arrangements
- Incident reporting and data collection processes/systems
- Business continuity and resilience planning
- Contract review and risk allocation strategies.
By influencing these areas, the Insurance Manager helps minimise future losses and ensures the best data available to inform the risk financing programme, while improving the authority's overall governance framework.
Insurance Managers must also carefully consider how historical liabilities will be managed following reorganisation. Issues may include legacy insurance funds, claims that span predecessor authorities, and ongoing liabilities from abolished councils. Questions could arise regarding which predecessor policies might offer indemnity, how the funding of excesses should be distributed and whether formal agreements are needed between successor authorities over how insurance maps to the historical liability transfers. These matters can have significant financial implications and require specialist expertise to resolve.
The preservation and migration of records also becomes critical. Historical claims files, health and safety records and employment data may all be required to defend claims many years into the future. Failure to retain this information can significantly increase costs and weaken legal defences.
Claims data runs through all of this like a steel thread. Claims information provides valuable insight into how an authority performs with the ensuing trends highlighting opportunities for improvement. Consolidating and analysing data from predecessor authorities will be key in managing exposures and identifying emerging risks. These insights can support decisions, inform service redesign and help leaders prioritise resources where they will have the greatest impact. It will, of course, along with the best exposure data, help to drive procurement of the most economically advantageous version of the Insurance Manager’s new risk financing strategy.
Key takeaway
LGR presents a unique opportunity to redefine the role of insurance and risk management within local authorities. Ultimately, the success of LGR will not be determined solely by organisational structures or financial savings. It will also depend on how effectively new authorities understand, manage and finance risk. Insurance Managers can play a central role in achieving that objective, making them an important contributor to the successful delivery of modern local government.